The Abu Dhabi National Oil Company (ADNOC) collaborated with IBM to pilot a blockchain-based automated system to integrate oil and gas production across the full value chain. It provides a secure platform for the tracking, validating and execution of transactions at every stage, from production well to the end customer.
ADNOC expects this technology to reduce the time it takes to execute transactions between ADNOC’s operating companies and says it will increase operational efficiency across its value chain. It will also enable greater transparency in transactions.
“Blockchain is a game-changer," said Abdul Nasser Al Mughairbi, ADNOC's digital unit manager. "It will substantially reduce our operating costs by eliminating time-consuming and labor-intensive processes, strengthen the marketing and trading of our products, and create long-term sustainable value that will ensure that ADNOC delivers on its 2030 smart growth strategy.”
The pilot developed a single platform to track the quantities and financial values of each bilateral transaction between ADNOC’s operating companies, automating the accounting process. For example, as crude oil makes its way from the production well to the refinery, or the export terminal, all quantities are accounted for on a daily basis along with the associated monetary values. Other products included in the blockchain application are gas, condensates, natural gas liquids and sulphur.
"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," said Zahid Habib, IBM's vice president of chemicals and petroleum solutions. "This unlocks the potential to digitally reinvent ADNOC's hydrocarbon value chain, adds a unique dimension to their data visualization in their Panorama Digital Command Center, and accelerates ADNOC towards their 2030 Vision."
The company plans to eventually link the platform to customers and investors. ADNOC noted in a press release that "enhanced clarity and transparency will reduce inherent business risks."
Blockchain is a shared ledger that can record transactions amongst a network efficiently and in a verifiable and permanent way. Information is stored in blocks and once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority. This allows the participants to verify and audit transactions independently and relatively inexpensively.
This follows the launch of blockchain-powered oil trading platform Vakt, which is backed by major oil companies including Shell and BP.