Why Sanctions On Venezuela Could Benefit U.S. Refiners

Sanctions on Venezuelan oil imports would impact Citgo the most, but other U.S. Gulf Coast refiners could benefit from an embargo on the country’s oil.

Last week it was reported that the Trump Administration is considering significant sanctions on Venezuela. The threat of sanctions is in response to Venezuelan President Nicolas Maduro’s pledge to rewrite his country’s constitution on July 30. President Trump promised that if he followed through, the U.S. “will take strong and swift economic actions,” which could impact Venezuela’s oil exports to the U.S. A decision is expected as early as this week.

According to the most recent data from the Energy Information Administration (EIA), Venezuela presently exports 800,000 barrels per day (BPD) of oil to the U.S. Venezuelan imports rank third behind Canada and Saudi Arabia, but Venezuela is the top source of foreign oil for U.S. Gulf Coast refineries.

How might the loss of Venezuelan crude impact refiners in the U.S.? Let’s investigate.

EIA data indicate that 13 US refineries imported Venezuelan crude in 2016. Here is the breakdown of all 13, in order of descending amount of crude processed:

Refineries that processed Venezuelan crude oil in 2016.

The Phillips 66 (NYSE: PSX) Refinery in Sweeny, Texas imported just over 46 million barrels of Venezuelan crude last year, the most of any US refinery in 2016. However, this was the only Phillips 66 refinery to use Venezuelan crude. Nevertheless, the capacity of this refinery is about 80 million barrels of crude per year, which means more than half of its crude slate last year was sourced from Venezuela. However, across the entire company, Venezuelan crude amounts to under 6% of Phillips 66’s total crude oil capacity for all its refineries.

Where things start to get interesting is with Citgo, which is owned by Venezuela’s state oil company, PDVSA. Citgo’s Lake Charles, Louisiana, refinery imported nearly 45 million barrels of Venezuelan crude in 2016. Another Citgo refinery in Corpus Christi, Texas imported 21.5 million barrels.

The two Citgo refineries consumed 26.6% of the oil imported from Venezuela, which makes it the most important destination for Venezuelan crude. Citgo is clearly in the worst position of any refiner, as it would need to source oil from elsewhere, and since Venezuela is strapped for cash, it might simply have to ramp down operations. That could benefit other U.S. refiners operating on the Gulf Coast.

Another refiner that could feel the sting of sanctions is Valero (NYSE: VLO), which processed Venezuelan crude in three of its refineries. The total amount processed was 53.8 million barrels (21.6% of Venezuelan imports), second only to Citgo. However, Valero processes more crude oil globally than any other independent petroleum refiner. According to Valero’s 2016 annual report, Venezuelan imports are equivalent to only about 6.5% of the crude Valero processed in 2016. So this may be more a perception issue than a serious risk to Valero’s business — although it could have a significant impact on specific Valero refineries.

PBF Energy (NYSE: PBF) imported a total of 22.4 million barrels of Venezuelan crude into two refineries it owns — Chalmette Refining in Louisiana and Delaware City Refining.

Shell (NYSE: RDS-A) imported 538,000 barrels of Venezuelan crude in its refinery in Martinez, California, and Motiva Enterprises, a 50–50 joint venture between Shell Oil Company and Saudi Refining, imported another 15 million barrels into its Port Arthur, Texas refinery.

Chevron (NYSE: CVX) used 32.5 million barrels of Venezuelan crude in its Pascagoula, Mississippi refinery, and Total (NYSE: TOT) used 9.7 million barrels in its Port Arthur refinery. Finally, Marathon Petroleum (NYSE: MPC) used 2.7 million barrels in its Garyville, Louisiana refinery.


The Trump Administration has said that action could be imposed this week on Venezuela and that all options are on the table. A full ban of Venezuelan crude would indeed impact refiners, but some are more exposed than others. Citgo is at most risk of having to curtail operations in response to sanctions, which could benefit other refiners in the U.S.

3 thoughts on “Why Sanctions On Venezuela Could Benefit U.S. Refiners”

  1. PGC said gas TRR was up 12% in 2 years. Massive resource. Haven’t read much on it.

    Sure seems like the shale hype was right and the skepticism wrong.

  2. This David Hughes article from 2011 (still touted on the Post Carbon Institute website) is pretty interesting in retrospect:

    http://www.postcarbon.org/publications/will-natural-gas-fuel-america/ (see pages 28-33 in particular).

    The guy fusses and pontificates about how EIA must be too optimistic. And their growth projects for 2035 were reached by 2015!

    You know it is one thing to be wrong, but another thing to not admit it and to continue making predictions in the same direction (peak oil school). Am amazed that people like James Hamilton fell for this guy’s shtick.

    1. “You know it is one thing to be wrong, but another thing to not admit it and to continue making predictions in the same direction (peak oil school).”

      Almost everyone I know in the imminent peak oil camp is like that. Instead of owning up to failed predictions, they make excuses or say that the timing was just slightly delayed. They will never say “Wow, we really missed on that.” I can think of a few exceptions to the rule, but most are still making the same kinds of predictions they made a decade ago without ever looking back on how those predictions fared.

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