The Potentials of Material Digital Passports in the Oil & Gas Industry (MDP)

With increasing global regulations, including European Union directives focused on transparency and sustainability, the demand for Digital Passports is on the rise. The adoption of Digital Product Passports (DPP) in various industries, including fashion and electronics, has set a benchmark for traceability and sustainability, and the oil and gas sector is poised to follow suit.

Fraud and inefficiencies threaten the profitability and reputation of oil and gas companies. To mitigate these risks, businesses are turning to innovative solutions like Material Digital Passports (MDPs), a game-changer for ensuring traceability, transparency, and accountability throughout the lifecycle of industrial equipment.

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What is a Material Digital Passport (MDP)?

A Material Digital Passport (MDP) is a secure digital identity attached to equipment used in the energy industry, including bulk materials, individual equipment, and complex assemblies like pumps, turbines, and compressors. 

This passport follows the equipment through its entire lifecycle, from production and distribution to installation and eventual retirement. The information recorded in the passport cannot be altered, ensuring transparency and trust among stakeholders.

Why MDPs Matter Now

Addressing Counterfeit Risks

The adoption of MDPs comes at a critical time for the oil and gas sector. The oil and gas sector faces a significant surge in counterfeit assets, posing risks to safety, operational efficiency, and regulatory compliance. An estimated 95% of counterfeit cases go undetected, resulting in costly incidents, such as leaks and system failures, which cost the industry billions annually.

The Need for Traceability

Counterfeiting not only leads to financial losses but also raises serious safety concerns. In response, traceability has become a top priority. Regulatory bodies are tightening controls, yet the complexity of global supply chains makes detection increasingly challenging.

IOGP’s Initiative for Standardization

The International Association of Oil & Gas Producers (IOGP) has addressed this issue through its Joint Industry Sprint (JIS01) initiative, developing specifications for Materials Digital Passports (MDPs), completed in June 2024.

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Benefits of MDPs

Ensure Authenticity and Provenance: MDPs allow businesses to verify the authenticity and origin of components throughout their lifecycle. This transparency builds trust and helps mitigate risks related to counterfeit parts, enhancing overall operational reliability.

Strengthen Compliance and Market Position: By adopting MDPs, companies can seamlessly meet regulatory requirements, ensuring compliance with industry standards. This proactive approach to transparency and safety positions businesses as preferred suppliers, improving competitiveness in the marketplace.

Reduce Costs and Protect Reputation: MDPs help minimize costs associated with warranties, replacements, and reputational damage. Accurate tracking of components reduces the risk of failure and enhances accountability, protecting businesses from unnecessary expenses.

Streamline Operations for Greater Efficiency: MDPs standardize the tagging and tracking of components, simplifying workflows for manufacturers, suppliers, and end-users. This improved process management leads to enhanced operational efficiency and faster decision-making across the supply chain.

Drive Sustainability and Support the Circular Economy: With MDPs, businesses can monitor the carbon footprint and environmental performance of equipment. This data helps align operations with global sustainability goals, such as the European Green Deal and the U.S. Inflation Reduction Act, while supporting circular economy initiatives.

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Key Features of MDPs

Material Digital Passport will require 3 main elements to function:

• Marking technology Physical identifier which will create the link to the digital ID
• Digital ID through the form of GUID which will ensure that each party in the value chain knows they are referring to the same piece of equipment/passport and gives a unique address to locate the ledger of record.
• Distributed Ledger Technology in an open version to store proofs of all information transactions along with timestamps and actors on the ledger throughout the equipment lifecycle

Source: IOGP

MDP Stakeholders and Ecosystem

The MDP ecosystem involves multiple stakeholders across the supply chain:

• Tier 0 - Owner & EPC: The owner generates overall requirements, often engaging an Engineering, Procurement, and Construction (EPC) contractor for asset design, procurement, and installation.
• Tier 1 and 2 Suppliers: These suppliers handle detailed design and manufacturing, issuing purchase orders for sub-components.
• Third-Party Certifiers: Independent entities validate equipment properties and regulatory compliance.

This multi-tiered ecosystem ensures that every piece of equipment, down to the smallest component, is traceable and verifiable.

