In a recent development, the Abu Dhabi National Oil Company (ADNOC) has partnered with IBM to develop a blockchain-based solution to track and manage commodity transactions in the supply chain, as revealed by the official press release published on December 9.
It is expected that the new platform will take care of every aspect in the supply chain right from the oil wells to the end customer. The differential factor which makes this project unique from other blockchain projects is the fact that it will focus on oil and gas lifecycle, while other industry projects have mostly focused on certain key parts like post-trade processes, and so on.
ADNOC is a state-owned company is the world’s 12th largest oil company by production, with over 55,000 employees. The company is the biggest company in the United Arab Emirates and produces more than 3 million barrels of oil per day.
This new blockchain-based system will help the company improve its efficiency and will reduce the transaction time between ADNOC operating companies. Another benefit of this distributed ledger is the fact that it is transparent, and ADNOC plans on using this to its advantage.
The state-owned company believes that the blockchain will address the loopholes in the system and will improve data reliability, by tracking, validating and executing every stage of the transactions. Also, as we’ve seen in all the cases of the applications of blockchain in supply chain transactions, it will reduce the execution time of transactions and increase operational efficiency across the value chain.
Reportedly, this project was first announced at the World Energy Capital Assembly held in London. During the event, Abdul Nasser Al Mughairbi, the Digital Unit Manager at ADNOC said,
“We believe this could be the first application of Blockchain in oil and gas production accounting anywhere in the world. Blockchain is a game-changer. It will substantially reduce our operating costs by eliminating time-consuming and labour-intensive processes, strengthen the marketing and trading of our products, and create long-term sustainable value.”
Talking about the project, the Vice President of Chemicals and Petroleum solution of IBM, Zahid Habib, says:
“With this pilot, ADNOC takes a massive leap forward in asset provenance and asset financials, which, in its simplest terms, enables the ability to track irrefutably, every molecule of oil, and its value, from well to customer.”
The increased use of blockchain in the supply chain
The love of oil giants towards blockchain seems to be unending. Shell and British Petroleum, last week, launched their blockchain-based oil trading platform. Called Vakt, the platform will eliminate the massive paperwork and will streamline the entire processes.
However, blockchain hasn’t been used only to track oil’s supply chain. In the food industry, we’ve covered IBM’s launch of ‘Food Trust’, Provenance’s goal to implement blockchain to track food and drinks, as well as the UK’s and South Korea’s initiative to track beef. For coffee lovers, there are even startups using blockchain to provide transparency to the coffee supply chain.
In the agricultural business, blockchain is helping modernise trade practices, and it is being used to track the shipment of almonds. We can’t deny that blockchain technology is affecting the supply chain, bringing transparency to customers and efficiency to the industry.