Euronav NV and TMT, owners of ships designed to haul Middle East crude to Europe and the US, joined Frontline, the largest operator, in saying they are reviewing whether to divert carriers around South Africa.

Bergen, Norway-based Odfjell SE, the world's largest owner of chemical transporters, already said it won't sail past Somalia while BW Gas, the biggest liquefied-gas shipper, may do the same.

'We've always told our captains to stay far from the coast in that region, but that may not be enough now', Euronav's Chief Financial Officer Hugo De Stoop said by phone from Antwerp on Wednesday, reported Bloomberg News. 'Terrorists or pirates, I don't really see the difference'.

Frontline, Euronav and TMT together control 90 supertankers, enough to carry more than two days of global demand, according to Athens-based Optima Shipbrokers.

A decision to avoid the Suez Canal, Egypt's third-biggest foreign-currency earner, would delay oil deliveries and reduce the supply of available vessels.

TMT Chief Executive Officer Nobu Su, in an e-mail to Bloomberg on Wednesday, 'urged' other owners to take the same action to secure trade routes.

Mr Jens Martin Jensen, interim chief executive officer of Hamilton, Bermuda-based Frontline's management unit, said Nov 18 he may also divert ships.

Somali pirates on Nov 15 seized their largest ever prize, a Saudi Arabian supertanker laden with 2 million barrels of crude, worth about US$108 million (S$165 million) at current prices. The ship itself is worth about US$148 million.

Ransom Payment
Somali pirates who hijacked the Saudi oil super-tanker Sirius Star on Thursday are demanding US$25 million (S$38 million) in ransom and have set a 10-day deadline, one of the pirates told AFP.

'We are demanding 25 million dollars from the Saudi owners of the tanker. We do not want long-term discussions to resolve the matter,' Mohamed Said told AFP from the ship anchored off the Somali coast.

'The Saudis have 10 days to comply, otherwise we will take action that could be disastrous,' Mr Said added, without elaborating.

The Sirius Star is now anchored in Somalia's northern Eyl coastal region with the hijackers negotiating the ransom payment with Vela International Marine, a Saudi Arabian state- backed oil-tanker company.

There have been at least 88 attacks against ships in the area since January and Somalian pirates are holding 250 crew hostage on board 14 merchant vessels.

Shippers sailing to the US and Europe from the Middle East would instead have to take vessels around South Africa's Cape of Good Hope rather than the Suez Canal. The waterway links the Mediterranean and Red Seas.

Customers have been given 'the option to safeguard their cargo', BW Gas Chief Executive Officer Jan Hakon Pettersen said from Oslo yesterday. 'For us, we would prefer them to use the cape route'.

The Joint Hull Committee, representing ship insurers, is advising shipowners to 'seriously consider' avoiding Somalian waters, Chairman Simon Stonehouse said Nov 18.

Damaging Business
Insurance premiums will rise and unless the Egyptian government becomes 'more actively interested' in combating piracy in the region they risk damaging the business of the Suez Canal, Mr Stonehouse said.

'If they stop shipping through the Suez, going round Africa instead, that's going to reduce supply', said Mr Glenn Lodden, an analyst at DnB NOR Markets in Oslo. 'There's a clear incentive for owners to go around Africa'.

Other shipowners are likely to follow should Frontline, Euronav and TMT choose to divert vessels and after the Joint Hull Committee urged companies to do so, Mr Lodden said.

AP Moller-Maersk A/S, Europe's biggest shipowner, may announce as soon as today that it will avoid Suez, Lloyd's List said on Wednesday, citing an unidentified spokesman.

Shipping Costs
Tanker owners may elect to charge more for sailing through Somalia's waters rather than re-routing, Mr Per Mansson, managing director of shipbroker Nor Ocean Stockholm AB, said in an e-mailed note on Wednesday, reported Bloomberg News.

'Maybe one or two will avoid, but most will go there against a premium to start with', Mr Mansson said. Still, 'one more hijacking of a tanker and the situation is in a different light'.

Derivatives contracts indicating the December cost of shipping Saudi Arabian crude to Japan, the industry benchmark, advanced 6 per cent to 71 Worldscale points, Mr Justin King, a broker of the contracts at Tradition Financial Services in London, said in an e-mailed note on Wednesday.

The fact owners say they are considering rerouting is buoying demand for the contracts, said Mr Ben Goggin, a broker at SSY Futures, a unit of the world's second-biggest shipbroker.

The European Union last month joined the North Atlantic Treaty Organisation (Nato), India, Malaysia and Russia in deploying vessels to combat piracy.

Additional information from AFP

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