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Abu Dhabi National Oil Company uses blockchain for inter-group network

The Abu Dhabi National Oil Company is using blockchain internally, with plans to expand it beyond the group boundaries

The Abu Dhabi National Oil Company (ADNOC) is using blockchain technology to increase transparency across its group companies, with plans to expand to its wider supply chain.

The state-owned oil company in Abu Dhabi has driven the United Arab Emirates economy since it was founded almost half a century ago.

ADNOC produces three million barrels of oil and processes billions of cubic feet of gas a day. The company is made up of 14 different companies involved in extracting oil and gas, as well as adding value to it.

Add to this the transportation, sales and marketing of oil and gas, and you have a large and complex organisation.

Abdul Nasser Al Mughairbi, head of digital at ADNOC, said the companies in the group are all separate profit centres that trade with each other.

“We are made up of 14 companies, and buy and sell products to and from each other on an hourly basis,” he said.

For example, the gas extraction company sells the gas to the petrochemicals company.

Hyperledger business blockchain framework

The company has invested in IBM’s Hyperledger business blockchain framework to create the internal network.

“Each of the group companies is a separate profit centre,” said Al Mughairbi. “Before, the transfer of products was done through the pipeline and the accounting was done manually through normal accounting processes.”

It’s now done on blockchain. “It’s now visible to everyone that needs to see it,” said Al Mughairbi. “It’s a distributed ledger – so it’s secure – and if you change something, everybody sees. Everyone in the group can do their accounting in real time and they all know exactly how much money they are getting.”

One of the benefits of using blockchain is it has created transparency. “We have shareholder companies including Total and BP,” he said.

And it plans to extend to its wider supply chain in the future. “We’ve been doing this internally for six months, and we’re hoping to make this bigger and even expand to customers with things such as smart contracts,” said Al Mughairbi.

“For us, this transparency de-risks investment. Traditionally, lawyers spend months discussing how they allocate products out of the refinery – but with blockchain, this negotiation takes a week and there are no longer middlemen doing accounting.”

The project is being run by Al Mughairbi’s department, which was established in 2017 to help ADNOC transform its operation through technologies such as blockchain and machine learning. This was instigated by a desire to keep pace with the oil and gas industry 4.0 revolution, where technologies such as the internet of things (IoT) and artificial intelligence (AI) are applied to the sector.

By 2025, public blockchain will provide a core interoperable foundation for global decentralised identity management, according to Gartner research.

In Gartner’s 2019 CIO agenda survey, 60% of CIOs said they expected some level of adoption of blockchain technologies in the next three years.

But while it offers many benefits, there’s still a lot to be done before blockchain technology becomes mainstream. Examples set by the likes of ADNOC, which is traditionally conservative when it comes to adopting the latest IT, will be closely watched by companies across sectors.

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