OSG To Build Four Tankers

Overseas Shipholding Group, Inc. will build four, 114,000 dwt 44-meterbeam Aframax tankers at the New Times Shipbuilding Co., Ltd. shipyard based in Jinjiang, China. The vessels, scheduled for delivery in 2008 and 2009, will increase OSG's Aframax fleet to 21 tankers serving customers in the Atlantic basin, and will operate in the Aframax International (AI) pool. The tankers will be built using the new Common Structural Rules (CSR) recently established by IACS for all tankers and bulk carriers ordered after April 1, 2006. Among other design upgrades, the new rules set forth stricter hull strength requirements and technical criteria of double hull tankers that had previously differed by each classification society. OSG has agreed to pay approximately $58 million for each of the high specification tankers.

The new tankers will add 456,000 deadweight tons to the Company's fleet, bringing its total owned, operated and newbuild fleet to 113 vessels, aggregating 12,652,837 dwt and 864,800 cbm. OSG co-founded and co-manages the AI pool which holds the number-two market position worldwide with a combined fleet of 42 Aframax tankers.

Additionally, the Company announced its intention to sell two of its older Aframax tankers. By replacing the older tonnage with newer, more efficient vessels, OSG will benefit from increased revenue and lower vessel operating expenses.

Mats Berglund, head of OSG's Crude Transportation Strategic Business unit stated, "The newbuild price we were able to negotiate was significantly less than the $75 million rates being quoted in the market today for less efficient vessels that are not CSR-compliant. After the sale of the older tankers, our marginal investment will more than double the commercial life of the vessels. Furthermore, the new ships are faster, have a larger carrying capacity and shallower draft than the vessels we intend to sell."