(Adds details on crude shipments, context)
LONDON, Sept 7 Algeria is sending crude oil to
Cuba for the first time to help offset lower supplies from the
island's closest ally, Venezuela, where low prices have caused
the steepest production decline in more than a decade, sources
with direct knowledge said on Wednesday.
Algeria's state-owned Sonatrach plans to ship an
80,000-tonne cargo of crude (some 515,000 barrels) to Cuba in
October, the sources said, to supplement Venezuelan crude
supplies, which declined 40 percent in the first half of 2016,
according to Venezuelan state oil company PDVSA's internal data.
The cargo would be the OPEC member's first crude delivery to
Cuba, sources who monitor its exports said. There may be another
cargo for November or December loading, one said.
Saharan Blend light sweet crude is Algeria's main export
Cuba and Algeria have maintained a close relationship in
recent years. The island annually imports some $200 million
to$300 million of oil products from the African country,
including some purchases of naphtha.
But Cuba relies almost exclusively on Venezuela, also an
OPEC member, for its crude supplies through a 15-year-old
assistance programme that Caracas has been struggling to
maintain as power cuts, lack of investment and payment delays
slash its oil output.
Even though the collapse of global oil prices has undermined
Venezuela's economy, PDVSA would be mediating the Algerian crude
sale to Cuba's Cienfuegos refinery in which it holds a 49
percent stake, a trade source with knowledge of the deal said.
PDVSA has been forced to find creative ways to supplement
supplies to Cuba as volumes of its medium grades dwindle and
Cuban refineries cannot process a larger volume of Venezuelan
heavy and extra-heavy grades.
In 2015, PDVSA sent 1.64 million barrels of Angola's
Girassol and Russia's Urals crudes to Cuba after the oil was
first discharged at its terminal in Curacao.
A year earlier, PDVSA arranged a similar deal with Sonatrach
to import up to 2 million barrels of Saharan Blend that were
finally paid for by refining firm Reliance Industries
through a triangulation pact that also included deliveries of
Venezuelan heavy oil to India.
(Reporting by Julia Payne and Ahmad Ghaddar in London, Lamine
Chikhi in Algiers and Marianna Parraga in Houston; Additional
reporting by Marc Frank in Havana; Editing by Ruth Pitchford and