MOGADISHU, Somalia - Somali pirates said Tuesday they celebrated a Muslim holiday aboard a hijacked freighter and denied reports that three comrades were killed in a shootout on the vessel, which is being closely watched by a half-dozen U.S. warships.

The hijacking of the MV Faina -- laden with 33 Soviet-made T-72 tanks, rifles and heavy weapons that U.S. defense officials have said included rocket launchers -- was the highest-profile act of piracy in the dangerous waters this year. The U.S. Navy has said it wants to keep the arms out of the hands of militants linked to al-Qaida in impoverished Somalia, a key battleground in the war on terrorism.

The pirates are demanding $20 million in ransom for the ship, which they boarded Thursday in the Indian Ocean off the Somali coast. There was a crew of 21 Russians and Ukrainians aboard, but the captain later died.

U.S. officials said 40-50 pirates were involved, but only about 30 were on the ship itself.

A Kenyan maritime official cited an unconfirmed report that three of the pirates were killed Monday night in a dispute over whether to surrender. Speaking on condition of anonymity because he was not authorized to talk on the record, a U.S. official in Washington said he believed that report was true. But the Pentagon had not confirmed the report by late Tuesday.

A spokesman for the pirates said the shootout report was false.

"We are happy on the ship, and we are celebrating" Eid al-Fitr, which marks the end of Ramadan, spokesman Sugule Ali told The Associated Press by satellite telephone. "Nothing has changed."

"We didn't dispute over a single thing, let alone have a shootout," Ali said.

Attempts to contact him later Tuesday failed. A man answering his phone said Ali was "very tired" and was asleep.

The vessel, anchored off the central Somali town of Hobyo, is surrounded by U.S. warships and helicopters. Moscow has dispatched a warship to the scene to protect the lives of the Russians aboard the captive vessel.

Piracy is a lucrative criminal racket in the region, bringing in tens of millions of dollars a year. There have been 24 reported attacks in Somalia this year, according to the International Maritime Bureau.

Defense Department spokesman Geoff Morrell said officials are working on securing the region's waterways but he gave no details. He told reporters at the Pentagon that the piracy issue "has drawn the attention of high-ranking people within this building."

Morrell said he had no information to confirm there had been a gunfight on the ship and that three might have been killed.

The destroyer USS Howard and several other U.S. ships have surrounded the Faina at a distance of about 10 miles -- sometimes closer. Helicopters watched from above.

U.S. Navy officials from the 5th Fleet said they have allowed the pirates to resupply the ship with food and water, but not to unload any military cargo.

Ukrainian news agencies have said the ship's operator is Tomex Team, based in the Black Sea port of Odessa. A Russian-based ship register indicates that Tomex Team is a subsidiary of the Faina's owner, Panama-based Waterlux AG.

Weapons destined for Sudan?

The U.S. fears the arms may end up with the militants who have been waging an insurgency against the shaky, U.N.-backed Somali transitional government since late 2006, when the Islamic fighters were driven out after six months in power. More than 9,000 people, most of them civilians, have been killed.

U.S. military officials and diplomats say the weapons are destined for southern Sudan. But Morrell said: "We take -- and have no reason not to take -- the president of Kenya at his word when he expressed to the president of the United States yesterday that this shipment was bound for his government, which is ... a peaceful government with legitimate self-defense needs."

Russian media reported that the Faina's first mate, Vladimir Nikolsky, said its captain, Vladimir Kolobkov, had suffered from heat stroke. The ITAR-Tass news agency said Kolobkov died of a stroke Sunday, and that the vessel has a crew of two Russians, 17 Ukrainians and one from Latvia.

The Russian navy has said it ordered the guided missile frigate Neustrashimy, or Intrepid, to the northwest Indian Ocean to protect commercial shipping lanes and defend the lives of Russian citizens. It is expected to take about a week to arrive.

Morrell said the U.S. Navy has enough ships in the area "to deal with the situation at hand."

"But this involves Russian cargo, as I understand it, so I don't think that we have a particular issue with the Russians coming on the scene, as well. And we will obviously work hard to coordinate, once they are on scene," he added.

Russian analysts say the hijacking has given Moscow another chance to display its might following its brief war with Georgia -- which the Kremlin justified, in part, as an effort to protect Russians living in two Georgian breakaway regions.

"It's another show of the flag intended to demonstrate that Russia would protect its citizens wherever it deems it necessary," said Yevgeny Volk, the head of the Moscow office of the Heritage Foundation.

A hostage rescue would play well with the many Russians nostalgic for the superpower status of the Soviet Union.

Pavel Felgenhauer, an independent military analyst, said Russia might be tempted to use force. "Neustrashimy is a well-armed frigate, which can do that," he said.

But there was no word of any Russian forces being sent to the area besides the frigate. The ship is armed with cruise missiles, torpedoes and cannons, and carries a helicopter.

"It's a pure propaganda effort," Volk said, arguing that a single warship would be useless in the current situation and a special-forces mission would be needed.

Ukraine has said little about the hijacking, and it's not clear if it is negotiating to end the crisis. Moscow has not publicly offered help to Ukraine, and Kiev has not publicly asked.

The hijacking comes at a time of strained relations between the two. Moscow is angry about Kiev's bid to join NATO, its threat to evict Russia's Black Sea fleet from its Ukrainian base in Sevastopol, and Ukraine's criticism of Russia's war in Georgia.

Russia's government-owned RIA Novosti news agency Monday quoted an unidentified Russian official as criticizing Ukraine for failing to provide a military escort for the ship.

Most pirate attacks occur in the Gulf of Aden, one of the world's busiest shipping lanes, north of Somalia. But recently pirates have been targeting Indian Ocean waters off eastern Somalia.

Some 62 ships have been attacked in the notorious African waters this year. A total of 26 ships were hijacked, and 12 remain in the hands of the pirates along with more than 200 crew members.

International warships patrol the area and have created a special security corridor under a U.S.-led initiative, but attacks have not abated.