OSG Named as Co-defendant in Indictment

Overseas Shipholding Group, Inc. was indicted on July 19, 2006 by a federal grand jury in Beaumont, Texas for alleged violations of law concerning maintenance of books and records with respect to the handling of waste oils on the Pacific Ruby, one of the company's wholly-owned Aframax vessels. OSG was named as a co-defendant in a superseding indictment of the chief engineer on the Pacific Ruby, who was first charged on May 17, 2006. The charge is related to the ongoing Department of Justice investigation that began in 2003 regarding the handling of waste oils on the company's vessels. The company continues to cooperate with this investigation. OSG's goal is to reach a comprehensive settlement in connection with the overall investigation. OSG does not believe that this action will have any material impact on its ongoing business, its relations with customers and vendors, or any of its contractual arrangements.