A tense stand-off is continuing in the waters off Somalia where pirates are demanding a $US20 million dollar ransom for a ship carrying tanks and weapons.

Our Africa correspondent, Andrew Geoghegan, reports there are reports that three of the pirates were killed in a shoot-out onboard the ship.

Several American warships have surrounded the Ukranian cargo ship, which was seized by Somali pirates last Thursday.

The freighter is carrying 33 battle tanks and other heavy weapons which had been destined for Kenya, although a US navy official claims the military hardware was actually headed to Sudan, which is subject to an arms embargo.

Reports from the US Defence Department indicate that there has been a disagreement among the pirates and that three have been shot dead.

However, a spokesman for the pirates denies the claim.

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