A little more than a year ago, the SIU joined others in the U.S.-flag maritime industry in celebrating the announcement of an unprecedented contract for 10 new American-flag commercial tankers to be built in Philadelphia.Last month brought a similarly large dose of good news as Seafarers-contracted U.S. Shipping Partners L.P. joined with General Dynamics NASSCO in announcing an agreement to build nine double-hulled product carrier tankers in San Diego. The contract is valued at $1 billion and includes options for five additional ships. Construction of the first tanker is scheduled to begin in the third quarter of 2007, with delivery slated for 2009.
“This announcement is further proof that the U.S. Merchant Marine can and will have a bright future,” said SIU President Michael Sacco. “Also, as with any new order for U.S.-flag tonnage, it is good news for our nation’s security, partly because the ships can be militarily useful and most importantly from my perspective because they will sail with loyal, well-trained American crews.”
Word of the then-tentative agreement trickled out in late July, but on Aug. 7, U.S. Shipping (USS) and NASSCO (National Steel and Shipbuilding Co.) officially announced that financing was in place for the nine-ship order. They reported that the new tankers each will be 600.4 feet long, with a beam of 105.6 feet and a design draft of 38.7 feet. The ships will weigh 49,000 deadweight tons (DWT) and will have a cargo capacity of 331,000 barrels apiece.
“USS is committed to building and operating the largest, most technologically advanced deep water fleet in the United States,” said Paul Gridley, chairman and CEO of SIU-contracted and New Jersey-based U.S. Shipping Partners L.P. “These new ships will allow us to add the needed new capacity that the domestic energy market is demanding. Additionally, given the regulatory requirements to upgrade the fleet operating under the Jones Act, General Dynamics NASSCO is a tremendous partner to provide us with a superior product that meets these requirements, in a timely fashion. These new ships will allow USS to expand our domestic shipping business, while providing our customers with the high-quality, reliable transport they require for their petroleum and chemical products.”
“NASSCO is the leading builder of U.S. Navy auxiliary ships and has delivered more Jones Act ships than any other shipyard in the country today,” said Frederick J. Harris, president of General Dynamics NASSCO. “This contract is the largest commercial shipbuilding contract in NASSCO’s history and positions this shipyard to remain the premier builder of Jones Act ships.”
USS operates a fleet of 10 deep sea vessels that carry refined petroleum and chemical products among customer facilities along the U.S. coastlines and has five double-hulled articulated tug barges on order or under construction. The majority of the USS fleet is on long-term time charters or contracts of affreightment with major oil and chemical companies based in the United States.
According to a jointly issued news release from USS and NASSCO, financing for the tanker construction is being provided by a joint venture among affiliates of the Blackstone Group; USS Product Carriers, a wholly owned subsidiary of USS; and other investors. Investment banking services were provided by Lehman Brothers and CIBC World Markets, with Sterling Investment Partners, a controlling partner of USS, providing advisory services negotiating and structuring the transaction.
The tankers are based on an existing design from DSEC, a wholly owned subsidiary of Daewoo Shipbuilding and Marine Engineering of Seoul, South Korea. NASSCO entered into an agreement with DSEC last March to produce ships for the U.S. market under the Jones Act, in which DSEC will provide detail designs and services related to construction of the ships. All of the ships will be constructed at the NASSCO shipyard in San Diego.
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