UPDATE 1-Somali pirates free Saudi supertanker

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MOGADISHU, Jan 9 (Reuters) - Somali pirates took a $3 million ransom and freed on Friday a Saudi supertanker seized in the world's biggest ship hijacking, an associate of the gang said.

Farah Osman, speaking to Reuters from Haradheere port near where the Sirius Star had been held for nearly two months, said the pirates had wanted more money but finally agreed $3 million for the ship which has a $100 million oil cargo.

A regional maritime group confirmed the release.

"The last batch of gunmen have disembarked from the Sirius Star. She is now steaming out to safe waters," said Andrew Mwangura, of the East African Seafarers Assistance programme, based in the Kenyan port of Mombasa.

The Sirius Star was captured in November with 25 crew members, 450 nautical miles southeast off Kenya in the boldest seizure to date by Somali pirates.

That strike, one of the most spectacular in maritime history, drew world attention to rampant piracy off Somalia that had worsened dramatically in 2008 as an Islamist insurgency fuelled chaos onshore.

The Somali piracy phenomenon in the busy Gulf of Aden and Indian Ocean shipping lanes has sent shipping insurance prices soaring, made some owners choose to go round South Africa instead of through the Suez Canal, and brought an unprecedented deployment of international warships to the region.

The Sirius' crew are from Britain, Poland, Croatia, Saudi Arabia and the Philippines.

The U.S. Navy, which has had a warship close to the Sirius monitoring the saga, could not immediately confirm its release. (Reporting by Abdi Sheikh in Mogadishu, Andrew Cawthorne in Nairobi; Editing by Giles Elgood)