November 20, 2008

Piracy threatens Suez Canal economy

European shipping companies said they are ordering fleets to sail around the tip of Africa to avoid piracy, a move that threatens Egypt's Suez Canal revenues.

AP Moller-Maersk, the largest ship owner on the continent of Africa, said Thursday it would send its 83 tankers around the Cape of Good Hope to avoid the canal. Norwegian shipping company Odfjell said it would direct 90 chemical tankers around the cape, while Frontline Shipping, the world's biggest tanker company, is considering a similar directive, the Financial Times reported.

Revenue from the Suez Canal reached $5.2 billion in 2007 and is Egypt's third largest source of foreign revenue after tourism and remittances.

Somali pirates hijacked a Saudi Arabian supertanker, the Sirius Star, and its $100 million cargo of crude oil in the Indian Ocean last week, raising concerns. The well-armed pirates were demanding $25 million to return the tanker, the Times reported.

Saudi Foreign Minister Saud al-Faisal said his government was opposed to negotiating with the pirates, the Times reported.