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India's Bonanza: The Texan Oil Companies' New Appetite For Guar Beans

Article illustrative image Partner logo Guar seeds.

NEW DELHI - As Texan oil companies move in, Rajasthan's cows are starting to feel the pressure. The oil companies have started buying up the cows' favorite food: guar, a long, green bean grown in the desert regions of India.

Guar, which means “cow food” in Hindi, was also used in the food industry as a thickening agent. Now oil and gas companies are racing to get their hands on this new hot commodity, which can be used as a lubricant in hydraulic fracturing.

Guar grains are turned into powder or gum, which thickens the fluids injected into rocks, turning them into gels that hold cracks open once the rocks have been fracked. It also lubrifies the fracking fluids, decreasing friction. A few grams are enough to make ice cream, but on the average, nine tons are needed for oil drilling or hydraulic fracturing.

In India, where 80% of the world's guar is harvested, this steep rise in demand has led to a surge in price. "Between 2010 and 2012, the price of one ton went from $1,500 to $20,000. We are getting around four or five new American clients each month," says Shwet Kamal Sharma, the director of the Lotus Gums & Chemicals factory in Jodhpur.

The company should triple its turnover this year, but the boss is still cautious. The guar futures market was suspended in March after the price increased tenfold in one year. However, prices are set to fall this year as the crop area expands in India.

"With a dry monsoon season on its way, farmers are increasingly depending on their guar crops," explains Purushottam Sharma, a journalist who has become a specialist in the subject. However, he adds, "Guar production is extremely volatile from one year to the next, as it is often grown in badly irrigated areas or without fertilizer. The harvest also depends on weather conditions." Only in October and November, after the monsoon season, will the farmers know if production has been good or not.

Thanks to the needs of Texan oil and gas companies, the guar industry has become a gold mine in India's desert regions. Cotton farmers in Punjab have also turned to growing guar. In Rajasthan, which supplies half of India's guar production, crop areas have expanded by a third, going from three million hectares in 2011 to four million this year.

Maximizing the yield

The result is that seeds have become rare. Rajasthan's public cooperative has decided to authorize the sale of guar seeds only to the poorest, or most vulnerable, farmers: those belonging to an "untouchable" caste or listed tribes. The farmers who receive authorization have started to sell their harvest to guar gum manufacturers. One of these producers, Vikas WSP, which should see its turnover go from $225 million this year to $1 billion in 2013, has in turn distributed almost 3,000 tons of seeds to around 200,000 farmers.

Teams of agriculturalists have been appointed to help them maximize their yield. Gum manufacturers have also secured their supply of seeds by creating partnerships with the country's universities.

Apart from Rajasthan or Haryana, the second biggest Indian state for guar production, other Indian states have also started experimenting with this crop, even though success is far from guaranteed, as the plant needs to grow in a tropical or subtropical zone and in dry earth.

Guar producers may not have become as rich as the emirs of Qatar, but the legume has at least changed their lives. In Rajasthan, tractor salesmen have seen their sales skyrocket, and the prices of plots of land in the arid regions have risen rapidly.

The guar miracle could, however, be a short-term one, which may risk putting the whole industry in difficulty. In June, two patents for synthetic substitution products were submitted in the U.S., where the oil industry would rather depend on a patent than take a chance on the monsoon season. The American oilfield service company Baker Hughes, which developed Aquaperm, has declared that they have replaced 5% of its guar consumption by this synthetic product. The company's rival, Halliburton, has started to use another substitute, Permstim, for some U.S. drilling.

"But synthetic products are still a long way from having the same properties as guar," Purushottam Sharma says. The cows in Rajasthan will have to wait just a little longer to graze once again on their favorite vegetable.

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About this article source Website:

This leading French daily newspaper Le Monde ("The World") was founded in December 1944 in the aftermath of World War II. Today, it is distributed in 120 countries. In late 2010, a trio formed by Pierre Berge, Xavier Niel and Matthieu Pigasse took a controlling 64.5% stake in the newspaper.

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