Blockchain technology in the oil and gas industry: A review of applications, opportunities, challenges, and risks

Hongfang Lu, Kun Huang, Mohammadamin Azimi, Lijun Guo
2019 IEEE Access  
Blockchain technology has been developed for more than ten years and has become a trend in various industries. As the oil and gas industry is gradually shifting toward intelligence and digitalization, many large oil and gas companies were working on blockchain technology in the past two years because of it can significantly improve the management level, efficiency, and data security of the oil and gas industry. This paper aims to let more people in the oil and gas industry understand the
more » ... ain and lead more thinking about how to apply the blockchain technology. To the best of our knowledge, this is one of the earliest papers on the review of the blockchain system in the oil and gas industry. This paper first presents the relevant theories and core technologies of the blockchain, and then describes how the blockchain is applied to the oil and gas industry from four aspects: trading, management and decision making, supervision, and cyber security. Finally, the application status, the understanding level of the blockchain in the oil and gas industry, opportunities, challenges, and risks and development trends are analyzed. The main conclusions are as follows: 1) at present, Europe and Asia have the fastest pace of developing the application of blockchain in the oil and gas industry, but there are still few oil and gas blockchain projects in operation or testing worldwide; 2) nowadays, the understanding of blockchain in the oil and gas industry is not sufficiently enough, the application is still in the experimental stage, and the investment is not enough; and (3) blockchain can bring many opportunities to the oil and gas industry, such as reducing transaction costs and improving transparency and efficiency. However, since it is still in the early stage of the application, there are still many challenges, primarily technological, and regulatory and system transformation. The development of blockchains in the oil and gas industry will move toward hybrid blockchain architecture, multi-technology combination, cross-chain, hybrid consensus mechanisms, and more interdisciplinary professionals. INDEX TERMS Blockchain, oil and gas industry, smart contract, oil and gas trade, track equipment, supervision. The associate editor coordinating the review of this manuscript and approving it for publication was Tao Zhang. of 1.2% for three consecutive years, while the consumption of natural gas has increased by 96 billion cubic meters, reaching the fastest growth rate after 2010. However, according to "BP Energy Outlook 2019 edition" [2], although the world is vigorously promoting the development of new energy, oil and gas will still occupy half of the world's energy by 2040. Besides, the report also pointed out that with the continuous expansion of liquified natural gas (LNG) trade, LNG will account for 15% of total natural gas demand in 2040. Therefore, oil and natural gas will continue to dominate the global energy market in the next 20-30 years.
doi:10.1109/access.2019.2907695 fatcat:yjjcuvh2fzbyvns46r6k3ycgwi