The oil and gas industry has long had to rely on the recommendations of trusted third-party experts to help make important supply chain decisions. Websites like https://oilprofit.app make the best utilization of strategies that help newbie oil traders in their trading journey.It is because supply chains have often developed organically over time and have lacked standardized benchmarking or guidelines for best practices.
The rise in popularity of blockchain technology could allow for significant disruption of these relationships by providing an unbiased methodology for sourcing, tracking, and executing transactions on behalf of customers with transparent data records across endpoints across supply chains.
Blockchain technology has already been widely adopted by many global enterprises over the past two years broadly in different aspects such as IoT (Internet of Things), smart contracts, and cryptocurrency. It has enabled businesses to benefit from the inherent trust and transparency of the technology.
Because blockchain exists in a distributed and decentralized system, it is viewed as an ideal solution for managing and recording transactions without needing a central authority. Furthermore, it means that all the participants in a network can view, access, and verify each other’s information. It creates a new platform on which companies can execute and complete transactions through cryptocurrencies such as bitcoin or other cryptocurrencies.
The benefits of this technology could be quite profound in the oil and gas industry since it will offer several key advantages to both customers and suppliers.
Benefits of Blockchain for Oil and Gas:
Reduce intermediaries in the supply chain A significant benefit of blockchain technology is that it will reduce the number of intermediaries in the supply chain. These intermediaries take up significant cash flow, incur costs, and use valuable resources to complete different transactions.
These can include multiple agencies, finance companies, banks, consultants, auditors, etc. The idea behind blockchain is to cut out these middlemen and provide a more transparent and efficient platform for making transactions between all parties involved in the process. There will be reduced costs and greater operational efficiencies since every individual transaction will be recorded on a shared ledger or database.
Reduce high costs of intermediaries According to a report by International Energy Agency (IEA), the average energy price in the oil and gas industry around the world was $40 per barrel in 2017. Furthermore, based on 2016 data, the cost of intermediaries accounted for 20% of all costs incurred by oil and gas enterprises. Suppose we assume that this 20% represents vast amounts of cash flow cost. In that case, it is easy to see how block chains ability to eliminate these middlemen can have a substantial disruptive potential on many different aspects across an entire supply chain.
If an intermediary is cut out, there will be more cash flow for utilization on the other side. Essentially, this could significantly reduce costs for the oil and gas business by utilizing blockchain technology in many aspects of the supply chain, from contracts to transactions.
Blockchain could be a powerful enabler toward achieving a “connected” supply chain. Many leading analysts and industry experts emphasize the need for a connected supply chain to improve operations, including reducing costs and increasing revenue flow.
Transforming the supply chain
Blockchain can transform the transaction process in the supply chain by providing a secure and accurate method of executing transactions. In addition, the technology can encourage greater sharing of information and combine it with smart contracts to increase the level of automation necessary for more efficient operations.
Blockchain has already been seen as a potential disruptor across many different industries, including finance, government, agriculture, and many others. However, the oil and gas industry is still in the early days of adopting this technology. Still, innovators will likely emerge that drive blockchain adoption across this industry over the coming years.
Benefits for Oil & Gas Market:
Cost savings blockchain significantly reduces costs through reduced intermediaries, increased transparency, and fewer manual processes/ errors.
Transaction costs- blockchain allows the transactions to be done and recorded securely on the system.
Lower risk of fraud – All the information of 1 supplier can be traced back, which helps to protect you from fraud.
Improved productivity- Blockchain Will boost efficiency and will help to enable new processes and ways of doing business.
Faster and cheaper transfers- Blockchain Uses intelligent contracts, so transactions are executed and recorded upon completion without any manual intervention.
Increased revenue- Blockchain will enhance the business process with quick and secure payments.
New business models- Blockchain will help promote new inbound and outbound business models across the supply chain.
Blockchain eliminates corruption and intermediaries from the process, which would have incurred an enormous amount of money by all the parties in the supply chain. It will catch on once blockchain is introduced in industries with many intermediaries, such as oil, gas, financial institutions, etc.