ADNOC digital unit manager Abdul Nasser al-Mughairbi announced the decision to use the technology while speaking at the World Energy Capital Assembly in London, UK.
Al-Mughairbi said: “We believe this could be the first application of blockchain in oil and gas production accounting anywhere in the world. It demonstrates how ADNOC is leveraging innovative partnerships to unleash the power of technology and creative thinking to enhance efficiencies and deliver greater performance.
“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 that will ensure that ADNOC delivers on its 2030 smart growth strategy.”
ADNOC’s 2030 strategy is intended to deliver increased growth and profitability across the business over the next 12 years, focussing on three areas; greater profitability upstream, greater value downstream, and a more sustainable and cost-efficient gas supply. As part of the strategy, ADNOC Drilling sold 5% of its shares to Baker Hughes to use it services to drive operational efficiency.
Not only does the blockchain technology provide a secure platform for tracking, validating and trading, but it also reduces transaction time, increases efficiency and improves the reliability of data recorded on production levels.
The application allows for the storage of data, which can only be altered with the consent of a network majority, and so all participants are involved in processes such as verifying and auditing transactions.
For example, it can automatically record how much crude oil is sent from the production well to the refinery or how much liquefied natural gas is exchanged between operating firms or exported to customers abroad, and at what price.
It can also track ADNOC’s performance in terms of its clean growth strategy.
IBM chemicals and petroleum solutions vice-president Zahid Habib said: “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.
“This unlocks the potential to digitally reinvent ADNOC’s hydrocarbon value chain, adds a unique dimension to their data visualisation in their Panorama Digital Command Center, and accelerates ADNOC towards their 2030 Vision.”
The blockchain for oil and gas operations will provide a stronger link between customers and investors, with the improved transparency vital for ensuring future business risks are mitigated.