by JP Buntinx
Embracing new and emerging technologies is a top priority for any industry looking to innovate. The oil and gas industry is keeping a close eye on what is happening in the world of distributed ledger technology. In fact, it appears these industries will use the technology underlying Bitcoin in the next 12 to 18 months. This development goes to show blockchain technology will continue to make strides in a range of vertical markets, including energy as well as finance and health.
To most people, the gas and oil industry remains one of the last remaining bulwarks of “old fashioned” business. While there have been some significant breakthroughs in innovation over the past few years, these sectors are not exactly known for their willingness to embrace new technologies from day one. That may seem rather strange, considering both of these commodities have a global appeal.
But things will be coming to change very soon, according to one of the world’s largest commodity traders. Given the number of basic and mundane processes taking place in the commodities sector, it is time to get rid of this archaic way of conducting business. Administrative paperwork associated with oil and gas can be simplified and digitized, but only by using secure technologies.
Marco Dunand, Chief Executive of Mercuria, explained it as follows:
“I don’t know if it is 17th or 18th century, but it’s not that sophisticated and … with today’s technology it seems to be easy to improve the efficiency of the system. I’ve seen sufficient bank presentations to believe the technology is there and it’s solid. And I believe we’re going to see a digital transformation of the oil and gas industry.”
As far as the advantages of a distributed ledger in the oil and gas industry go, the same selling points are rehashed. Blockchain can streamline all of the extracurricular processes associated with commodities, which will eventually lead to cost-cutting measures. To be more precise, Dunand expects this technology to shave off payments costs by as much as 30 percent. That number alone would make it well worth the time to explore what this technology has to offer to participants.
Implementing this technology would allow for the creation of permanent and public ledgers, containing records of all transactions taking place in the industry. In a way, this would replace more traditional clearing and settlement processes. Various other industries are exploring these benefits of distributed ledger technology as well right now.
It would be rather interesting to see the commodities market outpace the financial sector when it comes to embracing blockchain technology. Even though most of the world’s major banks are exploring what the technology has to offer, there is no “widespread adoption” to speak of just yet. At the same time, that shift in technology may come a lot sooner than some experts anticipate.
Even though it is exciting to think about blockchain technology in the energy sector, it is impossible to overhaul the entire industry at once. Deploying new technology standards requires multiple participants to get things rolling. Only time will tell how many players will decide to embrace this technology at an early stage.