Somali pirate source: deal near on Ukraine ship

MOGADISHU (Reuters) - An onshore associate of Somali pirates holding a Ukrainian ship with tanks and other weaponry on board said on Wednesday an $8 million ransom deal was in the offing which may enable the boat to be freed within days. "A boat will carry the money from Djibouti and pirates are expected to release the ship in the coming two nights," a business partner of the pirates, who identified himself only as Farah, told Reuters.

In the highest-profile of scores of pirate attacks off Somalia this year, the MV Faina has been held since the end of September with 20 crew members on board. Its cargo includes 33 T-72 tanks which were en route to Kenya's Mombasa port.

U.S. navy warships are watching the ship, which lies offshore near Hobyo town, guarded by about 50 pirates.

"The pirates on board the Ukrainian ship have struck a bargain of $8 million ransom," added Farah, who has given reliable information in the past about pirate activities.

"I think the Americans are aware of the deal because there is no other alternative to release the ship. If the warships threatened, pirates would die in a last-ditch fight and risk the hostages," he said.

Pirates on the Faina, reached by Reuters via satellite phone, said they were no longer speaking to media despite giving numerous interviews in the last two weeks.

U.S. FEARS

Lieutenant Nathan Christensen, spokesman for the U.S. Fifth Fleet whose boats are monitoring the Faina, could not confirm the state of ransom talks but said he hoped the saga ended soon.

"The actual negotiations are between the pirates and the shipping company, we're not engaged in anything on that front. Having said that, we want this to end as soon as possible and as peacefully as possible," he said.

"We are definitely concerned that the cargo may fall into the wrong hands ... terrorists and violent extremists and the pirates themselves."

The saga has galvanized international concern over piracy in the Gulf of Aden and Indian Ocean ship lanes off Somalia.

The U.N. Security Council on Tuesday again urged a joint naval operation against the pirates, who have reaped millions in ransoms this year and pushed up insurance costs for ships.

Farah scoffed at the international threat.

"The world has repeatedly voted to fight pirates, but if the situation were a piece of cake, then the American ship would not just be watching the Ukrainian ship," he said.

Kenya reiterated on Wednesday its denial that the Faina's military cargo was secretly destined for South Sudan as a regional maritime group and some defense sources have said.

Nairobi has been embarrassed by that accusation because it helped broker a 2005 north-south peace accord in Sudan. There are also suggestions of kickbacks involved in the shipment.

"The cargo on board the hijacked ship belongs to the Kenya government," Foreign Minister Moses Wetangula said.

The ship's manifest, seen by Reuters, lists Kenya as the "consignee" but gives MOD/GOSS as the contract reference. GOSS is the normal abbreviation for Government of South Sudan.

Somali Foreign Minister Ali Jama Jangili said an end to civil conflict onshore was a pre-requisite to solving piracy.

"Only the maintenance of peace in Somalia can help eradicate the menace of piracy," he told reporters in Nairobi.

(Additional reporting by Abdiqani Hassan in Bosasso, Raissa Kasolowsky in Dubai, Andrew Cawthorne and Humphrey Malalo in Nairobi; Writing by Andrew Cawthorne; Editing by Matthew Tostevin))