A Project Synopsis

On

“Investigating the adoption of blockchain technology in supply chain

management for oil and gas industry.”

In partial fulfilment of the requirements of the course

MBA Oil and Gas Management

Submitted By

Mr. Arijeet Pattnaik

Mr. Athul Ravi
Mr. Pulkit Bhaskar
Miss. Sakshi Pandey
Mr. Sahil Pandey

Under the Guidance of

Dr. Prashant Kumar Chaurasia

(LECT. in School of Business.)
UPES, Knowledge Acres, PO Bidholi, Vill.
Kandoli, Dehradun-248007
(Uttarakhand), India.

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Abstract:
The oil and gas (O&G) industry grapples with complex supply chains often plagued by
inefficiencies, opacity, and fraud. Blockchain technology, with its promise of enhanced
transparency, security, and traceability, emerges as a potential game-changer. This synopsis
delves into the current state of blockchain adoption within O&G supply chains, drawing upon
insights from leading consultancies like EY, Deloitte, and PwC. It highlights key research
findings, identifies gaps, and formulates research questions to guide future exploration.

Introduction:
The O&G industry demands seamless collaboration across diverse stakeholders – from
exploration and production companies to refineries, distributors, and retailers. However,
fragmented information flow, manual processes, and reliance on intermediaries’ breed
inefficiencies, inaccuracies, and vulnerability to fraud. In 2022, global fraud losses in the O&G
sector surpassed USD 40 billion, underlining the urgent need for secure and transparent
solutions. The oil and gas industry faces complex supply chains involving numerous
stakeholders, intricate processes, and significant risks. Ensuring transparency, traceability, and
efficiency throughout these chains is crucial. Blockchain technology, with its immutable data
records, secure transactions, and smart contracts, holds immense promise for revolutionizing oil
and gas SCM.

Literature Review:
Several studies have delved into the potential applications of blockchain in oil and gas SCM.
Some key benefits identified include:
• Enhanced Transparency: Blockchain can provide an immutable record of every
transaction, making the flow of goods and materials from source to consumption
transparent and verifiable. This fosters trust and reduces opportunities for fraud or errors.
• Improved Traceability: The technology facilitates detailed tracking of assets and
processes at each stage, offering real-time insights into product provenance, quality, and
compliance with regulations.
• Streamlined Payments: Smart contracts automate payments based on defined
conditions, eliminating delays and simplifying financial transactions.
• Optimized Logistics: Blockchain enables efficient coordination among shipping
partners, optimizing transportation routes and reducing logistical costs.
• Increased Efficiency: Automating manual processes and eliminating intermediaries can
streamline operations and boost overall efficiency.

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Surveys,
• EY Global Blockchain Survey 2021: 59% of O&G respondents reported actively
pursuing blockchain pilots or implementations, demonstrating significant industry
interest.
• Deloitte Future of Energy (2022): Blockchain's potential is recognized in improving
fuel provenance, streamlining emissions tracking, and facilitating carbon trading.
• PwC Blockchain for Oil & Gas (2020): Studies estimate blockchain could generate an
economic impact of USD 1.7 trillion for the O&G industry by 2030.

However, challenges hinder widespread adoption:

• Regulatory Uncertainty: The lack of clear regulations regarding blockchain use in the
oil and gas industry creates uncertainty and reluctance from companies to invest heavily.
• Technical Immaturity: While the technology is evolving rapidly, scalability and
interoperability concerns persist, especially with the complex and diverse IT systems in
existing oil and gas operations.
• High Costs: Implementing and integrating blockchain requires significant investments in
infrastructure, training, and expertise.
• Lack of Standardization: The absence of standardized protocols and data formats across
the industry creates integration challenges.
• Change Management: Shifting to blockchain-based solutions requires organizational
culture changes and overcoming resistance from stakeholders accustomed to traditional
practices.

