|By Anthony Butler, chief technology officer at IBM Blockchain Services, Middle East and Africa|
In these early discussions, they together realised that there was immense potential to drive efficiencies in the accounting of the flow of hydrocarbons and associate transactions between Adnoc’s various operating companies throughout the oil and gas value chain. Blockchain, as a distributed technology with specific technical characteristics, was well suited to the task.
As a complex organisation, Adnoc has multiple operating companies responsible for different parts of its hydrocarbon value chain. Each company has its own structure, systems, shareholders and role in the hydrocarbon journey, as crude oil, gas or refined products and petrochemicals flow through these entities en route to their final destination, whether for export or domestic use.
By creating a blockchain spanning these different companies, Adnoc receives a group-wide view of the flow of these hydrocarbon quantities and the associate large financial transactions, enabling efficiencies in accounting. Furthermore, the individual operating companies, as well as others with a share or interest in them, can base decisions on an immutable record that they can trust.
At present, the application is focused on a specific subset of Adnoc’s supply chain, which given its daily production of about 3.1 million barrels a day, is large.
IBM tracks the onshore production operations through to the refineries or gas processing, and then on to the export terminal. Each participant in the supply chain provides data on quantities exchanged and this is recorded to the ledger.
Tracking, managing and executing these transactions and exchanges used to be a long, labour-intensive process with phone calls, emails, verification and approvals.
Not only is the process now much more efficient and streamlined, but the blockchain can be visualised in such a way that the group receives a holistic view of the interrelationships. The individual operating companies gain their own perspective—for example, seeing the quantities entering and leaving their company en route to the next stage of the process.
Since the blockchain application is being installed within the Adnoc group, it is running within the context of its existing robust cybersecurity policies and IT infrastructure. It did not require anything different to be done from an IT or cybersecurity perspective.
IBM worked closely with Adnoc’s digital and IT teams throughout the process of designing and building the application. Adnoc helped co-create the solution with IBM and was involved from the beginning. The actual end-users or sponsor users were also involved and had the opportunity to shape the development of the system. This ensured that the application caters to their needs and they are comfortable with the way data is being collected and visualised. In doing so, there has been no need to train people on the specifics of the application.
The blockchain application will be managed and further developed by an internal team at Adnoc.
Blockchain is a proof of concept that covers three large, core areas of the value chain. Adnoc had a hypothesis that this could deliver value and IBM worked with the company to help prove it. As the blockchain application is expanded, it will eventually be linked to customers and investors, providing seamless integration among stakeholders. This enhanced clarity and transparency will reduce inherent business risks and consequently enhance the attractiveness of Adnoc Group as an investment partner.
This article is extracted from a report produced by MEED and Mashreq titled Disrupting Oil & Gas. Click here to download the report
To know more about the MEED Mashreq Partnership, get in touch with us at MEEDMashreqPartnership@meed.com or find more info on www.meedmashreqconstructionhub.com