Use of blockchain and smart contracts in Lng trade

Countries prefer Liquefied Natural Gas (LNG) trade, which is a faster and more practical solution to meet their energy needs. International LNG trade inherently involves some risks. Letters of credit are used to reduce these risks and ensure that transactions between parties are carried out securely. However, the complex structure of letters of credit, long duration of transactions, high costs, slow physical document review processes and lack of coordination between parties lead to some problems. It is thought that these problems can be overcome with technology. Blockchain, smart contracts and IoT technologies in particular have the potential to reduce these risks. The inclusion of blockchain and smart contracts in the letter of credit process represents a digital, automatic and traceable exemplary model. This model digitizes the traditional paper-based process, allowing transactions to be shared instantly and transparently, easily tracked and largely eliminating problems in the letter of credit process. Thus, coordination between parties is provided faster, costs and risks are reduced. Within the scope of the thesis, the question of whether LNG trade can be carried out through an automated system with smart contracts was investigated. By examining LNG contracts, the blockchain-based smart contract model was analyzed and research was conducted for this model. A sample contract was shown on the smart contract and software codes were developed on the Ethereum platform with the Solidity language. As a result, blockchain and smart contracts can be used technologically in LNG trade. However, whether contracts created over these technologies can be considered legally valid contracts is a complex issue. There have been difficulties in exchanging documents electronically and some obstacles related to legal regulations. Therefore, in order for the blockchain-based smart contract model to be successfully implemented, states need to take concrete steps towards paperless trade in their own laws and create legal regulations to resolve possible disputes.