How blockchain solves three challenges for the oil and gas industry Part three: Bureaucracy

There are three major challenges that face the oil and gas sector: efficiency, liquidity and bureaucracy. This is the final part of a series of three linked articles that has looked at these challenges in turn and explained how blockchain can help. In the first article we examined efficiency, in the second we discussed liquidity. We will now turn our attention to bureaucracy.


The oil and gas sector has been mired in overly complex administrative processes that have developed over decades. These are likely to have developed with the best of intentions but now they simply soak up money that could be used more efficiently elsewhere.

The good news is that the blockchain represents an excellent way for the oil and gas sector to strip out bureaucratic and administrative costs, making trades and internal processes quicker and more efficient without sacrificing security or reporting capabilities.

Combining oil, gas and efficiency

Blockchains offer the opportunity to create a live, tamper-resistant record of a process that can be accessed and updated by relevant individuals and organisations as appropriate. Because the information builds block on block, it is simple to see where data has been changed and confirm or query its validity.

This creates three significant cost-saving opportunities for the oil and gas sector.

Primarily, by creating a live record of data and information about an oil and gas project that can be accessed by organisations at every stage of a project, the flow of information from downstream through midstream and to upstream operations will be considerably faster. This will reduce several back-office costs from the simple such as re-keying, to the complex such as isolating and remedying holdups in a specific part of the process.

Secondly, it will also help organisations right across the sector manage their activities more efficiently because they will be able to see what stage a project is at and plan more efficiently for any hold-ups in the process. At the moment, the cost of unplanned delays can be magnified across the length of a project when resources have to be diverted at short notice (and usually the shorter the notice the higher the cost). In a more transparent world that has blockchain at its foundation, delays will be easier to spot and adapt to earlier in the process.

Finally, because of the way that tokenised, blockchain-based projects operate, the need for brokers and their associated costs will be significantly reduced. At the moment, while brokers often have considerable knowledge and relationships that can be very useful in attracting investment to a project, their fees can also be significant. A blockchain-based process means that projects can attract funding from a far wider pool of liquidity and potentially bring in a wider range of investors to compliment a potentially reduced number of major investors. Institutional investors would still be able to support a project, and the removal or significant reduction of broker fees would mean that they could do so at considerably lower transaction costs, but oil and gas projects could be significantly less reliant on their support.

Ultimately, the efficiency, liquidity and bureaucracy benefits are already available to oil and gas organisations through the PermianChain platform which has been designed to augment the way that firms across the oil and gas sector interact and trade. If you would like to find out more, get in touch with us through our social media channels.


PermianChain Technologies is a pioneer member of the Blockchain Research Institute. PermianChain is investigating ways to harness the power of blockchain technology, data science and artificial intelligence to digitize, tokenize and monetize proven but undeveloped natural resources, starting with oil and gas. The PermianChain, which already has secured oil and gas reserves to be listed on its platform, intends to unlock liquidity to revolutionise the way that oil and gas reserves are funded, produced, bought and sold on a permissioned-access blockchain. The firm is currently in the process of applying to for its regulated digital securities trading and investment platform.

PermianChain Technologies

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