Blockchain can help improve oil trade efficiency by 30-40%
The world's top energy companies are jointly developing a blockchain-based processing platform aimed to eliminate paperwork around oil trades and reduce transaction times and costs. Experts consider that the modern technology can extend into every stage of oil and gas production and refining.
Blockchain is beginning to change the face of oil and gas trading, says Oilprice.com, adding that soon we can see a lot more wide-scale adoption of the technology in the global oil and gas industry. This month, French Total and American Chevron have joined other major energy corporations such as Shell, BP, Equinor, Mercuria and Gunvor as shareholders of Vakt, a post-trade processing platform based on blockchain. Oil majors are now spending carefully and seeking to boost efficiencies, so they are testing blockchain in order to cut out middlemen along the oil trade transaction chain and lower costs.
Currently, the average trade finance transaction for a commodity cargo can involve up to 36 different original documents (and their numerous copies) from 27 different parties. It can take weeks to complete such a deal. The owners of Vakt claim that the platform can improve efficiency and trade finance savings by 30-40%. There are also other oil trading platforms that use the distributed ledger technology. For example, Komgo, which was created earlier than Vakt, covers all commodities, while a new platform by PermianChain Technologies doesn't even handle actual physical transactions but deals with trades of potential, undeveloped oil and gas resources.
According to industry experts, the benefits of blockchain can extend far beyond trade processing. For example, it can underpin access control and identity management in highly distributed environments such as oil and gas fields, serving to tamperproof cybersecurity enforcement, says CEO of Xage Security Duncan Greatwood. Refineries can also use the technology to share information with suppliers in a more secure manner. Besides, blockchain can enhance the integrity of data around oil shipments, considers Chris Kubecka, a former security team leader in Aramco and CEO of security firm HypaSec. Here the technology may serve to track and verify the origin of oil cargo.
Decentralising cybersecurity to reduce risks is now an essential task for any industry, but it acquires additional importance in the oil and gas sphere, as we're dealing with critical infrastructure. In this context, blockchain deserves special attention. ''The distributed systems common in the oil and gas industry need decentralised security, removing a single point of failure to ensure that in the event that a few devices are hacked, the rest of the network is not compromised,'' Xage's Greatwood says.