A HUNDRED years ago, in 1925, the world produced just over 500 million tons of oil per year. Today that number exceeds 4.3 billion tons. Natural gas consumption has grown even faster, from 200 billion cubic meters to over 4 trillion.
As extraction and consumption volumes have grown, the industry has become increasingly influential and profitable. And with that comes a greater need for transparency in distribution, transactions, and social responsibility.
Modern energy operates in a world where every ton of raw material, every deal, and even every gram of CO? must be backed by data. From environmental pressure to political turbulence, the oil and gas market works under a microscope. Companies are forced to report who they sold oil to, how it was transported, how many emissions accompanied production. This affects political relations, public reaction, and even pricing.
In a game with dozens of intermediaries and millions of documents, any mistake or forgery can cost millions. Traditional databases can’t handle this level of complexity. The industry needs a way to record information quickly, more securely, and with minimal human error. And not too long ago, the sector found this through blockchain.
So its emergence became an answer to the needs of the time. When the market grows and demands for transparency increase, the tools change too.
Beyond Crypto: Real-World Blockchain Use Cases in Oil and Gas
Blockchain is usually associated with cryptocurrencies and toys for crypto enthusiasts. But it expands possibilities much further. Today it’s about flawless business transparency, not just bitcoin. In such a complex and conservative niche as energy, this means tracking from the moment oil leaves the ground to when it ends up in a tank or gas pump, where each step can be recorded on the blockchain. This eliminates all doubts and provides absolute transparency in raw material logistics.
- Track & Trace: For example, companies use blockchain to track the origin of raw materials. This isn’t just about logistics, but also security. In some regions like Nigeria or Mexico, startups are creating blockchain-based systems that prevent oil theft during transportation.
- Smart contracts: Agreements that execute automatically when conditions are met. For example, as soon as a tanker with raw materials arrives at port, the system automatically initiates payment. No paperwork, no human delays, just code, data, and instant results.
- Environmental Monitoring: Blockchain also helps record CO? emission levels and track the origin of “clean” energy. This is important for ESG reporting and green certificates, which investors only trust when the data can’t be forged.
Some giants have been testing these solutions for a while now. Shell uses the Vakt platform to digitize trading, BP works with Komgo to automate financial operations, and Equinor applies blockchain for transportation contract control. All these cases prove that blockchain has become a real driver of efficiency. You can read more about how such solutions are integrated into processes on the websites of technology partners of the aforementioned companies and software developers for oil and gas (for example: https://dxc.com/industries/energy/oil-gas).
Smart Contracts: The Digital Referees of Energy Deals
Let’s break down a situation where an oil tanker just docked at port, the cargo passed quality control, and the contract signed itself. No correspondence, no lawyers, no human factor. This is exactly how smart contracts work: digital arbiters that automatically execute deal terms if all criteria are met.
In the world of oil and gas, where one deal can stretch to hundreds of pages, this is a real revolution. A mistake in a document or payment delay can lead to million-dollar losses. Smart contracts minimize such risks: they record terms in the blockchain, verify execution automatically, and eliminate manipulation.
It’s interesting to think if similar technology had existed earlier. For example, in 1973 during the oil crisis, governments and companies lost millions due to panic, fake contracts, and speculation on paper documents. Smart contracts that execute only after actual delivery could have reduced these risks and stabilized the market. But well…
Today such systems integrate with ERP solutions and risk management platforms. This allows companies to combine financial data, logistics, and quality control into a single ecosystem. Leading IT companies are the first to develop such integrations: DXC Technology, SAP, Oracle, IBM, Accenture, Infosys, Tata Consultancy Services, Cognizant, and Capgemini.
All this is gradually transforming an industry where paper agreements and manual checks once ruled into a digital environment where data is the most honest intermediary. By the way, this trend will inevitably roll into other niches. It’s just that such huge and influential businesses are usually the first to integrate such global solutions, because here the cost of error is enormous like nowhere else.
Supply Chain Transparency: From Rig to Retail
In the classic definition, supply chain transparency is the ability to see, control, and verify all stages of the supply chain. In energy, this means every barrel of oil or cubic meter of gas has a digital “passport” accessible to all market participants.
Blockchain in this system acts like “Google Docs” for the supply chain: everyone sees the same version of the truth. This minimizes disputes, speeds up audits, and creates trust between traders, suppliers, and government structures.
When IoT sensors are added to the chain, the system becomes even more powerful. For example, sensors on oil containers or LNG trailers automatically record temperature, volume, location, and add this data to the blockchain. If a container is delayed or pressure changes, the information is instantly updated for all participants.
Such solutions are especially valuable in conditions of political instability or logistics failures. In situations where routes change or documents can be forged, blockchain guarantees that data remains unchanged and verified.
For companies, this isn’t just a matter of control, but a competitive advantage. Partners are more willing to cooperate when they know the supply chain is transparent and the information is reliable. In the end, in a world where speed and trust determine success, blockchain becomes that very “gold standard of transparency” that everyone looks to.
ESG, Green Energy, and the Blockchain Link
Today energy companies, besides extraction and distribution, must prove they do it responsibly. ESG (Environmental, Social, and Governance) requirements cover environmental standards, ethical management, and social transparency. The EU has Sustainable Finance Disclosure Regulation (SFDR) and Corporate Sustainability Reporting Directive (CSRD), the US has SEC Climate Disclosure Rules, and Asia has its own regional standards.
