Somali pirates who hijacked a Chinese fishing boat have demanded a ransom payment for the vessel and its 18 crew members, police and local officials said on Saturday.

It was not immediately clear when the ship was taken hostage by gunmen wielding AK-47 assault rifles but the European Union's anti-piracy force drew global attention to the incident on Thursday.

"The pirates are moving the ship off the coast... they are looking for a safe haven," Mohamed Dini, a police officer in Eyl, a traditional pirate stronghold on Puntland's east coast, told AFP.

The boat was hijacked by men who had been contracted to provide "protection" before later being reinforced by other pirates, Dini said, adding that they had demanded payment for its release.

Ali Warsame, a local elder familiar with the case, said a Somali company acting on the boat's behalf had offered to pay a $300,000 ransom.

But the proposal was declined by the pirates.

Local fishermen said the boat came close to Eyl on Friday, but the pirates pushed back into the sea out of fear of Puntland's coast guards.

But "they cannot move deeper towards the ocean because they are afraid of the foreign military ships," said fisherman Abdirahman Said.

EU's anti-piracy naval force Atalanta on Friday said it was closely monitoring the event "classified as armed robbery at sea".

"The crew remains safe, with no injuries," it added.

The incident is the latest episode in a surge of Somali pirate activity after years of lull.

In March, Somali pirates hijacked a Bangladeshi cargo ship transporting more than 55,000 tonnes of coal from Mozambique to the United Arab Emirates.

The bulk carrier MV Abdullah was freed after its Bangladeshi owners, KSRM Group, paid a hefty ransom that was air-dropped over the vessel in sackloads of US dollars.

The ransom amount was not disclosed by the company.

A series of incidents since then has fuelled concerns about a resurgence of Indian Ocean raids by opportunistic pirates exploiting a security gap after the redeployment of international forces.

(AFP)

Illustration only: This handout photograph taken on January 30, 2024 and released by the Indian Navy shows an Iranian fishing vessel after it has been freed by the Indian Navy from Somali pirates, off the Somali coast. (AFP)

Somali pirates demand ransom for Chinese vessel