LONDON (Bloomberg) - Bermuda-based Frontline Ltd., the world's largest operator of supertankers, may divert vessels away from Somalia after pirates captured a Saudi Arabian oil tanker and insurance costs advanced.

The Sirius Star, the largest merchant ship ever seized, was taken on November 15 and was yesterday anchored off the coast of Somalia, east Africa, along with its crew of 25. Supertankers cost about $148 million and its cargo of two million barrels of oil about $110 million. An attempted hijacking of Frontline's Front Voyager tanker in the same area was thwarted in September.

"When it comes to the safety of our crew, we don't take any chances," Jens Martin Jensen, interim chief executive officer of Frontline's management unit, said by phone from Singapore yesterday. The company has yet to make a final decision, he said.

There have been 88 attacks against ships in the area since January and Somalian pirates are holding 250 crew hostage on board 14 merchant vessels. To avoid Somalia, ships would have to go around South Africa's Cape of Good Hope rather than use Egypt's Suez Canal, increasing the cost of shipping crude.

"Shipping costs will rise significantly as insurance premiums increase substantially," IHS Global Insight Inc. said in a report yesterday. The attacks are "likely to spur international efforts to secure the region's shipping lanes".

The Joint Hull Committee, a group representing ship insurers, is advising shipowners to avoid Somalian waters, Chairman Simon Stonehouse said yesterday. Insurance premiums will rise and unless the Egyptian government becomes "more actively interested" in combating piracy in the region they risk damaging the business of the Suez Canal, Mr. Stonehouse said.

Odfjell SE, the world's largest operator of chemical tankers, said yesterday it will divert ships away from Somalia.

About 11 percent of the world's seaborne petroleum passes through the Gulf of Aden, using the Suez Canal. Ships also use the route to carry Asian-made goods to the US and Europe.

Routing vessels around Africa will lengthen journeys and effectively reduce ship supply, said Nikos Varvaropoulos, an Athens-based official at Optima Shipbrokers.

December freight-derivative contracts tied to the price of shipping Saudi Arabian crude to Japan, the global benchmark, advanced 8.2 percent to 66 Worldscale points, according to data from Justin King, a London-based broker of the contracts at Tradition Financial Service.

Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in US dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

"Every single ship is coming under attack," Captain Nasrollah Sardashti, chartering manager of the National Iranian Tanker Co., operator of Iran's supertankers, said by phone from Tehran yesterday. "That's what the captains are saying to us."

Shipping lines are increasingly forming convoys to navigate the Gulf of Aden, he said. The European Union last month joined the North Atlantic Treaty Organisation, India, Malaysia and Russia in deploying vessels to combat piracy.

"Piracy like terrorism is a disease that affects everyone and we have to deal with," Saudi Arabia's Foreign Minister Saud Al-Faisal said yesterday.