Major multinational oil companies can account for more than 100,000 suppliers to ensure these massive networks are supplied and operated smoothly. However, the issue with so many stakeholders is that it is nearly impossible for everyone to stay in sync without a digital solution.
The current model for managing records is inefficient for both manufacturer and customer, with duplication of information and data silos that lead to system errors. Blockchain-based networked systems can automate tasks such as monitoring and auditing while avoiding costly manual processes. For example, if a shipping container is lost or damaged, the database can be immediately updated to identify where it has been shipped; the person accountable should be able to access the details of when, where, and by whom it was shipped. So, if you are planning to start your Oil trading journey, you may use a reputable trading platform like Oil Profit
With the rise in frauds, particularly those related to identity theft, companies need a secure and transparent network to track vital information on each product. Blockchain technology can help in this regard as well. Products such as crude oil are often moved through many different hands before reaching their destination, so critical information may get lost along the way.
The oil industry is not alone in getting benefits from the blockchain:
According to the World Energy Council, the global oil and gas industry is worth over $6 trillion, and the industry is constantly looking for ways to increase efficiency. With the growing interest in blockchain and other distributed ledger technologies, it is only a matter of time before these systems become an integral part of the business.
Some industries that will benefit most include pharmaceuticals, vehicle manufacturing, agriculture, logistics, and government operations. The seamless blockchain system can help providers manage documentation processes while reducing costs associated with the fraud. Let’s discuss the reasons why the oil industry needs blockchain technology.
- Oil industry needs blockchain to automate the process:
The industry is highly distributed, and the challenges can be enormous to the point that, at times, it feels almost impossible to get everyone on the same page. Nevertheless, blockchain adoption can be beneficial for several reasons. For one thing, it can help reduce paperwork and eliminate costs associated with paper-based processes.
Companies often need to transmit critical information using fax machines or even overnight courier services, which are prone to error and delays. A shared network can also help streamline existing processes by eliminating redundant effort and automating manual activities.
Blockchain-based systems are ideal for automating tasks such as monitoring and auditing while avoiding costly manual processes. For example, every product has a unique identity through an identifier known as a serial number. Blockchain technology can also help identify counterfeits of certain products and produce reports of where each product was used, who received it, and at what stage the user completed the transaction.
- Oil industry needs blockchain to reduce costs:
Many companies have had to cut costs due to the falling oil prices in North America and Europe. Blockchain helps combat this trend by reducing costs while also increasing efficiency. If the system is efficiently distributed, it can eliminate redundant efforts and help bring down costs. In addition, the shared ledger technology can also reduce errors and increase transparency through smart contracts.
- Oil industry needs blockchain to improve document management:
Blockchain reduces costs while improving efficiency in several scenarios, such as document management. Many oil companies have stated that they are interested in implementing blockchain technology as it is cheaper and easier to scale. Documenting everything from the sale of raw materials to finished products, the ledger provides a permanent history of all data elements involved in a transaction.
- Oil industry needs blockchain for smart contracts:
People can use smart contracts to regulate transactions between stakeholders by enforcing specific clauses based on predetermined conditions. With smart contracts, all parties involved in the deal have control over what happens next instead of being dictated by the rules set by a centralized entity. As a result, it gives oil companies more control over their business while also allowing them to avoid fraud.
- Oil industry needs blockchain to fight piracy and other attacks:
Even though physical documents are easy to secure, there is still a need for a system that can guarantee the integrity of distributed data across the network. As long as a single node on the network is offline, there will be no way for anyone to access the data stored in the ledger. Blockchain can also prevent access to the network by malicious actors. Users can achieve it through a private key and a peer-to-peer configuration that ensures that no one knows where each part of the system’s data is stored.
- Oil industry needs blockchain for faster, more reliable transactions:
With today’s current transaction speeds and delays, blockchain technology will improve speed and reliability. In addition, with smart contracts, people involved in a transaction are assured of what will happen next. As a result, there is no need for third-party intermediaries between oil companies and their suppliers or customers.
