Ship crews paid double to brave pirates-Saudi firm

DUBAI, Jan 11 (Reuters) - Oil shippers are paying crews double to persuade them to sail through the pirate-infested Gulf of Aden, an official at Saudi Arabia's National Shipping Company (NSCSA) said on Sunday.

Somali pirates caused havoc in one of the world's busiest shipping lanes in 2008, hijacking dozens of ships including a Saudi Aramco-owned supertanker carrying $100 million worth of crude, freed this week for a reported $3 million ransom. "The main change in operations in generic terms is that most ships are now avoiding the Suez Canal and going around Cape Hope, which adds to the number of days of sailing," Saleh al-Shamekh, the company's president of oil and gas, told Reuters on the sidelines of an energy conference in Dubai.

"But on the ships that have to go through the Gulf of Aden, they are having to pay the crew more, double the salaries," he said.

Shamekh said their ships were also keeping a distance of up to 1,000 km from the Somali coast, and were travelling in convoys for safety, all of which was adding to cost.

Insurance costs had also risen because of piracy, he said.

"We don't see it affecting that much on the bottom line - hopefully," he said.

Asked how much extra cost NSCSA was incurring as a result of the surge in pirate attacks, Shamekh said: "It's difficult to quantify."

"Most of our business is spot business which goes east ... this doesn't get affected," Shamekh said, adding that 65 percent of the NSCSA's activities were in the spot market.

NSCSA's five-year plan to double its fleet to around 50 tankers, including 32 chemical carriers, was to be completed by 2011 at a total cost of 5 billion riyals ($1.33 billion), he said.

Shamekh said none of NSCSA's ships was being used as part of a global "floating storage", in which oil majors and traders store crude oil on supertankers to take advantage of the contango in oil markets and cheaper freight. (Reporting by Raissa Kasolowsky; Editing by David Cowell)