Kiev - Somali pirates holding the crew of a Ukrainian cargo ship loaded with tanks and munitions reduced their ransom demand to a cut-rate three million dollars, Sehodnia newspaper reported Wednesday.

The seventeen officers and crew of the MV Faina, carrying an arms shipment from Ukraine to Kenya, have been in pirate custody since September. The vessel was anchored near the Somali port Hobyo at last report.

The ransom demanded by the Somali gunmen for the ship, cargo, and crew was initially as high as 35 million dollars, but the number has fallen dramatically over the past two months, with the Ukrainian government working for a diplomatic solution to the crisis.

Pirates have repeatedly promised to kill the crew and destroy the ship if their demands were not met, so far without carrying through the threats.

The Faina, with its load of tanks, armoured personnel carriers, small arms, and munitions is one of the highest-profile ships currently held by pirates operating off the Somali coast.

NATO warships in the vicinity have monitored the ship's location, but made no move to take it away from the pirates by force.

Ukrainian media reported the vessel to be lightly guarded, but with the crew including Ukraine, Russian, and a Latvian national held most of the time in a single room below decks.

The ship's captain died of a blood circulation problem shortly after pirates took the vessel.

The crew is receiving food and medical supplies and is in acceptable health, said Nina Karpacheva, a Ukraine government spokeswoman, according to a 24 TV news report. (dpa)