OilVoice - Somali Pirates Begin Negotiations with Super-Tanker’s Owners

Somali Pirates Begin Negotiations with Super-Tanker’s Owners

Tuesday, November 18, 2008

As the world watches and waits, the Somali pirates who hijacked the Saudi super-tanker, the Sirius Star, have opened negotiations with Vela International Marine, the ship’s owners.

The Dubai-based marine company that operates the Saudi-owned Sirius Star said that it was in conversation with the pirates and was working towards the release of the supertanker, and more importantly her crew.

A spokesman for Vela said that all 25 crew members – including 2 British seamen – are reported to be safe. The tanker was also carrying crew members, who are set to become pirate’s booty themselves in exchange for significant ransoms, from Croatia, the Philippines, Poland and Saudi Arabia itself.

At current no mention has been made of a ransom, but in reality such companies have little bargaining position but to pay out huge ransoms, usually totaling around $1 million, to ensure the safety of the crew and the vessel's return.

The large oil tanker, which is owned by Saudi oil company Aramco, was sailing under a Liberian flag at the time of its capture by the bandits. It is 1,080ft (330m) long and has the capacity to carry around two million barrels of oil.

It was initally thought that the pirates would take the tanker to Eyl, a port in the northern Puntland region of Somalia, which has become notorious for pirate activity over the past months. Dozens of ships are thought to be being held captive there.

The International Maritime Bureau has reported that in the three months to September, 63 ships have been attacked off of the coast of Somalia, of which 26 were hijacked with a total of 537 crew members taken hostage. Of those, 12 vessels and 243 people were still in the hands of pirates awaiting a peaceful, yet costly, resolution to the conflict.

But, the whereabouts of the Sirius Star have in fact been traced to Harardhere, a pirate’s mecca some 265 from Eyl, where – according to reports – the ship has dropped anchor.

A coalition of world powers including: the United States, Russia and NATO have all sent ships to the region in an effort to curtail the ongoing piracy.

Lt. Nathan Christensen, a spokesman for the U.S. Navy’s 5th Fleet, said on Tuesday: “We remain deeply concerned because this attack represents a fundamental change in pirates' ability to hijack bigger vessels farther out at sea.”

In terms of the oil industry the pirates’ actions have already had an immediate effect on the commodities market, but the scale of the impact can only be properly judged over a longer period of time.

If the international shipping community reacts by re-directing its ships away the route via the Gulf of Aden and the Suez canal and opt to take the longer way around the Cape of Good Hope, someone will have be forced to foot the bill – and that someone is most likely to be the consumer.