Equipment Types Covered

MDPs are versatile and applicable to various equipment types in the oil and gas sector, including:

1. Bulk Material: Piping, steel plates, and other materials documented at the batch level.
2. Individual Equipment: Motors, pumps, and vessels.
3. Complex Assemblies: Components like compressors and turbine skids, where both individual parts and materials are covered by the passport.

A Future Fueled by Blockchain

The traditional paper trail has long been the backbone of industry, but reliance on document-based workflows creates a high chance of delays, errors and duplication. While digitization is transforming operations in the energy sector, data sharing across organizational boundaries remains a challenge, often leading to delays, errors, and duplications in procurement.

Transitioning to a digital audit trail for equipment using blockchain technology can reduce waste and enhance efficiency throughout the process. As the industry shifts toward decentralized technologies, MDPs offer a future-proof solution for tracking equipment and minimizing fraud. For companies aiming to cut costs, improve workflows, and comply with regulations, adopting MDPs is essential.

Arianee's Open Source Protocol: Leading the charge in MDP implementation

Arianee is at the forefront of delivering innovative blockchain-based solutions to the oil and gas industry through our MDP offerings. Our open-source protocol enhances equipment traceability and lifecycle management, helping the energy sector meet increasingly stringent regulatory demands.

Arianee’s strength lies in its open-source protocol, which is developed and maintained by the Arianee Association and deployed on blockchain networks. This open, decentralized protocol is widely accessible, enabling any party to build on it and integrate it with their systems.

• Ready for Material Digital Passports: Arianee’s protocol already provides all the essential features required for MDPs, ensuring traceability, security, and compliance.
• APIs for Rapid Integration: Beyond the protocol, Arianee offers a suite of APIs that accelerate the development and integration process. This makes it easier for businesses to adopt MDP solutions without heavy infrastructure investments.

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Where Arianee Fits in the MDP Project

The MDP project relies on three core components:

1. Marking Technology: Arianee enables the creation of a physical identifier, linking equipment to its digital ID.
2. Digital ID (GUID): Arianee’s protocol ensures every piece of equipment is tracked through a GUID (globally unique identifier), providing a unique digital address to locate the ledger of record.
3. Distributed Ledger Technology: Arianee uses decentralized blockchain technology to store proofs of all information transactions, along with timestamps and actors, throughout the equipment’s lifecycle.

Key Features of Arianee’s MDP Solution

Arianee’s solutions are built to meet the demands of the oil and gas sector, offering a robust set of features for managing the lifecycle of equipment:

• Creation, Issuance, and Maintenance: Arianee’s protocol allows users to create, issue, and maintain MDPs, ensuring the digital authenticity and traceability of equipment.
• UUID and Parent IDs: The protocol supports the management of UUIDs for both individual and complex equipment, as well as bulk material.
• Issuer Verification System: Guarantees digital authenticity through an on-chain verification process.
• Lifecycle Event Management: Allows stakeholders to manage and update lifecycle events for equipment directly on the blockchain.
• Digital Ownership Transfer: Facilitates the seamless transfer of digital ownership to new parties.
• Reporting and Analytics: Offers comprehensive reporting tools to track and monitor the status of MDPs across the supply chain.
• Data Storage and Retention: Ensures secure storage of data and retention over time, accessible through MDP web addresses and QR codes.

Arianee Solutions: Tailored Access for All Stakeholders

One of the standout features of Arianee’s solution is its ability to provide tailored access for all stakeholders, ensuring the right people have the right access at the right time.

• Granular Access Control: Assign specific read and write permissions based on user roles, from asset owners to manufacturers and operators.
• Customizable Profiles: Tailor access levels for each stakeholder to ensure secure, seamless collaboration.
• Secure Identity Management: Verified, secure access to sensitive data and system functionality is guaranteed for all users.
• Audit Trails & Transparency: Track all user actions for accountability and integrity.
• Role-Based Access: Simplified access management by grouping users into roles like admin, viewer, or editor.
• Scalability: As more stakeholders join the ecosystem, Arianee’s access management system can scale effortlessly to accommodate growing needs.

As the oil and gas industry embraces decentralized technologies, MDPs are poised to become a cornerstone of efficient, transparent, and sustainable operations. Companies looking to reduce fraud, streamline workflows, and comply with regulations should adopt MDPs without delay.

Ready to explore how Arianee can help your company implement MDPs? Contact us to learn how we can tailor our solutions to meet your needs.

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