Investment platforms are getting smarter and more efficient
Processes change and adapt. This can be a slow process, particularly in a mature sector such as oil and gas where approaches have been tested, adapted and finessed and suit the often divergent needs of buyers, sellers, third parties and regulators over many years. Once a decade or so, a new approach or technology comes along and completely changes the game. It looks likely that the blockchain could well be this generation’s gamechanger.
Half a century ago, investment was done on paper. Physical receipts ruled the investment process. Deals were negotiated, signed, recorded and archived. Having reliable postal services and courier companies were a hugely important part of the trading process.
Telex and later fax machines, mobile phones, desk-top computers and spreadsheets, the internet, wired and then mobile, tablets and shared documents have all changed the way that trading and investment is carried out.
The problem in the oil and gas sector is that some of the ways that things were done that made perfect sense ten, 20 or 30 years ago are still present in some of the bureaucratic processes. These activities tend to slow down the investment process. Sometimes the impact is tiny, but taken together, they can represent a significant reduction in the efficiency of the overall process.
There is so much focus on ensuring that every process in the oil and gas sector is as efficient as possible that finding ways to reduce the drag that these legacy processes can have is increasingly important.
…and how the blockchain can fix it
The blockchain represents a once in a generation opportunity to look at how things are done and discuss whether they could be done more efficiently.
For investment in the oil and gas sector, the blockchain represents several opportunities. Primarily it represents a chance to do away with any redundant processes that have accumulated over the years and ensure that the process of investing in oil and gas is as efficient as possible.
A second opportunity is that as the blockchain makes its presence felt across an array of other sectors, it will be possible to spread best practice in a way that hasn’t been possible in the past. The blockchain process could well make several financial markets more transparent and reduce some of the specifics of the investment process in for example foreign exchange, commodities and capital markets. This will make it far easier to share efficient processes between sectors.
How PermianChain will help
PermianChain is focused on playing a key role in this evolution. We have created a transparent investment platform that removes many of the broker and administrative processes and fees that have traditionally existed in the oil and gas sector. This will make it possible to attract new sources of liquidity from far smaller investors.
PermmianChain will also create entirely new investment opportunities by making it possible to invest in proved but not yet extracted oil and gas reserves. Participation in this part of the market has also been difficult in the past because of the challenges of creating a viable investible market, but the efficiency of the blockchain and the addition of smaller investors makes it possible to create a viable market. With an estimated 1.6 trillion barrels of oil reserves globally, there is a significant opportunity for a highly liquid new market that complements and augments the activities of the oil and gas sector.
Whenever a new technology or approach arises, for example from telex to fax to the internet, the pace of change depends on three factors: efficiency, opportunity and the cost of trade. We believe that the blockchain will have a clear and undeniable impact on all three factors and that the oil and gas sector will quickly embrace it. The sector’s current practices will soon seem as arcane as faxing a trade confirmation.
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.