More after the jump.
From OilPrice, January 5:
Piracy in some of the world’s most critical oil chokepoints is on the rise--but now, pirates are resorting back to another method of income generation better suited to times of lower oil prices: taking human captives.
Sometimes, black market oil prices just aren’t lucrative enough. In the days of $100 oil, oil theft was a hot commodity. Today, pirates are supplementing their stolen oil income with ransomed sailors, creating a whole new set of problems for the oil industry to tackle.
Where Piracy is Hot, and Where It’s Not
Piracy is being dealt with fairly successfully in certain regions of the world. In others, efforts to shore up maritime security have failed. But the threat of pirates taking human captives is alive and well in all regions.
East Africa - Once a piracy hotspot, piracy off Somalia’s coast has fallen in recent years as the international community--including Iran--stepped up to tackle this pressing problem that disrupted the flow of goods, including oil, through the critical oil route. Somalia, too, has stepped up its ability to prosecute pirates. The East Africa area includes the Bab-el-Mandeb between Yemen and Djibouti, as well as the Gulf of Aden. Piracy incidents here hit a high of 54 in 2017, before falling back to just 9 in 2018, according to One Earth Future’s annual report The State of Maritime Piracy 2018.
But while piracy off Somalia has toned down in recent years, the problem of using captive humans as an additional income stream has not gone away. One Iranian seafarer, for example, who was held captive by Somalia pirates was finally released after four years due to poor health. Three of his shipmates, however, are still being held to this day.The first rule of kidnapping insurance is DON"T TELL ANYONE YOU HAVE KIDNAPPING INSURANCE!
West Africa - While things appear to be cooling off in the pirate world off Africa’s east coast, the west side is seeing a disturbing rise in piracy. And not just any piracy--piracy with a human captive component. The area most subject to piracy here is off the coast of Nigeria and the Gulf of Guinea in general. So much so has this alarming shift risen from oil to persons over the course of the last year in West Africa, that India--the most prolific source of maritime sailors in the region--has banned all Indian seafarers from working on vessels in Nigerian waters and in the Gulf of Guinea. On the line here for Nigeria is $10 billion annually in crude oil sales to India, who purchases more than one-third of all Nigerian oil.
Just last month, pirates in the Gulf of Guinea hijacked two Indian oil tankers in two separate instances. But they didn’t stop with the crude oil. They also took the Indian crewmembers hostage both times. While one set of hostages have since been released, the second batch is still being held in captivity, adding to the growing unrest in the region as shippers and sailors fear for their own safety and for the safety of their crew.
Overall in 2019, there were a total of 89 crew hijacked for ransom in the Gulf of Guinea, and there is now even a special rider offered by one insurer, Beazley, called the “Gulf of Guinea Piracy Plus” that compensates vessels up to a certain maximum should they fall prey to pirates.
This area is where 82% of all kidnappings on the world seas take place, as crime syndicates in the Niger Delta region of Nigeria look to capitalize not only on the country’s sizable crude oil trade but on the ransom for the many kidnapped sailors that traverse nearby waters as well....MORE
News You Can Use: "The Economics of Kidnap Insurance"
"Kidnapped by Pirates at Sea? Here's How Economics Can Save You"
Insurance—"The business of kidnapping: inside the secret world of hostage negotiation"
Back in the heyday of the Somali pirates the business grew to be quite formalized. Some of our posts from that time:
Piracy 2012: Now With Form Letters, P.R.
And some of the posts linked in that piece:
"Somali sea gangs lure investors at pirate lair" and "A comparison of Piracy and Private Equity"
"Mace and Vomit: The Latest in Anti-Pirate Tech"
Oil: Somali Pirates Seize Supertanker, Smoke the Khat, Head for Home
Somali pirates set up "agencies" on three continents
"The Arms Race Against the Pirates"
Big Money: Somali Pirates' Rich Returns
Arrgh: 'Pirates Not a Good Long Term Bet
Obama Reaches Out to 'Moderate' Pirate Community (and we plan to make a buck-o, or two)
Somali Jihadi's Put a Price on Obama's, Hillary's Heads
..."Anyone who helps the Mujahideen find the whereabouts of Obama and Hillary Clinton will be rewarded with 10 Camels to the information leading to Obama and 10 hens and 10 cocks for Hillary," said senior Shabaab commander Fuad Mohamed Khalaf in a statement reported on numerous websites....And five years later:
Who's Who In Active Somali Pirate Clans and Militias
So let's set the mood with 2009's "Arrgh: 'Pirates Not a Good Long Term Bet'":
Update: The WSJ's Deal Journal has a comparison of Piracy and Private Equity:
...Geographical investment thesis
Private equity: Bullish on China.
Piracy: Opportunities on the coast of Africa.
Start-up costs
Piracy: Gun, boats, a handful of men, rocket-propelled grenades.
Private equity: Office on Park Avenue.
Jargon
Private equity: “Internal rate of return,” called IRR.
Piracy: Eerily similar: “Aaar.”>>>MUCH MORE
And from yesterday's maritime Executive:Who said a grenade launcher could not be a perfect financial asset?"
Active Somali Pirate Clans and Militias....
A new form on finance on the coast of Somalia.
I particularly enjoyed this part:
Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel.
“I am waiting for my share after I contributed a rocket-propelled grenade for the operation,” she said, adding that she got the weapon from her ex-husband in alimony.
“I am really happy and lucky. I have made $75,000 in only 38 days since I joined the ‘company’.”Getting serious once again, some headlines from the last few days:
19 Indians kidnapped by pirates near Nigerian coast released, one died in captivity | India News - Times of India
South Korea to Deploy Anti-Piracy Unit to the Strait of Hormuz
Sailor kidnappings surge 50% off West Africa
If interested here's an approach slightly different from the U.N./EU tactics:
"Dealing with Pirates (and terrorists) Russian Style
