Oil and gas is definitely one of the world’s most complex sectors due to its vast supply lines that cuts through almost all borders and jurisdictions. It is also labour intensive as it requires expertise from a range of disciplines. These expertise reaches as far as geology, chemistry, mathematics, technology, trading and logistics, to name a few. Not many industries are as large scale or as complex as natural resources like oil and gas. The amount of paperwork involved at every level of a contract for as little as a barrel of oil or a small volume of gas are very significant. Delays at any juncture of the supply chain will have knock-on effects at every level, all the way up and down. This then results in the industry keeping extensive storage facilities to always have a consistent supply despite the hold-ups.
The sheer size and complexity is another reason for the sector to be resistant to major changes. The sector has been developed in such a way that any changes to the system needs to be implemented in a measured and careful manner that considers the needs of all other parts of the supply and value chain. Disruptions will have serious consequences far beyond the oil and gas sector only. Complexity would only add cost to the oil and gas industry. This is not welcomed especially at a time when investors and consumers have options to investment alternatives.
Tokenisation can potentially offer an opportunity to reduce complexity and bureaucracy and enhance transparency and speed in this sector. This will significantly bring down costs and only benefit everyone on the chain. Tokenisation of an oil or gas contract could be done without much of a significant investment as blockchain technology already exists and could be implemented at low cost to enhance efficiency across the entire supply chain.