And blockchain was able to optimize this too. It creates a system where energy origin, emission levels, and efficiency are recorded in an immutable digital registry. Companies can show investors exact figures: when and how much energy was produced, where it came from, what its carbon footprint is.
Examples already exist. Energy Web Foundation creates a blockchain network for tracking green certificates, and Power Ledger allows households to trade surpluses from solar panels without intermediaries. All this forms a transparent energy market where “green” electricity can be proven documentally, not just claimed in a press release.
Essentially, blockchain becomes a green audit tool: it records who, when, and how much energy consumed, what emissions accompanied production, and whether the company really fulfills its environmental obligations.
When ESG became a requirement of investors and regulators, companies that already integrate blockchain into their reporting processes gain trust from the market and a competitive advantage in the “green race” for capital.
Challenges on the Horizon: Costs, Regulations, and Adoption
Despite all the advantages, blockchain in the oil and gas industry isn’t a magic “optimize” button. Many companies are still not ready to implement it fully. There are several reasons, and they’re more or less objective and understandable:
- First, integration is complex: old IT systems, dozens of internal databases, different data formats. Connecting this with blockchain is like trying to plug a Tesla into a 1960s outlet.
- Second, cost. Developing and maintaining private blockchain networks requires investments in servers, cybersecurity, and personnel training. Not every market player is ready for this at the start.
- And third, a shortage of specialists. Blockchain engineers with industry experience are still worth their weight in gold. And finding a contractor who can effectively integrate blockchain in such a complex niche is quite difficult.
But the situation is gradually changing. Companies are joining industry consortia and creating common standards: this makes it easier to avoid process duplication and increase trust among participants. Partnerships with IT giants are developing, including DXC Technology, IBM, Microsoft, Accenture, Schlumberger, and Amazon Web Services. They provide cloud platforms, APIs, and ready-made modules that lower entry barriers.
The optimal path is to start with a pilot project. For example, tracking the origin of one oil batch or automating a single contract. Then scaling to logistics, finance, audit. Such a step-by-step approach allows testing efficiency without big risks.
Blockchain Roadmap for Oil & Gas Companies
Below is a practical action plan to go from idea to scaling with minimal risks. The focus here is on realistic steps and control points you’ll need at each stage. I’m not giving exact timelines (they depend on scale and resources), but each step is a separate checkpoint for “go / no-go.”
0) Preparatory stage: clearly define the pilot goal
- Define one clear business goal. For example: “automating payment for delivery through a smart contract.”
- Form KPIs. Examples: % reduction in delivery confirmation time, cost savings on audits.
- Choose pilot scale. One section / one route / one counterparty pair to minimize complexity.
1) Creating a working group and stakeholders
- Assemble core team: business owner, PM, tech lead, DevOps, architect, legal department representative, security lead, operations/logistics representative.
- Assign external partners: integrator/system integrator, blockchain platform provider, IoT provider (if sensors needed).
2) Architecture and technology selection
- Choose blockchain type: public/private/permissioned (often permissioned for enterprise: Hyperledger Fabric, Corda, or private Ethereum networks).
- Integration with existing systems: ERP (SAP, Oracle), TMS, WMS, quality control systems, finance. Define integration points and data format (EDIFACT, XML, API).
- If there’s IoT: choose sensors and gateways, data transmission plan to blockchain (through middleware).
- Security and identification: PKI, key management, roles/rights in network.
- Develop proof-of-concept (PoC) architecture: diagram with components and data flows.
3) Legal and regulatory checks
- Assess legal force of digital records and smart contracts in participants’ jurisdictions.
- Check data privacy issues (which data is public, which is hidden).
- Agree on SLA and data processing terms with counterparties.
- Obtain “preliminary approvals” from internal compliance/regional departments if needed.
4) Pilot development (PoC ? pilot)
- PoC (proof of concept): make “minimum viable part,” for example, recording tanker arrival event in blockchain + smart contract trigger. Check interfaces.
- Document processes: instructions for operators, checklists for checks.
5) Pilot launch and operational testing
- Soft launch: one or several real trips/batches under close supervision.
- Go/No-Go assessment: compare results with KPIs, make decision about expansion, corrections, or stopping.
6) Scaling (phased rollout) Plan phased expansion:
- Phase A: additional routes/batches
- Phase B: integration with finance / automatic settlements
- Phase C: audit/regulatory reports
- Phase D: tokenization or marketplace (if needed)
Conclusions: Blockchain Trends in the Oil and Gas Industry
Blockchain in the oil and gas industry is a logical step toward transparency, automation, and trust. What once required months of checks and hundreds of documents can now happen in minutes without intermediaries. The main trends are already clearly emerging:
- Integration with AI and IoT, so data from sensors and forecasts is immediately recorded in the blockchain.
- Tokenization of resources, when a barrel of oil or megawatt of energy becomes a digital asset that can be traded.
- Enhanced cybersecurity, as blockchain forms an immutable, attack-resistant data system.
Major technology partners, as well as Shell, BP, Equinor, Chevron, TotalEnergies, and Saudi Aramco, are already creating or testing their own blockchain solutions. For some it’s a path to faster deals, for others to real environmental transparency.
Oil will continue to move the world, but trust is what holds it together. And blockchain is becoming the mechanism that ensures that trust.
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