- Blockchain technology may find widespread application in oil and gas industry
- Replacing intermediaries with blockchain technology
- Reducing transaction costs in oil and gas
Although most closely associated with bitcoin and cryptocurrencies, blockchain technology is finding its way into a wide range of industries and applications. Under development in fields as diverse as stock trading, land title registration, smart contracts, the sharing economy and supply chain logistics, the technology’s disruptive potential is being compared to that of the internet itself. As an example of the seismic shifts it may precipitate, a Forbes feature speculates on the reasons ‘Why Blockchain Could Kill Uber’ (http://ibn.fm/tITNB). Uber, the peer-to-peer ridesharing company, is perhaps the poster child for what has come to be called the sharing economy. Now, Petroteq Energy Inc. (OTCQX: PQEFF) (TSX.V: PQE) is out to take that sharing concept one step further, in the oil and gas industry, with its PetroBLOQ blockchain platform. Developed in collaboration with First Bitcoin Capital Corp., PetroBLOQ may reduce transaction costs in supply chain management by making many intermediaries in the industry redundant.
The sharing economy is best characterized by companies like Uber and Airbnb. Indeed, ‘uberization’ is now an accepted alternative term for the phenomenon, which is essentially the enabling of peers to transact with each other. However, the approach adopted by Uber and others is just one model under which peer-to-peer transacting is made possible. These companies erect a technological platform that allows two parties to contract, and, by doing so seamlessly, they appear almost invisible to the transactors. Nevertheless, they are intermediaries and must be compensated not only for the costly infrastructure that makes ‘sharing’ possible but also for the trust they bring to the system (Uber does background checks on its drivers).
By contrast, blockchain technology obviates the need for a trusted intermediary. Using it, parties can transact directly with each other by using verified procedures that are incorporated in the transaction details. The technology creates an incorruptible digital ledger of their transactions, the information on which then exists as a shared and continually reconciled database. Reconciliation takes place at 10-minute intervals, and each reconciled group of transactions becomes a ‘block’, which is distributed to all participants. Consequently, parties need depend only on the system to maintain the integrity of transactions rather than having to rely on a trusted person or organization to do so.
The oil and gas industry is one where blockchain technology may find widespread application. Its supply chain is global and spans an extensive network that includes domestic and international transportation, ordering, inventory management and control, materials handling, import and export facilitation, refining and information technology. The scale and complexity of this network makes it difficult to gather accurate information on a timely basis. However, with blockchain technology, transactions for product trades and transfers can be instantly verified across an entire global network without reliance on a central reconciling authority, potentially reducing operating costs, more securely storing and managing data, and speeding up the processing of transactions.
Petroteq is moving ahead quickly with its blockchain initiative. Late last year, it announced that it had joined the Enterprise Ethereum Alliance (“EEA”), the world’s largest open-source blockchain network (http://ibn.fm/8plc6). The EEA brings together over 500 enterprises and experts to discuss and develop the ethereum framework, currently the only blockchain running in real-world production that supports smart contracts, or programs that encode the terms of an agreement and are stored, replicated and supervised by a network of computers running a blockchain.
The company recently announced that Pemex, the Mexican state-owned petroleum company, has agreed to become the first member of the PetroBLOQ Global Blockchain Industry Consortium (http://ibn.fm/nw092). This stems, no doubt, from the promise offered by PetroBLOQ of improving efficiency, transparency and security in the oil and gas industry. The technology is expected to be the first blockchain-based platform developed exclusively for the supply chain needs of the oil and gas sector. At its deployment, PetroBLOQ users will enjoy cost and time savings, increased transparency and the ability to mitigate the constantly evolving geopolitical atmosphere and market fluctuations.
For more information, visit the company’s website at www.Petroteq.energy
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