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Research Gap:
While considerable research explores blockchain's theoretical benefits, there's a dearth of
comprehensive studies analyzing actual adoption rates, tangible impacts, and key challenges
faced by O&G companies:
• Limited Empirical Studies: While theoretical insights abound, there is a scarcity of
empirical studies validating the claimed benefits of blockchain in real-world oil and gas
SCM applications.
• Focus on Specific Use Cases: Most research focuses on individual areas like provenance
tracking or payments, neglecting a holistic understanding of how blockchain can
transform the entire oil and gas supply chain ecosystem.
• Cost-Benefit Analysis: Comprehensive studies analyzing the cost-benefit trade-off of
blockchain adoption in various oil and gas SCM scenarios are scarce.
• Addressing Regulatory Uncertainty: Research exploring potential regulatory
frameworks and their impact on blockchain adoption in the oil and gas industry is
lacking.

Research Problem:
The slow and uneven adoption of blockchain in O&G supply chains necessitates investigating
the underlying factors impeding broader implementation.

Research Question:
To what extent can blockchain technology improve transparency, traceability, efficiency, and
overall performance in oil and gas supply chain management, considering the existing challenges
and research gaps?

Research Objective:
This research aims to:
• Assess the potential benefits and challenges of blockchain adoption in oil and gas SCM
through a comprehensive literature review and case studies.
• Identify key research gaps and propose future research directions.
• Develop a cost-benefit analysis framework to evaluate the economic feasibility of
blockchain adoption in various oil and gas SCM scenarios.
• Explore potential regulatory frameworks that can facilitate widespread adoption while
ensuring security and compliance.

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 • Analyzing quantitative data from leading consultancies to assess the current state of
blockchain adoption in O&G supply chains.

• Formulating recommendations for overcoming barriers and accelerating blockchain

implementation in the O&G sector.

Methodology:
This research will employ a mixed-method approach, combining quantitative analysis of data
from consultancies like EY, Deloitte, and PwC with qualitative studies involving:
• Semi-structured interviews with industry experts and practitioners.
• Case studies of successful blockchain implementations in O&G supply chains.
• Literature Review: A systematic review of existing academic literature, industry reports,
and white papers to understand the current state of knowledge and identify research gaps.
• Case Studies: An investigation of real-world examples of blockchain adoption in oil and
gas SCM to assess its practical impact and challenges faced.
• Cost-Benefit Analysis: Development of a framework to evaluate the economic feasibility
of blockchain adoption based on costs, benefits, and ROI for different SCM scenarios.
• Expert Interviews: Interviews with industry experts and academic researchers to gain
insights and perspectives on potential regulatory frameworks and future trends.

Blockchain: A Primer:
1. Blockchain is a distributed ledger technology (DLT) that securely stores data in a
decentralized, tamper-proof manner across a network of computers.
2. Each transaction is recorded as a "block" and linked to the previous block, creating an
immutable chain of record.
3. This decentralized network eliminates the need for a central authority, fostering trust and
transparency.

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Conclusion:
This research aims to contribute to a deeper understanding of the potential and challenges
associated with blockchain adoption in oil and gas SCM. By addressing research gaps and
proposing solutions, it can guide oil and gas companies in evaluating the feasibility and value
proposition of this transformative technology. Ultimately, this research contributes to creating a
more transparent, efficient, and resilient oil and gas supply chain ecosystem.

References:
Blockchain Technology for Oil and Gas: Implications and Adoption Framework Using Agile and Lean
Supply Chains Javed Aslam 1 , Aqeela Saleem 1 , Nokhaiz Tariq Khan 2 and Yun Bae Kim 1,*
ADOPTION OF BLOCK CHAIN TECHNOLOGY IN SUPPLY CHAIN MANAGEMENT by Abhiraj
Kumar Saha, Abhijit Chirputka.
EY Global Blockchain Survey 2021 EY announces the fourth generation of EY Blockchain Analyzer:
Reconciler with new features for blockchain and cryptocurrency audit services | EY - Global
Deloitte Future of Energy (2022) Deloitte's 2021 Global Blockchain Survey | Deloitte Insights
PwC Blockchain for Oil & Gas (2020) Digital operations study for oil and gas | Strategy& (pwc.com)