Blockchains are free from regular chain/dependence on public and private financial institutions. Blockchain is another digital disruptor that would improve efficiency and performance in Oil & Gas Industry. Some of the ways in which Blockchains could further boost productivity and reduce cost in Upstream are:
Seamless Ownership - Blockchains can simplify Joint Interest Billing by providing an undisputable public ledger accessible to all Owners including Division of Interest, Division Order – creation and maintenance of ownership records used to value sales revenue for all owners of record. Blockchains can also simplify prior period notifications for changes that impact both Valuation and Contract Allocation processes, including automatic updates of marketing group changes, when necessary.
Seamless transaction without intermediaries – Revenue Distribution, in Oil & Gas Industry, has lot of dependencies on intermediaries & third parties. Revenue Distribution allocates total volume, value, marketing deductions & taxes to all owners in the Division Of Interest. It also generates accounting distributions, and maintains payment history. The process has many steps with interdependencies which can lead to inefficiency & losses. Blockchains can combine/do away with following steps
- Creating Bank files for fund transfer
- Check printing to Owners
- Third part tool for Accounts Payable Outbound, which takes input from check write file and publish it on web.
- The functionality & configuration of Check write
Seamless self-manage – Though digitalisation of the accounting system is still in its infancy stage, Oil & Gas Industry can benefit as Blockchains can enhance today’s accounting practice by doing away with the practice of keeping separate records by creating an interlocking system of enduring accounting records. Blockchains can help Tax & Royalty transactions within the industry since they consist of network of applications suited for the requirements which can adjust seamlessly for Revenue Distribution/Disbursement & allocate revenue to the Interest Owner level using appropriate Journal Entries