* State-run company would use its own fleet for transport
* Crude purchases would reduce costs of product imports
* Venezuela has been crude exporter for last century (Updates with comment from source, context on purchases)
By Marianna Parraga
HOUSTON, Aug 27 OPEC member Venezuela is considering importing crude oil for the first time ever and could use Algerian light crude as blending stock to boost sales of its own extra heavy oil, according to an internal document from the state-run energy company PDVSA seen by Reuters on Wednesday.
Though Venezuela has the world's largest crude reserves, PDVSA has been buying a growing volume of refined products such as heavy naphtha in recent years to mix with its crude output from the vast Orinoco belt - its largest producing region.
That is done to make the extra heavy crude exportable as extraction of domestic medium and light crudes, which had been used as diluents, declines.
Naphtha is currently being imported at high prices paid on the open market and has hurt the cashflow of PDVSA, which is the main source of revenue for the government of President Nicolas Maduro.
"The (PDVSA) commerce department evaluates a strategy of importing Saharan Blend from Algeria," said the document that evaluated freight costs of crude imports.
PDVSA recently told its foreign partners in Venezuela that it is holding negotiations with Algeria's state-run Sonatrach to make purchases of crude, a source close to the companies said,
The oil company did not answer requests for comments on possible crude purchases.
Venezuela's Petroleum minister, Rafael Ramirez, said earlier this year that PDVSA could import crude as a "last resort" to find diluents for its heavy crudes. But he did not elaborate on the controversial issue.
Crude imports would be less expensive through a supply contract when compared to costly naphtha.
In July, PDVSA launched a tender to buy at least four 500,000 barrel cargoes of heavy naphtha for September through December and, according to traders, Petrochina and trading firms Delaney and Noble Group were awarded with the offer.
The South American country has been an oil exporter for almost a century. Last year it sold 2.43 million barrels per day (bpd) of crude and products to foreign clients, according to public PDVSA figures.
Venezuela and Algeria have been closely allied within the OPEC in recent years, even though they have never entered a joint venture.
The document said PDVSA could use its tankers in its own fleet, including two very large crude carrier (VLCC) tankers that recently entered service, to bring the crude over.
PDVSA has been expanding its tanker fleet to cover longer routes to destinations such as China and India as part of a wider strategy to reduce freight costs.
Last year, it was in talks with U.S. refiner Valero Energy to partially restart the 235,000 barrel per day Aruba refinery to produce heavy naphtha, but this and other attempts to cut import costs have been unsuccessful.
Mixing its heavy crudes with a light sweet crude would create a more marketable blend for PDVSA. Its current blend of crude and naphtha, known as diluted crude oil (DCO), lacks buyers and is mainly sent to its U.S. unit Citgo.
DCO production has increased as PDVSA and half a dozen foreign partners, including U.S. Chevron, Italy's ENI and Spain's Repsol, face delays building new upgraders that would convert the extra heavy oil into lighter crude with wider international demand.
The Algerian imports would bring enough diluent to Venezuela until the new upgraders start.
Other Latin American oil producing countries are also considering crude imports to cut pricey finished fuel purchases, such as Mexico and Argentina.
Mexico's state-run PEMEX recently said it is also poised to import oil, mainly condensates and light crudes, abandoning a decades-old devotion to self-sufficiency.
Algeria's Saharan Blend, a super light sweet crude of 45 API degrees, is usually shipped from the Arsew, Bejaia and Skikda terminals. All three ports features single buoy mooring, at which VLCCs and Suezmaxes can be loaded.
To transport crude from Algeria - which has plenty inventories of this grade - to Venezuela would take some 20 days, shorter than the China-Venezuela route, and PDVSA could save around $3 million per shipment using its own fleet, according to the document.
After delays and problems with foreign shipyards building new vessels, the company now has six new tankers, including VLCCs and Suezmaxes.
These units are part of 42 vessels PDVSA ordered starting in 2006 to replace its fleet by the end of 2012. But only a few of them have set sail.
Using its own fleet would allow PDVSA to cut freight costs while diverting an increasing volume of oil to Asia as shipments to North America, Latin America and Europe decline. (Reporting by Marianna Parraga; Editing by Terry Wade and Marguerita Choy)