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Tuesday, June 25, 2024

OSG Buys Laid Up Jones Act Tanker from BP

Maritime Activity Reports, Inc.

October 12, 2023

U.S. shipping company Overseas Shipholding Group, Inc. (OSG) on Thursday announced it has reached an agreement with BP Oil Shipping Company to purchase the Jones Act compliant crude oil tanker Alaskan Frontier.

Built by General Dynamics NASSCO in 2004, the 1.3-million-barrel capacity tanker is a sister to three other Alaskan Class vessels operated by OSG’s wholly owned subsidiary, Alaskan Tanker Company. It was part of Alaska Tanker Company's active fleet  until 2019 when the vessel was placed in cold lay-up in Labuan, Malaysia.

OSG said it expects the transaction will be completed in early November. Afterward, the company intends to reactivate the tanker, making “significant investments” in the vessel for it to begin commercial trade by the fourth quarter of 2024.

“The purchase of the Alaskan Frontier brings all four of the Alaskan class crude oil tankers under OSG’s ownership at a time when the prospect for expanded crude oil production in Alaska offers great promise for continued and increasing demand for ships of her type,” said Sam Norton, president and CEO of OSG. “Upon completion of shipyard work, which will include lifecycle upgrades on the engines that will improve the performance and longevity of the vessel, we believe that the Alaskan Frontier will be primed to provide additional transportation capacity to suit the needs of our customers in a time of limited availability.”

Norton added, “The full scope of reactivation work is expected to require a period of approximately one year and will, in addition to the engine upgrades, entail a ballast water treatment system installation and other improvements to prepare her for commercial use.”

The total capital commitment for the project, including the purchase price of the vessel, is approximately $50 million, OSG said.

Upgrades to each of the four engines on board are considered a lifecycle upgrade, which will be completed by MAN Energy Solutions. The modernization, which includes preparation for possible use of methanol fuel, will improve performance and fuel efficiency, generating expected 15-20% fuel savings as compared to the vessel’s current consumption, OSG said.