The energy industry’s supply chain is both intricate and surprisingly opaque. Paper-based processes, phone calls, and emails remain the norm. The physical stamps and signatures that attend the chain of custody and inspection are difficult to track, and the validity of inspection documents can be hard to verify. Meanwhile, emerging manufacturing technologies like 3D printing are making it even easier for bad actors to sneak counterfeit assets into the energy supply chain, which poses risks to critical national infrastructure.

All of the major players in the energy supply chain — inspectors; engineering, procurement, and construction companies (EPCs); original equipment manufacturers (OEMs); and the owner/operators (OOs) who install and use the assets — want to achieve greater transparency and standardization. But industry-wide standardization has yet to emerge.

How can all energy supply chain stakeholders, who rely on each other and yet struggle to achieve complete trust and transparency, converge on a shared and mutually beneficial solution? The answer is blockchain: an immutable ledger that gives all stakeholders equal access to the chain of asset information. By leveraging blockchain to equip each asset with a unique digital passport, the industry will be able to track assets from cradle to grave and achieve new horizons of efficiency and security. 

Aligning Incentives with a Shared Blockchain

Today, most energy supply chain systems are company-specific solutions, implemented and maintained by OOs to track their own supply chains. These solutions have built equipment tracking on top of existing systems and processes rather than transforming the supply chain ecosystem itself. Buyers (EPCs), suppliers (OEMs), and inspectors find themselves utilizing multiple client systems, even though the underlying assets vary little between operators. Divergent requirements, trainings, processes, ways of working, accounts, and data systems — as well as uneven digitalization — are driving high overhead for all partners in the value chain.

Why are these solutions so siloed? It’s largely due to a lack of incentives to develop a shared solution. Supply chain stakeholders would struggle to trust each other as they collaborated on a shared solution, worried that each subsector would aim to skew the system toward its own needs. The desire for a more comprehensive shared solution is palpable, but each supply chain player anticipates endless negotiations and pilot projects that go nowhere.

Blockchain-based Digital Passports: A Revolution in the Energy Equipment Supply Chain

A shared blockchain solution managed by a third-party vendor, like Wipro Falcon, solves the incentive problem by ensuring that all stakeholders have an equal share in the data ecosystem. A blockchain-enabled digital passport (see above) can provide all stakeholders with access to identical data and ensure authenticity. It also allows the collective intelligence of the entire industry to push standardization and achieve new efficiencies. Controls and auditability improve while manual processes and the attendant risks of manual errors disappear. Among other capabilities, blockchain-based digital passports will contribute to: 

  • Procurement standardization: JIP33 aims to standardize industry-wide procurement specifications and enable safe, reliable, and competitive asset projects and operations across the globe. Digital passports represent an opportunity to drive adoption of emerging JIP33 standards.
  • Data standardization: Blockchain-based digital passports will drive adherence to the common data and information standards being developed by the IOGP’s DISC subcommittee.
  • Efficient data sharing: Digital passports solve numerous information handover problems. Digital passports can be aligned with Capital Facilities Information Handover Specification (CFIHOS) to ensure that data is shared efficiently, safely, and appropriately between operators, contractors, equipment manufacturers, and suppliers.
Furthermore, as all stakeholders invest in a shared ecosystem, the potential for advanced digitalization increases — as does the ability to identify counterfeit equipment and track bad actors.  
Tomorrow’s Energy Asset Ecosystem
Every industry today is fundamentally a data-driven partner ecosystem. Yes, partners sometimes engage in forceful negotiation over factors like price and quality, but at the end of the day, they end up sharing significant amounts of data as they coordinate activities and transactions. If aligned properly, a shared data ecosystem allows these partners to reduce costs and improve profitability not at the expense of others, but rather alongside them. The industry as a whole will benefit from higher efficiency, improved sustainability outcomes, and reputational gains.

As much as blockchain-based digital passports will advance the efficiency of oil and gas supply chains, they will also support new energy value streams. Wind and solar assets share similar procurement models and standards. As the energy transition ramps up, digitalization will be essentially to ensuring that capital-intensive clean energy projects proceed quickly and cost-effectively. At the same time, emerging sustainability parameters — like potential EU eco-design guidelines for asset re-use — will only make validation and verification more complicated. Digitalizing the energy asset supply chain is a necessity. Blockchain-led digital passports are the way forward. 

About the Authors

Prashant Mishra
Global Product Owner – Falcon
Managing Consultant, Downstream Oil & Gas, Wipro Consulting

Jorn Fokkens
Global Change, Value & Adoption Lead – Falcon
Managing Consultant, Talent & Change, Wipro Consulting