Greek refiner Hellenic's darkest days over as oil options grow

* BP joins Glencore, Vitol as supplier of crude to Hellenic

* Switch to new suppliers after Iran embargo was costly

* Some deals concluded through barter and cash - traders

* More traders eye business as Greek worries ease

By Julia Payne

LONDON, March 22 (Reuters) - Greece's largest refiner isfinding it easier to secure crude as improving credit conditionsallow suppliers to cautiously return, although it still must paya premium.

Hellenic Petroleum, was dealt a double body blowwhen it was forced to abandon cheap Iranian oil imports due tosanctions at the height of the Greek economic crisis whenliquidity was squeezed.

For the past year, the refiner has been reliant mostly ondeliveries from trading houses Vitol and Glencore. Now, BP and other, smaller players aredealing with Hellenic, say traders, and others may follow.

"Credit conditions have significantly improved since therecent EU/IMF resolutions on Greece and the disbursement of thebailout tranche last December," the spokesman for Hellenic said.

Towards the end of last year, the euro zone finalised a 50billion euro package for Greek banks and Hellenic refinanced 1.2billion euro in loans.

VICTIM

Hellenic, which has a refining capacity of 310,000 barrelsper day, fell victim to the Greek financial crisis asinternational banks stopped dealing with most Greek institutionsand their letters of credit, fearing defaults.

Iran was the only country that continued to deal with Greeceon the open credit basis, a standard practice in the industrywhen payments for oil are due several months after the deliveryto allow refiners to generate cash from selling products.

However, Western sanctions on Iran cut off vital crude flowslast spring, which accounted for up to 30 percent of Hellenic'soil supplies.

For most of the second half of last year Hellenic relied onVitol and Glencore, which supplied mostly Russian Urals and someIraqi Basra Light crude grades.

Hellenic said while the switch was costly it is not facingany issues with crude supply.

"Adverse factors affecting results were the increased crudeoil cost due to suppliers switching and Greek crisis relatedrisk," the company said in financial disclosures.

Hellenic's year-on-year operating profit and cash flows fell by a third in 2012 compared with 2011.

HEFTY PREMIUMS

Open credit is difficult to secure as it requires thecounterparty to take on the full risk of potential non-payment.

Most traders pulled the plug on supplies to Greece with onlyGlencore and Vitol, as suppliers of last resort, taking on therisk without any bank backing in case of non-payment - butcharging hefty premiums.

Glencore still accounts for the bulk of deliveries with opencredit of around $200 million, while Vitol's presence hasdiminished over the past months, several industry sources said.

With open credit options limited, Hellenic had to find otheravenues with cash payments being one of the main options.

"They are trying to use 100 percent of their cashavailability," one Greek oil executive said, "But they need tobuy more than they can handle with cash."

Swapping crude imports for product exports emerged asanother option.

BP engaged in such trade earlier this year, severaltrading and shipping sources said. BP declined to comment.

Hellenic said it does not engage in barter trade, but saidthat some deals on products sales and crude purchases are oftenconcluded between the same parties.

"With exports accounting for more than 50 percent of ourtotal sales... it often occurs that we are dealing with the samecounterparty on certain crude purchases and products sales," itsaid.

Trading and shipping sources said one firm was swapping60,000 tonnes of ultra-low sulphur diesel per month againstcrude supplies to Hellenic. A Russian trader has been swappingstraight-run fuel oil delivered to Hellenic for refining againstfinished products.

"Over the past two to three months, I have seen increasedactivity from products-focused people who were saying they arekeen to get involved in crude to supply Greece because swaps aregetting attractive," one trading source said.

A trader at a small trading house, which used to sell toHellenic, said that he hoped to resume trade in the next fewmonths as banks are re-evaluating Greek risks.