UAE: The National Oil Company Wants To Secure Supplies Against Possible Iran’s Attack
Decentralized technologies are steadily entering the mining industry, which is not surprising - it is most subjected to technological and geopolitical risks. Similar experiments have already been announced by BP and Shell. The magic word “blockchain” long ago became one of the main PR-markers. Among the hundreds of projects where this concept appears in one way or another, only a few have practical meaning. And here is one of them: IBM, together with the Abu Dhabi National Oil Company (ADNOC), will test the blockchain platform for tracking offshore oil supplies. Will this help the commodity company to avoid financial losses both in their daily activities and in the case of force majeure circumstances?
It is easy to imagine the extent of the problem and the tasks set. 98% of cargoes in the world are transported by the ocean. At the same time, 85% of the oil produced in the UAE is also taken aboard on tankers, which move into different directions around the world. Numerically, the volumes look even more impressive: only through the Strait of Hormuz, connecting the Persian Gulf with the Indian Ocean, 18.5 million barrels of oil pass annually. This is 30% of the total world exports.
The route of a single tanker is not a direct line from the port of departure to the port of arrival. One of the main tasks of the ship crew is to minimize the risks of an accident or the spill of petroleum products. In bad weather conditions, the transportation speed can be significantly reduced. A ship sometimes has to enter protected harbors. Modern tankers are bigger and more complex than the most advanced warships. For example, the draft of the largest supertanker, Knock Nevis, is 24 m, and the length is 458 m, which is approximately 100 m more than that of the American Nimitz class attack aircraft carrier. The parking of such a ship costs several tens of thousands dollars per hour. In addition, there are risks of spills during loading and unloading of raw materials.
According to experts from IBM and the ADNOC management, the blockchain will help better control costs and avoid transportation expenses. The head of the digital technology department at the oil company, Abdul Nasser Al Mugayrbi, while speaking at the conference of energy companies in London, noted that the blockchain would change working conditions, help reduce costs, and optimize trading conditions. In turn, the IBM spokesman Zahid Habib said without missing a beat that the service would be able to track "every molecule of oil”.
But if we move from emotions to pragmatics, the purpose of the blockchain platform may be different. The situation in the Persian Gulf is becoming more complicated, if not every day, then every month. The confrontation between Saudi Arabia and Iran in this oil-bearing region has already passed into the hot-tempered phase and no one can guarantee that tomorrow the Islamic Republic will not block the Strait of Hormuz, and then, of course, the blockchain will not save anyone. The three million barrels of oil produced by the company from Abu Dhabi may still remain in above-surface storage facilities if it is not possible to use an alternative route by means of the pipeline through Saudi Arabia to the ports on the Red Sea. Commodity hubs also belong to the kingdom, and here, the blockchain really comes in handy to take into account supply volumes and distinguish the Saudi oil from the oil from the United Arab Emirates and other countries that want to use the alternative route.
The experience of recent decades has shown demonstratively that one must begin to take care of the security of supplies before the force majeure circumstances occur. The future will show whether the decentralized ledger will affect the price of oil on the world market, but one thing can be said right now - it will secure supplies to a certain extent. Not like the American aircraft carrier, but still appreciably.
Another note is that digital technologies became an instrument of the geopolitical struggle long ago. The traditional and the crypto economy are moving closer to each other. Perhaps not in the way the crypto-enthusiasts supporting the new world and the new society would like, but the adoption process is in progress, as a technology becomes popular when it solves the security problem.