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IBM joins hands with a state-owned Abu Dhabi Oil Giant, ADNOC. They aspire to implement blockchain for value chain management to boost operational efficiency while cutting on costs.
The Abu Dhabi National Oil Company (ADNOC) joined IBM to pilot a much-anticipated supply chain system. The company made this announcement through a press release published on Dec. 9. ADNOC is a state-owned oil company operating in the United Arab Emirates. The company is also a world leader producing 10.5 cubic feet of natural gas and about 3 million barrels of oil daily.
According to the press release, the projected has successfully:
“Provided a single platform that tracks the quantities and financial values of each bilateral transaction between the involved companies automating the accounting process”
Abdul Nasser Al Mughairbi, the ADNOC Digital Unit Manager, made the project announcement recently in London. He was speaking at the World Energy Capital Assembly. Al Mughairbi illustrated his perception of the fundamental technology terming it as the first blockchain application in the oil and gas industry.
He said blockchain is a game-changer. It is set to significantly reduce the company’s operating costs through elimination of labor-intensive and time-consuming processes. The technology will strengthen the trading and marketing of ADNOC’s products simultaneously creating long-term sustainable values.
According to an IBM representative, Zahid Habib, the system will enhance the traceability of every oil molecule. Thus, the companies will determine the precise value of the oil from well to the consumer. Investors and customers will also have access to the data in future as reported by ArabianGazette. The transparency will eventually develop seamless integration among all stakeholders.
Benefits of the New System
There are other benefits that this system will bring to the operation of the company. According to the same press release:
“The system will reduce the time it takes to execute transactions between its operating companies and significantly increase operational efficiencies across its full value chain. It will also improve the reliability of production data by enabling greater transparency in transactions.”
The oil and gas sector is slowly embracing blockchain technology. Recently, there was a launch of a blockchain-based processing tool from VAKT in late November. The tool is designed for crude oil industry players including Shell, Equinor, Gunvor, BP, and Mercuria. The Abu Dhabi Global Market also successfully tested the blockchain-based system earlier in the week.
First Application Accounting
Although Microsoft replaced IBM as the biggest Blockchain-as-a-Service Platform, IBM has turned its attention to the oil sector. The ADNOC project is regarded as the first application of blockchain-based oil and gas accounting platform. The regular price fluctuations and limited capacity for the natural resources prompted the UAE government to seek sustainable solutions.
The announcement is definitely excellent news for the entire crypto industry. It also unlocks the potential to digitally reinvent the ADNOC’s state-owned hydrocarbon value chain. Moreover, it adds a unique dimension to the company’s data visualization in their state-of-the-art Panorama Digital Command Center. The system undisputedly accelerates ADNOC towards their vision 2030.