CARACAS/HOUSTON (Reuters) - Venezuela’s PDVSA and international trading company Trafigura are in discussions to swap over 10 percent of the South American country’s crude output for imported fuels for domestic use, according to draft documents viewed by Reuters on Wednesday.

FILE PHOTO: The corporate logo of the state oil company PDVSA is seen at a gas station in Caracas, Venezuela November 22, 2017. REUTERS/Marco Bello/File Photo

The talks come amid PDVSA’s limited access to credit due to U.S. sanctions that have disrupted its oil purchases and bank guarantees for crude deliveries, making the country more dependent on barter deals.

Venezuela’s sharp crude output decline and the poor state of its refineries have turned the once fuel self-sufficient country into a growing importer. The OPEC member faces the world’s steepest inflation, a fourth year of economic recession, a severe scarcity of food and medicine, and mounting pressure to restructure $60 billion in debt.

If signed, the proposed three-year agreements would mark a major shift at PDVSA, which traditionally avoided long-term supply contracts with trading firms because crude resales could affect the pricing of heavy crudes including many Venezuelan grades.

PDVSA did not respond to a request for comment.

The deals, which also allows for cash payments, would include PDVSA’s first crude supply contract entirely priced in euros, after Venezuelan President Nicolas Maduro said the country would walk away from the U.S. dollar.

Deliveries under the proposed deals would begin in January and run through December 2020 unless the contracts are terminated earlier by either party, the documents said.

Swiss-based Trafigura declined to comment. The firm and other traders increasingly have been purchasing Venezuelan oil on a spot basis, directly from PDVSA, from its joint ventures or business partners.

The proposals call for delivery of up to 200,000 barrels per day (bpd) of Venezuela’s Morichal, Petrozuata Heavy or Merey crudes to be paid by Trafigura either with cash through “open account,” which allows payments after delivery, or by supplying imported refined products to PDVSA.

Venezuela can also deliver fuel oil, asphalt and other refined products to meet the monthly supply quota, according to one of the contracts. In terms of imports, PDVSA can request up to 240,000 bpd of products in exchange for the crude.

Since U.S. sanctions were imposed in August, PDVSA has struggled to find suppliers for refined products. Cash-strapped PDVSA’s record of payment delays to suppliers also has contributed to its declining oil output and problems to get imports.

The swap deal could reduce PDVSA’s need to issue open market tenders for fuel imports in cash. It would also fill the export gap left by Brazil’s Braskem and U.S. PBF Energy, which earlier this year suspended or did not renew contracts to buy Venezuelan oil.

Venezuela’s crude output fell in November to 1.837 million barrels per day (bpd), its lowest level in almost three decades due to lack of investment, payment delays to oil service firms and a brain drain. An extended anti-corruption investigation has also shaken PDVSA, including its top management.

It was not immediately clear if the agreements would lead PDVSA to cut exports to other customers. Venezuelan crude shipments to the United States this year are 21 percent below the year-ago level, according to Reuters Trade Flows data.

TIED UP

PDVSA increasingly is delivering crude that is later resold to its own customers or other buyers since it started repaying loans with barrels of oil and refined products. Most of the deals involve firms that operate refineries, such as China National Petroleum Corp (CNPC) and Russia’s Rosneft, which prefer to resell the Venezuelan barrels for cash.

The contracts with Trafigura would imply a more firm supply commitment. The draft agreements include several clauses protecting the parties against any potential payment delays, contract breaches and quality problems, which have become more frequent at PDVSA.

Any dispute would be directed to the International Chamber of Commerce (ICC), the documents say.

The contracts allow Trafigura to choose the final destination of the crude it intends to lift at Venezuelan ports, a flexibility other PDVSA contracts do not include. If barrels go to China, however, PDVSA has to approve the company ultimately receiving the cargo.

To avoid payment issues, Trafigura and PDVSA agreed to allow for offsetting invoices. But if payment in cash is agreed for a cargo, Trafigura would receive it five days after delivery.

Also, if claims for demurrage, quality or freight costs reach $800,000, Trafigura can discount the amount due from invoices to be paid to PDVSA.