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Agreement Signed for up to 13 More Tankers

January 2008

In a potentially huge development for the Jones Act fleet, Aker American Shipping ASA in late November announced it has entered into an “option agreement” with union-contracted Aker Philadelphia Shipyard to build up to 13 product tankers at a total contract value of $1.3 billion. With this agreement, Aker American Shipping stated that the company aims to expand its fleet from 12 to 25 state-of-the-art vessels. Aker American Shipping’s fleet comprises 10 product tankers and two shuttle tankers, all of which are chartered to SIU-contracted Overseas Shipholding Group (OSG) under bareboat charter agreements. OSG has already time-chartered 11 of these vessels to oil companies and refineries in the U.S. The new agreement with Aker Philadelphia Shipyard allows for a fleet expansion by an additional 13 vessels, for delivery between July 2011 and July 2015. There was no immediate word concerning charters for those vessels. However, according to the company, the ships “are of the robust, double-hull Veteran MT-46 Jones Act product tanker design; they can be easily modified to allow for deployment as shuttle tankers or chemical carriers.” That wasn’t the only big news recently announced about the tanker programs. On Nov. 16, the third tanker built at the Philadelphia Shipyard – the Overseas Los Angeles – was delivered. The occasion marked the first time in the yard’s history that three vessels were delivered in the same year. Following very successful sea trials and final testing and commissioning, the ship joins two sister vessels in the Jones Act trades that were built at the same yard: the Overseas Houston and Overseas Long Beach. Each of the ships is 600 feet long and capable of carrying 330,000 barrels of petroleum products. Each vessel weighs approximately 46,000 deadweight tons. Aker American Shipping President and CEO Dave Meehan stated, “This vessel is powerful evidence of the value of series construction. Built in a shorter period of time and delivered with zero outstanding inspection comments, this vessel will serve its crew and charterers well.” Three additional tankers are currently under construction at the yard, with the next vessel scheduled for delivery in the second quarter of 2008. In all, nine further tankers are slated to be delivered by the yard through 2011.