Arabs discuss piracy as tankers avoid Suez Canal

Six Arab countries that share the Red Sea held an emergency meeting in Egypt aimed at forging a common response to the upsurge in piracy in the region.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Nov. 21 -- Six Arab countries that share the Red Sea held an emergency meeting in Egypt aimed at forging a common response to the upsurge in piracy in the region.

Ahead of the meeting, officials said it would consider establishing a warning system for ships and setting up a piracy monitoring centre. But several fell short of endorsing any common naval force deployed to secure the sea route.

The Cairo meeting came as the Suez Canal, the international waterway crucial to shipping between Europe and the Middle East, faces the threat of a dramatic decline in traffic as shipping companies shift to other sea routes to avoid Somali pirates.

AP Moller-Maersk, Europe's largest ship owner, said it had decided to divert its fleet of 83 tankers away from the canal to the longer and more expensive sea route around the Cape of Good Hope in southern Africa.

"The policy change will primarily impact our tanker vessels," said Soren Skou, partner and member of AP Moller-Maersk's executive board. Skou denounced piracy in the region as a "threat to important international trade lanes and therefore an international security issue."

Shipping firms need help
The piracy "must be addressed by relevant authorities and the international community. It is not a problem that Moller-Maersk or the shipping industry can solve alone," said Skou.

Moller-Maersk's announcement followed an earlier one made by Odfjell SE stating that all that company's owned, managed, and time-chartered ships normally sailing through the Gulf of Aden will be routed via the Cape of Good Hope.

"We will no longer expose our crew to the risk of being hijacked and held for ransom by pirates in the Gulf of Aden, said Terje Storeng, Odfjell president and chief executive officer.

"The rerouting will entail extra sailing days and later cargo deliveries," said Storeng. "This will incur significant extra cost, but we expect our customers' support and contribution."

As with Moller-Maersk's Skou, Storeng said, "Odfjell is frustrated by the fact that governments and authorities in general seem to take a limited interest in this very serious problem."

He said, "The efforts that are being made do not seem to put an effective end to what can best be described as ruthless, high-level organized crime."

Arabs meet in Cairo
The decision to reroute tankers came as Egypt hosted an emergency meeting on piracy attended by representatives from Yemen, Saudi Arabia, Sudan, Jordan, and Somalia.

Egyptian diplomat Wafaa Bassem said several options would be discussed at the meeting, including establishing joint operations by Arab navies and setting up a piracy monitoring centre and warning systems for ship.

Egypt is concerned that piracy will force shipping companies to opt for safer routes that avoid the Suez Canal, which links the Red Sea with the Mediterranean.

The meeting came after the 330-m Sirius Star, carrying $100 million worth of oil, was hijacked at the weekend (OGJ Online, Nov. 17, 2008).

Its owner, Vela International, a subsidiary of the state oil company Saudi Aramco, opened ransom negotiations on Nov 19, according to Saudi Arabia's foreign minister, Prince Saud al-Faisal.

"I know the owners of the tanker are negotiating on the issue. We do not like to negotiate with terrorists or hijackers. But the owners of the tanker, they are the final arbiters of what happens there," he said.

Pirates' demands, threats
"We are demanding $25 million from the Saudi owners of the tanker. We do not want long-term discussions to resolve the matter," said a pirate who identified himself as Mohamed Said.

"The Saudis have 10 days to comply, otherwise we will take action that could be disastrous," Said said. He gave no indication as to the action or what the disastrous consequences could be.

Meanwhile, with Somali bandits and criminal syndicates attacking ships with apparent impunity, concerns are growing that other regions of the world may soon begin suffering from similar acts of piracy.

"I am sure that a lot of criminals and criminal syndicates in Asia are watching events in Somalia with great interest," said Noel Choong, head of the International Maritime Bureau's piracy reporting centre in Kuala Lumpur.

"The Somali pirates are making so much money, and have been facing very low risk. Any time you have an activity that is low risk but with huge rewards, that will encourage criminals."

There is especial concern about the Strait of Malacca, located between peninsular Malaysia and the island of Sumatra, and links the Indian Ocean to the South China Sea and Pacific Ocean.

According to the US Energy Information Administration, the Strait of Malacca is the shortest sea route between Persian Gulf suppliers and Asian markets, and is the key chokepoint in Asia with an estimated 15 million b/d flow in 2006.

Contact Eric Watkins at hippalus@yahoo.com.

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