Blockchain tech is revolutionizing a number of industries and creating massive change in economies worldwide. It offers advantages including security, digital automation, and significant cost reductions that will be sure to help relieve the Egyptian state’s budget. Pressure is being applied by many different stakeholders across oil and gas markets to cut costs and increase profits through employing a variety of different technological solutions, but none have been as effective as blockchain tech. Through effectively increasing transparency and automating processes within the production processes, blockchain can help streamline the oil and gas supply chain by enhancing operational efficiency, thereby helping to realize the nation’s ambition of becoming a major natural gas trading hub nestled within the focal points of three major global markets, Asia, Africa, and Europe.
Blockchain technology has brought transparency to physical commodity trading, enabling parties to monitor the supply chain and confirm the origin and quality of goods, thereby decreasing fraud and boosting confidence. Smart contracts have simplified trading procedures, speeding up trade settlement and lowering administrative costs. Yet, even with the unlimited potential that blockchain tech has to offer, some studies have pointed out the oil and gas industry has been lagging in its full integration into the sector’s operations.
“Despite blockchain’s potential to address existing security and privacy voids in the supply chain, there is a significant lack of practical implementation of blockchain integration in oil and gas operations. This deficiency substantially challenges the transition from conventional methods to a blockchain-centric approach,” it said in an article titled “Blockchain in Oil and Gas Supply Chain: A Literature Review from User Security and Privacy Perspective” written by Urvashi Kishnani, Srinidhi Madabhushi, and Sachari Das from the University of Denver.
With security being a top concern, cryptographic security guarantees safe transactions, which is especially advantageous for international trade. Moreover, it makes trade finance digitalization possible, expedites cross-border payments, and creates fractional ownership through asset tokenization, which opens up new investment prospects. In addition, through automating and enforcing terms, smart contracts simplify procedures and reduce conflict. By promoting dependability and accountability, blockchain technology makes the oil and gas industry more reliable and robust. This will help increase increases investment through building trust among the industry’s major stakeholders.
Blockchain has also been an important factor in mitigating the economic fallout of price fluctuations. “Blockchain Technology in the Oil and Gas Industry: A Review of Applications, Opportunities, Challenges, and Risks” by Hongfang Lu, Kun Huang, Mohammadamin Azimi, and Lijun Guo. “In the environment of oil price fluctuations, many oil and gas enterprises are facing tremendous pressure to reduce costs and improve productivity, to maintain an acceptable profit margin. In oil and gas trading, the traditional way makes the transaction inevitably produce errors, and the transaction is prone to fraud and compromise. Blockchain technology can solve the problem well. It can also make the transaction more transparent. Both sides of the transaction can view all the transaction records and evaluations of the other side, thereby improving the success rate of the transaction. In addition, both sides of the transaction can also see the specific situation of each stage in the transaction process, to be more able to control the overall situation.”
Some studies have also answered concerns about the energy consumption of blockchain technologies saying that “While [blockchain tech’s] energy consumption is, indeed, massive, particularly when compared to the number of transactions they can operate, we found that they do not pose a large threat to the climate.” This 2020 study titled “The Energy Consumption of Blockchain Technology Beyond Myth” written by Johannes Sedlmeir, Hans Ulrich Buhl, Gilbert Fridgen, as well as Robert Keller, also continues to highlight the unlimited potential these digital solutions have to offer.
In conclusion, Blockchain is a revolutionary technology that can expand and innovate further because of its transparent and auditable transaction history, which also helps with regulatory compliance. It can also significantly build trust in the oil and gas sector. It lowers the risk of fraud and increases efficiency by guaranteeing the safe and transparent recording of data, such as contracts and transactions. Businesses may collaborate with partners, regulators, and customers by sharing information with confidence.
