THE owner of a home-made submarine that sank south of Copenhagen has been arrested on suspicion of murdering a Swedish journalist who was a passenger.

Police said the man has denied killing the missing woman and said he dropped her off on an island on Thursday night.

Officers did not identify the owner, Peter Madsen, but he appeared on Danish television yesterday to discuss the submarine’s sinking.

Deputy Police Inspector Jens Moller Jensen said investigators are looking for witnesses who may have seen the woman after Madsen reported she disembarked.

The submarine is lying in seven feet of water but divers have not been able to enter it safely yet, police said.

Madsen, 46, financed his submarine project through crowdfunding and completed the UC3 Nautilus in 2008.

Footage aired on Denmark’s TV2 channel showed him getting off what appeared to be a private boat and making a thumbs-up sign as he walked away.

“I am fine, but sad because Nautilus went down,” he told TV2.

Madsen said “a minor problem with a ballast tank ... turned into a major issue” that ultimately caused the vessel — considered the largest privately-built submarine of its kind — to sink.

The ballast tank is a compartment that holds water, which is used as ballast to provide stability for a vessel.

“It took about 30 seconds for Nautilus to sink, and I couldn’t close any hatches or anything,” Madsen said. “But I guess that was pretty good because I otherwise still would have been down there.”

However, Swedish police said later in the day they were investigating the whereabouts of a missing woman who had been on the submarine at some point.

“Whether the woman was on board the submarine at the time of her disappearance is unclear.”

The woman was a journalist writing about Madsen and his submarine, Swedish and Danish media reported.

“He told us that the journalist who also had been on board had been dropped off Thursday evening,” navy spokesman Anders Damgaard said.