KIEV, Sept. 28 - Somali pirates that hold a Ukrainian ship with tanks and other military equipment have reduced their ransom demand to $5 million from an original $35 million, the Indo-Asian News Service reported Sunday.

The demand was lowered as a U.S. naval destroyer approached within visibility range of the captured ship, apparently to prevent any unauthorized uploading of the potentially explosive cargo.

The development increased fears of a potential showdown off the cost of Somalia and over the fate of 21 hostages on board, including 17 Ukrainians, three Russians and one Latvian.

Russia also sent one of its battle ships, Neustrashimiy, or Fearless, towards the area of the potential showdown, on a mission to protect Russian interests, according to an Itar-Tass news report.

The Russians said their mission was aimed at punishing the pirates, but was not part of an international effort.

A Belize-flagged Ukrainian ship, the Faina, was carrying 33 tanks and "weapons of all kinds" destined for Kenya, had been seized late Thursday, reported IANS citing a spokesman for the pirates identified as Januna Ali Jama.

The ship is currently about 350 km off the coast of Somalia, ‘protected’ by three speed boats operated by the pirates, according to media reports. The pirates warned any action against them would put in danger the hostages.

The ransom was cut mostly due to the fact that the tanks were used, and that the pirates faced greater risk of arrest should they attempt to unload the equipment, said Andrew Mwangura, head of East Africa's Seafarer's Assistance Programme.

Still, the asked ransom for the Ukrainian ship exceeds the traditional $1 million and $2 million price that the pirates usually charge businesses after seizing their commercial cargo off the Somali coast.

Ukraine’s Defense Minister Yuriy Yekhanurov on Friday confirmed that the ship had contained 33 upgraded tanks T-72 and other weaponry and was part of a contract to sell arms to Kenya.

Ukraine’s state-owned UkrSpetsExport, the arms exporter, has been carrying out the contract, he said.

Yekhanurov made the comments shortly after meeting by the National Security and Defense Council, Ukraine’s top security body under President Viktor Yushchenko.

The meeting was called for discussions of several security issues, including supplies of natural gas and the extra finance for the military forces, and was apparently not related to the seizure of the Ukrainian ship by the pirates.

It was not clear who was negotiating with the pirates over the ransom. The Kenyan authorities said they did not own the shipment until it is unloaded on their territory, leaving Ukraine as the still de-facto owner of the cargo.

Piracy is rife in the Gulf of Aden - a strategic shipping route off Somalia - with over a dozen ships currently in the hands of armed groups, the latest victim being a Greek vessel seized Saturday. (jp/ez)