Rampant piracy off Somalia's coast will hit revenues at Egypt's Suez Canal if piracy is not quickly curtailed and shippers continue to shun the strategic waterway, canal officials said.

One of the world's biggest shippers has said some of its fleet was avoiding the canal due to piracy fears south of the waterway linking the Red Sea to the Mediterranean, and a major tanker association said many others were also diverting vessels.

"A decline may happen as a result of piracy acts," one Suez Canal official said, asking not to be named because he was not authorised to speak to the press. "We are following the situation with sharp interest."    

The move by some shippers to avoid the canal follows the spectacular capture by Somali pirates of a Saudi Arabian supertanker loaded with $100 million worth of oil a week ago, the biggest ship hijacking in history.

Denmark's A.P. Moller-Maersk is routing some of its 50 oil tankers around the Cape of Good Hope instead of through Suez, and Intertanko said many other tanker firms were doing the same.

Norway's Frontline, which ferries much of the Middle East's oil to world markets, said it was considering a similar step.

Millions of tonnes of crude oil, petroleum products, gas and dry commodities like grains, iron ore and coal, as well as containerised goods from electronic goods to toys are ferried through the Gulf of Aden and Suez Canal every month.

Revenues at the canal have already dropped from life highs in August, but officials attribute the slowdown to the global economic crisis and say piracy has not yet affected returns.

The canal made $467.5 million in October, down from $504.5 million in August when a record 1,993 ships used the canal.

Piracy could also deal a blow to Egyptian efforts to attract more large ships including larger oil tankers through Suez by working to deepen the navigation channel, a project expected to be completed in 2009.

Canal officials have said that once the planned expansion is finished, the waterway will be capable of attracting 64 percent of the global fleet of oil carriers with full loads. Egypt depends on the Suez Canal as a major source of foreign currency.

"The continuation of acts of piracy at the current rate will negatively affect numbers of ships passing through the canal and revenues," said Galal al-Deeb, a former member of the Suez Canal administration.

"Oil tankers passing through the canal will be affected as vessels begin to face hijacking, as will overall goods traffic because oil represents around 17 percent of total goods passing through the Suez Canal," he added.

But officials declined to speculate on how severely the canal's revenues might be affected.

Owners of oil supertankers already often send ships around the Cape of Good Hope because of capacity issues at Suez, where large ships occasionally run aground. The hijacked US-bound Saudi tanker had not passed through the Suez Canal, a route more commonly used by European-bound tankers.

Canal spokesman Mahmoud Abd Al-Wahab said that shipping firms had not given the canal word of any cancellations, but that the canal did not normally receive such notification.

"Ship owners have a right to determine whatever route they want to use," he said. "The Suez Canal administration has no forecasts on the numbers or type of ship that may be affected by piracy acts and would decide not to use the Suez Canal."    

Cairo-based investment bank EFG-Hermes says the canal may earn a record $6.1 billion this fiscal year, up about 18 percent from the fiscal year that ended in June. But even before last week's hijack, EFG-Hermes forecast tougher times ahead. The bank said it saw the canal's revenue growth slowing to 10 percent in the 2009/2010 year, with lower European demand presenting a significant downside risk. - Reuters