Data response question: oil production in Kazakhstan
a. What advantage does Kazakhstan have in oil production?
The advantage Kazakhstan has in oil production is it has major oil fields, especially in Tengiz and Karachaganak. This is a huge advantage because they can exploit their own oil mine which is huge and rich, from that, they can sell or exchange oil with another nearby country, which might not has major oil fields or don’t have oil mine to exploit.
b. What risks does Kazakhstan run in piping its oil to its customers? When Kazakhstan pipes its oil to customers, who are mostly from Russia, they have to build pipelines under nearby countries, which will go through the Black Sea, the Caspian Sea and the Mediterranean, this will lead to some certain risks : Firstly, they can’t built pipes under nearby countries ’s ground for free, their neighbors will ask for taxes as a cost of digging under their “house”, they might take this as an advantage and even ask for more in the future. Secondly, by building pipes under nearby countries ‘s ground, the neighbors might sneakily steal the oil, this is out of Kazakhstan’s government’s control and this can easily happens if Kazakhstan is in a conflict with their neighbor.
c. Discuss three risks Kazakhstan faces in specializing in oil production. The first risk is this will decrease Kazakhstan’s self-sufficiency, they will depend on another countries as they are specialized in oil production. Second, in the future, as oil is a non-renewable resource, Kazakhstan might face with a huge problem, scarcity, which will lead to a crisis, Russia might lose their oil supply and Kazakhstan itself might have nothing to trade with another countries. Last, Kazakhstan always have to humble themselves to prevent from any conflicts with another countries as they might lose trades, this will make Kazakhstan miss a lots of opportunities in another industries.
d. Discuss four ways an oil company could reduce its average cost of production by engaging in division of labour . Division of labour:
specialization for workers – a worker does the job he/she is best at. Dependent on skills.
By engaging in division of labour, they will have better use of specialist machinaries, which will be faster to make a good product. Each part of a product will be responsible by one group of specialized workers, this will make the final product turns out to be a perfect one. Workers will be more motivated as they have been trained to become experts/specialists, this will not affect the quality and quantity of the outputs, but also make workers work for a longer time and be careful, responsible with their work.