Petroteq Energy Inc. announced a co-development agreement with First Bitcoin Capital Corp. in which the companies will develop a new supply chain management platform based on advanced blockchain technology to be used in the global oil and gas industry. Per the agreement, Petroteq and First Bitcoin Capital will share industry experience and financial and technological resources with the intent to develop and operate an enterprise- grade, blockchain-based platform that will enable oil and gas companies globally to conduct transactions.

Technology executives in oil and gas companies can consider the following key areas in determining whether and how blockchain technology could be of benefit: Transparency and Compliance: Blockchain, by design, should enable greater transparency and efficiency. Sharing digital blockchain information in joint-operating agreements could reduce, if not eliminate, the need for reconciliations between companies and for data hubs controlled by third parties. This could completely disrupt the current processes for balloting partners on new projects, performing joint interest billing, and reporting production revenue.

Smart Contracts: The sheer size and volume of contracts and transactions necessary to execute capital projects in oil and gas have historically caused significant reconciliation and tracking issues among contractors, subcontractors, and suppliers. They also pose significant challenges in managing logistics for supplies, tracking costs, and deploying inventory. Using blockchain, however, companies could generate cascading purchase orders, change orders, receipts, and other trade-related documentation and data on inventory by following specific codified rules.

Drafting agreements that afford new tracking, bookkeeping, and automation methodologies could create a more efficient supply chain, improve capital project spend analytics, and simplify contractual obligations. Simply put, this potentially game-changing technology will provide knowledge of who gets paid how much, as well as insight into who along the chain is performing as explicitly mandated by agreements. Trading and Third-party Impacts: Blockchain technologies are beginning to disrupt and open energy trading markets.

Boundaries between asset classes could blur as cash, energy products, and other commodities become digital assets that trade interoperably. Blockchain-enabled applications can also address issues such as reduced brokers' fees; reducing fraud, error and otherwise compromised transactions; and limiting credit risk and transaction capital requirements. By trading physical commodities on a blockchain solution, commodity traders could benefit from increased speed of exchange, improved availability of data, and enhanced reliability and auditability as records are verified in near real-time.

Ultimately, this could result in minimizing transaction backlogs and overall costs.