Block Chain and Smart Contacts for Transparency in Oil and Gas Transactions

Purpose: This paper assessed the potential of blockchain and smart contracts to enhance transparency, decrease costs, and improve legislative compliance within the oil and gas sector. The study aimed at elucidating the notion of ledger decentralization to improve record permanence and prevent data modification. Methodology: The research employed secondary or desk-based research to examine the role of blockchain and smart contracts in addressing compliance, fraud prevention, and cost reduction within the oil and gas sector. The literature analysis indicates that desktop research involves using the resources of others, including their financial contributions, time, and effort, without incorporating insights from primary research conducted via surveys within the target community, and thus, it is cost effective, speed, and capacity for extensive data collection. Findings: The study demonstrated that blockchain enables the following through its characteristics: data immutability, time-stamping, and the irreversibility of transactions. Payments and compensation for a certain smart contract are executed automatically, requiring minimal time and devoid of external intervention. Nonetheless, there are some limits to the comprehensive implementation: elevated costs, legal system challenges, and infrastructure deficiencies. The study also revealed that issues arise from comprehensive compliance solutions that are unsuitable for blockchain; therefore, existing compliance models should be integrated with blockchain. Unique Contribution to Theory, Practice, and Policy: Consequently, it is recommended that governments legitimize blockchain transactions and smart contracts to enhance their implementation. Governments must deploy and cultivate both technical and human capital in the blockchain sector to address these deficiencies. Therefore, to conduct operations and mitigate fraud, the oil industry could implement decentralized ledger operational models in conjunction with current compliance solutions, as hybrid models. To address these vulnerabilities while enhancing the strengths of sustainability, efficiency, and transparency in its promotion, enterprises could implement energy-efficient blockchain technology.