(Corrects paragraph 2 to U.S. commonwealth instead of country)
Aug 13 (Reuters) - Puerto Rico's electric power authority PREPA is likely to receive an extension of vital lines of credit it uses to buy oil, a financial industry executive familiar with the situation said, giving breathing space to the island's debt-stricken utility.
The U.S. commonwealth's restructuring experts and its Government Development Bank (GDB) are in talks with banks to extend PREPA's loans of $671 million to March 2015, with an option to shorten the extension to the year end, said the source, who is in contact with the negotiating parties.
Another option would be another short term extension similar to a recent two-week reprieve, said the source, who declined to be identified because the discussions are confidential. Talks are continuing and still may fail to produce a deal.
PREPA faces a deadline of Thursday to the loans to Citigroup and Scotiabank.
The banks will also name a chief restructuring officer with the remit to develop a restructuring plan by March, the source said.
Citi declined comment. PREPA and Scotiabank were not immediately available for comment.
(Reporting by Reuters in San Juan, writing by Edward Krudy and Megan Davies, editing by Dan Burns and Chizu Nomiyama)