As emerging frontiers, especially digital ledger system also called blockchain become a more globally recognised solution, experts have called for frameworks that will enable Nigeria’s oil and gas sector to benefit from the innovation.
With a new $2.5million funding secured by US-based, Rocky Mountain Institute, from about 10 utility companies to support Energy Web Foundation (EWF), to extend the use of blockchain across the sector, stakeholders have said the transition of the financial technology in the petroleum industry remained unstoppable.
Blockchain, described as an open, distributed ledger that can record transactions between two parties efficiently, and in a verifiable and permanent way, provides a singular network, with a constantly increasing list of records that are referred to as “blocks”.
The technology, which reduces transaction costs by keeping a single logical copy of transaction records, would help the sector avoid the need for reconciliation and settlement, thereby a potential game-changer for the energy sector.
A report conducted by Deloitte, titled, “Is Blockchain’s Future in Oil and Gas Transformative or Transient?, discovered that the data-intensive opportunities available through the growth and expansion of the Internet of Things, could make blockchain an important vessel to carry the industry’s data transformation forward.
This is regardless of the fact that technology has had little impact on the oil and gas industry, providing a small frame of reference for oil executives to adequately assess its current and future value.
In the Nigerian scenario where transparency, accountability and efficiency are reportedly lacking, Deloitte expect Blockchain to offer “transactional verification instantly across a network, without relying on a central authority – potentially reducing operating costs, more securely storing and managing data, and improving the speed of transaction processing.”
“Blockchain could also lead to increasing database and trading efficiency, improving transparency and compliance, addressing cyber threats and even improving the supply chain, through more seamless contract management,” the report stated.
Experts quoted in the report, said the challenges development is posing to orthodox models across the world, required proactive measures to mitigate the impact of the trend, especially in Nigerian kind.
President, Chartered Institute of Bankers of Nigeria (CIBN) Prof. Segun Ajibola, said the capability of the trend to address issues bothering on the recurring cases of openness of data and accuracy as well as accountability in the Nigeria petroleum sector would be a welcome development.
“This goes beyond government. If international trades begin to recognise and adopt blockchain technology as a major means of international trade techniques, government will be helpless. It is not just about what government wants or does not want. It will be much of what the global economy is saying.
“A lot of issues that bother on transparency and accuracy of record, issues on honesty and sincerity in terms keeping records and open disclosure of what is happening in the oil and gas in Nigeria. Operators and regulators may not feel comfortable of the openness the technology will introduce. But it will override the interest of individual,” he said.
But for the system to work, Ajibola said: “We need a seamless, legal, institutional and operational framework. We need to recognise it in our payment system. We need to also invest in technology using our peculiarity. We need to appreciate the globally acceptable system coming from blockchain technology.
“Since the global payment system is embracing the technology, we need to start thinking about it in Nigeria.