Overseas Shipholding Group (OSG) has exercised options to extend bareboat charters with the Oslo-listed American Shipping Company (AMSC) for two vessels, while options to extend employment for three other ships will not be exercised as the New York-listed tanker player looks to adjust its energy transportation portfolio.
The two bareboat charter extensions provide for additional one-year terms, commencing in December 2022 and ending in December 2023. With these extensions, seven vessels will continue on lease from AMSC – six with maturity dates aligned to end in December 2023 and one with a maturity of 2025. As for the ships whose charters have not been extended, namely the MR2 product tankers Overseas New York, Overseas Los Angeles and Overseas Texas City, OSG will operate the trio for the next 12 months until the end of their current bareboat term in December 2022.
The Jones Act market for larger conventional tankers has shifted over the last five years
Sam Norton, OSG’s president and CEO, stated: “We believe the market continues to support attractive commercial opportunities for the vessel leases that we are retaining to supplement the strong and stable cash flow generation from our niche businesses.
“Our decision not to exercise some of our options reflects a continued diversification from a relatively high concentration in conventional Jones Act tankers and ATBs to our niche businesses that have enjoyed higher and more stable returns. The Jones Act market for larger conventional tankers has shifted over the last five years as marginal demand drivers domestically have become more volatile in both crude and refined product flows. While we are witnessing a rebound in demand currently, charter periods obtainable in the markets we serve have shortened and the trajectory to increased stability remains uncertain.”
Norton added that the decision to redeliver three vessels to AMSC will allow the company to redirect resources towards participating in a broader spectrum of opportunities in the existing and emerging markets for energy and liquid bulk commodities of all types.
OSG operates a fleet of 22 US-flagged vessels consisting of three crude oil tankers, two conventional ATBs, two lightering ATBs, three shuttle tankers, ten MR tankers, and two non-Jones Act MRs that participate in the US Maritime Security Program. The company also owns and operates one Marshall Islands-flagged MR tanker, which trades internationally.
