(Adds details on crude shipments, context)

LONDON, Sept 7 (Reuters) - 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 grade.

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 James Dalgleish)