Shortly after the capture of Venezuelan President Nicolas Maduro by U.S. special forces, President Donald Trump made clear that his rationale for ordering the raid included gaining access to Venezuela’s abundant crude oil reserves.
The move drew condemnation from Latin American nations and cheers from opponents of Maduro’s socialist regime. And while experts say it’s too soon to say what exactly it that might mean for the South American country’s ailing oil industry, if new supplies of Venezuelan crude start flowing, refineries along the Gulf Coast, including a dozen or so in Louisiana, will likely be the beneficiaries.
The Lake Charles CITGO Refinery Night. Photo Courtesy of CITGO
The state’s third-largest refinery, CITGO in Lake Charles, was owned by the Venezuelan government until recently. And most of Louisiana’s refineries were built during a period when Venezuela’s oil industry was closely tied to the U.S., and are designed to process the type of heavy, sour crude that is plentiful in Venezuela.
“The jury is still out on whether this will all work out in Venezuela,” said Eric Smith, associate director of the Tulane Energy Institute. “But for the Gulf Coast, I think it will be good. We have a long-term, baked-in demand for heavy crude to make our refineries run right.”
‘Built for heavy sour’
Louisiana’s 15 crude oil refineries account for about one-sixth of U.S. refining capacity and can process nearly 3 million barrels of oil per day. The two largest, Marathon Petroleum near LaPlace and ExxonMobil in Baton Rouge, together produce more than 1 million barrels a day.
Most were built in the 1960s and 1970s and later modified so they could process heavy sour crude — which is dense with a high-sulfur content and, therefore, more difficult to break down into gasoline, jet fuel and other usable products.
At the time, the U.S. was importing more oil than it was producing domestically and exporting, as it does now, and Venezuela was a key trading partner.
Eric Smith
That all changed in the late 1990s, when Hugo Chavez came to power. In the years that followed, Venezuela nationalized its oil industry and expelled most of the U.S. companies doing business there. The supply of Venezuelan oil to the U.S. declined and Gulf Coast refineries started sourcing most of their heavy crude from other countries, namely Canada.
While the refineries have adjusted, a new source of heavy sour crude would allow them to maximize capacity that is currently not being used. According to the American Fuel & Petrochemical Manufacturers, an industry trade group, nearly 70% of U.S. refining capacity runs more efficiently with heavier crude.
“Louisiana refineries were built for heavy sour,” said Tyler Gray, director of Energy Innovation at the LSU Energy Institute. “If you have the capacity — equipment on site — to produce things you’re not producing, then you’re not operating as efficiently as you could be.”
Tyler Gray
That could also help refineries generate higher profits, though Smith said profitability is not a problem for most of the refineries operating in the state.
“The refineries were profitable before Venezuela expropriated their oil fields and they were profitable after,” he said. “They have gone father afield to obtain heavy crude, but they are still profitable.”
Challenges
Venezuela has the largest oil reserves in the world, roughly 300 billion barrels, which is more than Saudi Arabia, Iran and Canada combined.
But in a global oil market that produces around 109 million barrels a day, Venezuela is only a small player. The country produces some 1.1 million barrels a day. After nationalization, the industry deteriorated and lacks the infrastructure and expertise to get it out of the ground.
A local walks past a mural featuring oil pumps and wells in Caracas, Venezuela, Tuesday, Jan. 6, 2026. (AP Photo/Matias Delacroix)
The Venezuelan government has prevented most foreign oil companies from operating there for the past two decades. Today, only Chevron operates in Venezuela, through a joint venture with the government, producing about 250,000 barrels a day, about half of which makes it to the Gulf Coast for refining.
None of those challenges are expected to be quickly resolved, even if big oil companies were suddenly given access to Venezuela’s oil fields.
Trump said he thinks Venezuela’s decimated oil industry could be rebuilt in less than 18 months with U.S. support. He envisions major oil companies returning to Venezuela to make those investments and profit from its oil industry.
But given the unrest and decades of badly damaged infrastructure, it’s unlikely to top the list of places oil companies would choose to invest, experts said.
Rystad Energy, a consulting firm, estimates it would take $54 billion of oil and gas investment over the next 15 years to keep Venezuela’s oil production flat at around 1.1 million barrels per day, and that with additional investment over two to three years an additional 300,000 barrels per day could be added. Going beyond 1.4 million barrels per day would require an additional $8 billion to $9 billion per year, the group said.
Still, Smith said that the U.S. could get its hands on the small amount of oil that is currently exported from Venezuela and going to refineries in China.
“Technically they are repaying a loan,” Smith said. “But we have claims against that oil and could get it fairly quickly and it would come to the Gulf Coast for refining.”
‘Interesting to watch’
In the wake of the U.S. invasion on Venezuela last week, Gov. Jeff Landry predicted that oil and gas service companies would “have an opportunity to go and do business there.” He also said the state’s port system stood to benefit.
Those opportunities could came later, energy experts say. What is more likely in the short term is that the major international companies will aim for more production off the coast of Venezuela, which also has proven reserves, and move the crude to nearby countries like Trinidad and Tobago or St. Croix.
“They have refineries and experience running it,” Smith said.
Down the line, he believes, Gulf Coast refineries will get a piece of the action.
“The first thing that will see U.S. investment is upstream offshore oil fields,” he said. “Once there is a functioning government, banking system, and the like, then you’ll see onshore migration.
“Eventually, refineries here will benefit. It’s going to be interesting to watch.”
The Associated Press contributed to this report.