Somalia Piracy Spurs Private Gulf of Aden Navy to Start Within Five Months

The company behind the world’s first private navy to protect merchant ships against Somali pirates plans to start armed escorts through the Gulf of Aden within five months after attacks rose to a record this year.

Convoy Escort Programme Ltd., backed by the marine insurance industry, will initially deploy seven former naval patrol boats, each with armed security teams of eight people on board, Angus Campbell, chief executive officer, said by phone from Swarland, England today. The bullet-proofed boats will charge about $30,000 per ship traveling in a convoy of around four vessels over three to four days, he said.

“We are going to be a deterrent,” Campbell said. “We are not in the business of looking for trouble but if anybody tries to attack a vessel we are escorting, our security teams will deploy force if they have to act in self defence.”

Attacks reached a record this year and cost the global economy an estimated $7 billion to $12 billion annually, according to the United Nations’ International Maritime Organization. About 23,000 vessels carrying $1 trillion of trade pass through the Gulf of Aden every year, the U.K. government estimates.

About 25 percent of vessels that sail in the Gulf of Aden and Indian Ocean use armed guards, and their owners pay $120 million a year to London insurers for protection against the risks of pirate hijacks, Andrew Voke, chairman of the Lloyd’s Market Association marine committee, told a U.K. parliamentary hearing in June.

There is a shortage of naval assets protecting ships from piracy, said Campbell, whose company is looking for investors to complete the boat purchases. The convoys will police the same 490 nautical-mile long stretch of water within the Gulf of Aden, known as Internationally Recognized Transit Corridor, as the world’s state-backed navies.

‘Enhancing’ Security

“This is an enhancement to the existing military services, we’re not trying to step on anybody’s toes here,” he said.

Establishing a private force against piracy is a world- first, akin to the formation of insurance company-backed fire brigades that started after the Great Fire of London in 1666 to protect buildings, Campbell said.

The venture, backed by U.K. insurance and reinsurance broking company Jardine Lloyd Thompson Group Plc (JLT), needs about $30 million from investors to complete the first-stage, patrol boat purchase, Campbell said. A second stage adding another 11 former offshore boats, will follow, taking total investment to around $50 million, he said. Venture capitalists, oil companies and marine insurers are among possible investors.

The project, first discussed more than a year ago, experienced some delays in getting a state jurisdiction to register its vessels. Cyprus agreed to add the ships last month, following a U.S. State Department veto for registration in the Marshall Islands, Campbell said.

Government Support

Thirty governments including some in Europe, America and the U.K. support various anti-piracy patrols covering 2.8 million square miles in the Indian Ocean and Gulf of Aden, Peter Swift, chairman of a maritime piracy program, said in September.

Almost 4,000 seafarers have been held hostage over the past five years after their vessels were hijacked for ransom by pirates in attacks that cost the world economy $12 billion in 2010, Swift said.

Naval forces have caught and released as many as 1,500 pirates since the beginning of 2010, because they didn’t want their countries to have the responsibility of prosecuting them, said Giles Noakes, head of security at the Baltic and International Maritime Council, a trade group representing owners. Some pirates had been caught and let go up to three times, he said.

To contact the reporter on this story: Michelle Wiese Bockmann in London at mwiesebockma@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale in London at anightingal1@bloomberg.net

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