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Over time I get them all to no-aggression pact to which you can upgrade the protection and then you don't pay them anything.
Sometimes its quircky when you encounter them and they might instantly break protection again, so what always work for me, when I get the notification meeting pirates the game is paused. I go to diplomacy and propose the protection myself during the game's pause.
Sometimes you might not have enough reputation even for that. You can typically see how much is missing (sometimes not) when you hover over the protection proposal. Based on that, usually giving them the smallest gift possible enables you to make a protection agreement.
Over time their reputation with you will go to around -2 to +2 and then you can gift them to push to the point where you can propose non-aggression so you don't have to pay protection. I typically do this paused too because when you gift them and game runs at x4 it might be you drop just by 1-2 points below needed for non aggression pact.
You should grow and try to get out of system ASAP, not "waiting due to pirates". You won't get strong enough if you want to fight them some point (I never do), if you stay in one system.
This will grow your fleet and diminish theirs at the same time. It will help to have a couple of repair ships on manual so that you can go and repair the ones that warp out of system in a timely fashion.
I suggest fleets of 10 ships at start (3-5 frigates plus escorts for bulk) Have the fleet attack one ship at a time. Target the largest attacking ship for best results. Every ship captured adds to your fleet power as pirate ships are more powerful than yours in early game.
Let them use their resources to build your fleet. Economic warfare at its finest.
When you go this route be ready for a knock down drag out fight. The pirate AI does not know when to cut it's losses and go to an easier target. This will lead to massive numbers of captured pirate ships over time. In my last campaign i ended up with 8 fleets of pirate ships numbering between 30 - 35 ships each.
Research first warpdrive. Research first shields. Start researching the second warpdrive. When it is about 50% done, rush the research, and order building 7 escorts with 2x long range cannon each. They should be ready (and with shields recharged) about when you get second warpdrive. If you can afford it, you should also make a second 7-escort fleet.
7 because they make a nice tight hex formation. The delay until 50% research done is so that your admiral does not become drunk. The game tends to give you one when you start building military ships, and if he has to wait the full time till warp bubble is researched, he will get bored.
Now you should ideally have two fleets of 7 escorts each. As soon as the bubble drive is researched, immediately have both fleets refit (it is a fast refit because only the warpdrive is upgraded). One fleet at yard, other at planet so it is faster. Do not design civillian ships with new warpdrive because the game will start upgrading freighters, clogging up the spaceyards. You are on a timer.
Assuming you built all the mining stations in your system that you could while doing the above, the clock is ticking. Soon the first pirate faction will arrive at one of your stations.
Now have both of your fleets jump to the station, and all attack the same pirate ship. 14 (even just 7) escorts focusing fire will shred it in seconds. If possible, switch to a different target when the first pirate is at roughly 50%, to leave the hulk for later capture.
If a second pirate faction arrives, order both of your fleets to repair at homeworld. The pirates will start fighting each other, saving you some ammo. After the repair, you can warp back in and mop up.
When the ghost fleet arrives, make a 3rd fleet out of them and have them assist the 2 others. After pirates flee (or raid the station and leave) and there are any disabled hulks floating in space, order the ghost fleet to capture them, repair them, and join them to ghost fleet. That way the ghost fleet's ability to capture targets grows (all pirate ships have boarding modules).
The key is having the 7 escorts ready when pirates arrive, and focus fire, focus fire, focus fire. The computer doesn't know how to do that.