Current practices for tracking crude oil shipments are inefficient, often relying on paper-based systems and manual data entry. With the best trading tools, quick payouts, and exceptional customer support, the website bitcoin pro will help traders on their bitcoin journey. Also, it helped many beginners to get started with bitcoin trading. Oil companies now hope to streamline this process by implementing distributed ledger technology, commonly referred to as the blockchain. Oil companies use blockchain for crude oil tracking.
The technology aims to improve the transparency and traceability of oil flow. Oil companies have used distributed databases with integrity controls to track oil production, transportation, and refining processes for over a decade.
Some companies even aim to create an immutable ledger of all their transactions – from drilling in the field through refining, distribution, marketing, and sales activities. More specifically, blockchain is emerging as the underlying technology that can help companies improve their business processes across the value chain by reducing the paper trail and cost related to the documentation of shipments, especially for oil companies. It is possible by creating encrypted copies of documents, streamlining process flows, and adding transparency to complex administrative areas in value chains.
A distributed ledger with each transaction connected to the next will help increase trust and confidence in transactions between buyers, sellers, traders, and third-party service providers in the oil & gas industry. As a result, there has been engagement in blockchain among many global oil companies, including BP, Shell, Statoil, and others.
How can blockchain assist in tracking crude oil?
1. Real-time data updating:
Most data for tracking crude oil shipments are available in real-time. The problem is the information has to be entered manually into various systems, which can be a significant impediment with multiple steps required. Blockchain-based applications can create a digital paper trail that automatically updates in real time as data changes and is shared across a distributed network. With these real-time updates, processes such as document approvals and transaction monitoring will be transparent and specific.
Using blockchain can help create a typical supply chain standard (SCS), which can be maintained by people across all companies in the industry. This process can go a long way in reducing the cost associated with documentation, data input, and indexing.
The choice to use blockchain for standardization may come from the need for more trust among many oil companies today. It is possible to create a global network of suppliers that could share data and currency rather than creating proprietary systems that are not integrated with other companies.
Blockchain can offer enhanced transparency along the crude oil supply chain by assuring interested parties where and when assets have been located at different points in time. It can help improve trust and establish the provenance of assets throughout their lifecycle. For example, blockchain applications can connect physical assets at the point of origin to the point of sale, helping to minimize fraud and risk associated with ownership transfer. It can save time and cost for both buyers and sellers.
4. Value-added services:
Beyond improving standardization, trust, and transparency, blockchain also can add value by providing other services for oil companies, such as electronic bill of lading (eBL) services. EBL will significantly impact cost and transparency and may become a competitive advantage in the oil & gas industry.
The use of blockchain for crude oil tracking is still in its early stages. Therefore, its effectiveness will depend on collaboration between many organizations within the value chain. For example, it will require support from other industry players, such as producers, suppliers, and regulators, who will all have to work together to create the right environment to support the technology. Another challenge may be to convince regulators who have been resistant to change over time.
The technology has great promise, but there are also threats, such as cyber security threats against blockchain systems from hackers or organized crime gangs that may target high-value assets such as oil tankers or pipelines.
5. Financial Reconciliation:
As crude oil moves through the supply chain, financial accounting is critical to ensure that product is paid for at all times. Blockchain applications can provide a distributed ledger that provides a permanent record of all transactions and continuously reconciles each financial account. In addition, blockchain-enabled applications are being developed to act like digital coupons that people can collect and redeem for various products or services. The ability to use loyalty points may increase consumer acceptance of blockchain technology.
While not currently a focus of many companies, blockchain applications also have the potential to be used as digital identities, which will help increase trust between organizations in the value chain as well as customers and businesses.
Blockchain applications can provide new security features that make it more difficult to commit fraud and increase transparency. For example, third parties transactions could be verified using the blockchain, reducing identity theft and fraud. One of the main advantages of using blockchain technology is its ability to radically simplify cumbersome business processes between oil companies without sacrificing security or transparency.