Blockchain has been the subject of much hype recently, with almost every industry proposing its use in various scenarios. From the financial industry to the public sector, blockchain seems to hold answers for many of the problems these industries face.
However, this eagerness to promote blockchain as a panacea for all multi-party transactions is also the very thing that could damage its long-term prospects. For many situations, blockchain could be overkill, and many multi-party scenarios can be tackled through conventional technologies such as cloud and distributed database.
Nonetheless, blockchain is a viable option for situations that require shared write access when the interests of the parties involved are not well aligned—for example, in the oil and gas industry. The oil and gas industry is characterized by heavy investment and cooperation among multiple parties, especially on the upstream side. Even midstream and downstream, however, there are often ownership changes, transactions, and information exchanges taking place across multiple companies. This is due to the inherent trading nature and bulk movement of various commodities comprising of gas, crude oil, refined products, and petrochemicals.
These characteristics make the industry a good candidate for blockchain, at least in those areas where there is a change of ownership, sharing of expenses, and multi-party collaboration. The industry’s stringent regulatory requirements and the need to share information with governmental bodies adds another dimension that makes distributed ledger technology like blockchain relevant.
Imagine a vault of oil barrels. The oil barrels are owned by ""Oil-owner Inc."" and the vault is owned by ""Vault Inc."" Vault Inc. has a spectacular reputation and third-party auditors who verify the amount of oil barrels in its vault.
Oil-owner Inc. could offer a digital token to the public that represents ownership of the oil barrels and through a smart contract with Vault Inc. maintain a public off-chain registry that relates fractional interest in the gold with the tokens. For every token sold, Oil-owner Inc. transfers ownership to Vault Inc., who holds it on behalf of the token owner. Vault Inc. guarantees redemption of the value price of oil barrels by anyone who can prove ownership through a digital signature.
Blockchain is a reliable, difficult to hack record of transactions and of who owns what. These transactions can be cryptocurrency, land records, financial transactions, contracts, or any data. In other words, it is a trustworthy ledger which maintains records.PermianChain tokenizes Oil to support Permian Token (XPR) related assets and operations. PermianChain will be used by upstream companies to fund their oil campaigns and by midstream companies to secure proven reserves via blockchain.