Economic Calendar

Wednesday, November 19, 2008

Pirates Demand Ransom for Tanker; Three Ships Seized

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By Caroline Alexander and Hamsa Omar

Nov. 19 (Bloomberg) -- Pirates demanded a ransom for an oil- laden Saudi supertanker amid reports three other merchant vessels have been hijacked in one of the worst spates of attacks in the Gulf of Aden and off the East African coast.

``Negotiators are onboard the ship and on land,'' a man identifying himself as Farah Abd Jameh, a member of the group that hijacked the Saudi tanker, said in an audio tape aired by Al Jazeera television. ``Once they agree on the ransom, it will be taken in cash to the oil tanker.'' He didn't say how much money his group wants.

Saudi Arabia's state-owned shipping line, Vela International Marine Ltd., yesterday said it set up negotiation teams to free the tanker, Sirius Star, and its crew of 25, seized about 420 nautical miles (833 kilometers) off Somalia on Nov. 15. The vessel is carrying more than 2 million barrels of crude valued at $110 million.

Since January, at least 91 vessels have been attacked in the Gulf of Aden, an area of 1 million square miles (2.6 million square kilometers) flanked by Yemen and Somalia and leading to the Suez Canal. Since then, both Indian and British naval ships have engaged pirates in combat and French commandos freed two nationals held by hijackers.

Ransom payments have spurred raiders to step up their activities, the International Maritime Bureau says, even as NATO, European Union, Indian, Malaysian and Russian naval fleets patrol the waters in an anti-piracy mission. NATO said today it didn't plan to increase its mission in the region.

The Sirius Star is anchored near Harardhare, a town in Somalia's semi-autonomous northern Puntland region. ``We assure the safety of the ship carrying the ransom,'' the man said in the Al Jazeera broadcast, warning against any attempts to use counterfeit cash.

War-Torn Somalia

Pirates from war-torn Somalia, which hasn't had an effective government since the 1991 fall of the Siad Barre regime, have asked for $1 million ransoms on average this year, according to Chatham House, a London-based research organization that advises mainly European governments.

In the past 48 hours, pirates in the region have taken control of ships from Hong Kong, Greece and Thailand, Andrew Mwangura, head of the East African Seafarers Association, said in a phone interview from Kenya. Pirates generally use speed boats for raids near the coast and captured fishing trawlers for attacks further out to sea, according to Chatham House.

Today, pirates freed a Hong Kong-flagged ship and 25 crew members captured two months ago, Agence France-Presse said.

Indian Navy

An Indian Navy ship fired at a pirate vessel in the Gulf of Aden yesterday, the government in New Delhi said today. The Navy's+ Tabar encountered the pirate vessel 285 nautical miles southwest of Salalah in Oman. The Tabar has been on an anti- piracy mission in the Gulf of Aden since Nov. 2.

A fire broke out on the pirate ship ``possibly due to exploding ammunition that was stored on the vessel,'' it said in a statement. The clash came a week after the Indian frigate rescued the Saudi Arabia-registered merchant vessel Timaha and a 38,000 metric-ton Indian bulk carrier from pirates.

On Nov. 13, the British Royal Navy commandos gave chase to suspected pirates off the coast of Yemen, killing two of them in an ensuing gunfight. A third pirate later died. In September, French commandos freed two kidnapped nationals, killing one pirate and capturing six.

Hong Kong Ship

The Hong Kong-flagged Delight was hijacked in the Gulf of Aden yesterday. It was carrying 36,000 metric tons of wheat to the Iranian port of Bandar Abbas and had a crew of 25. The Thai- operated boat was also taken yesterday off the coast of Yemen as it sailed toward the Red Sea. The Greek Merchant Marine Ministry in Athens said it couldn't confirm a Greek-flagged or Greek-owned vessel had been seized.

``The pirates really demonstrate unexpected things and are sending a message to the world that they can do what they need to,'' the seafarers association's Mwangura said.

More than 14 vessels and 250 crew members remain hostage, according to the IMB, including a Ukrainian-crewed vessel carrying at least 30 Soviet-designed T-72 tanks bound for Kenya. That ship is anchored near the Sirius Star in Harardhare, Colonel Abshir Abdi Jama, a national security official in Puntland said yesterday.

Pirates are honing their techniques and using Global Positioning System navigational aids and satellite phones to find potential targets, according to Chatham House.

Bigger Than Chrysler Building

The Sirius Star, bigger than the Chrysler Building, a 77- story Manhattan skyscraper, is the largest ship seized and the hijacking was the farthest out to sea that Somali pirates have struck, according to the U.S. Navy. Analysts said the chances of a military response to rescue the ship are slim.

``Everything is possible but it would take extraordinary means and organization, and the risk of an ecological disaster is very high,'' Dominique Montecer, director of operations at GEOS, a French risk management company, said by phone from Paris yesterday. ``They are sitting on a bomb.''

The U.S. Navy Fifth Fleet hasn't had any communication with the pirates or the ship, spokesman Lieutenant Nate Christensen said by phone from Bahrain today.

Hijackers may force shippers to divert vessels from the Gulf of Aden, to take the longer route to Europe and North America around South Africa's Cape of Good Hope, delaying deliveries to Europe and the U.S. and adding to costs.

Still, the Indian Ocean is vast and patrolling it is extremely difficult, the Fifth Fleet's Christensen said.

Extensive Area

``We patrol an area of 2.5 million square miles, from Pakistan to Kenya. The area is extensively large and we can't be everywhere at once,'' he said.

When asked why the Sirius Star wasn't being taken back by force, he said an armed response would require a great deal of international agreement and cooperation.

``It's certainly a very complex environment to work in -- a Liberian-flagged vessel, owned by a Saudi company, in Somali waters, with so many different nationalities on board,'' Christensen said.

The pirates probably fired grappling hooks onto the supertanker's deck, allowing them to scale the ship's 10-meter- high (33-foot) side using rope ladders, said Roger Middleton, an analyst at Chatham House.

Ships are normally attacked by five or six pirates, though as many as 15 may have been involved this time, Middleton said. Once the pirates are on board they're normally joined by others, he said.

Frontline Ltd., the world's largest owner of tanker ships, said it has yet to make a final decision about sending carriers away from Somalia, Jens Martin Jensen, interim chief executive officer of the company's management unit, said by mobile phone from Singapore today.

Sirius Star Crew

The crew of the Sirius Star, 19 Filipinos, two Britons, two Poles, a Saudi and a Croatian, is ``believed to be safe'' and Vela is ``working toward their safe and speedy return,'' Vela said in a statement.

Saudi Arabia is unlikely to be considering an armed response to the hijacking because it may endanger the crew, according to Nick Day, London-based chief executive officer of Diligence Inc., a security and intelligence group.

``Once in port you've got several hundred people around there, heavily armed,'' said Day, a former member of the U.K. military's Special Boat Service.

In any case, shippers say firepower won't rid the region of piracy. Naval units must go after the pirates' dens and boats to reduce piracy, they say, not just patrol the 2,400-kilometer coast waiting for raiders to make the first move.

To contact the reporters on this story: Caroline Alexander in London at calexander1@bloomberg.net; Hamsa Omar in Mogadishu via Johannesburg at pmrichardson@bloomberg.net.




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