Two Tankers to Shift from OSG to Keystone, Dec 2022

Guess declining the option to renew the leases back in December wasn’t just a negotiating tactic by OSG.

OSG declined to renew three ships, two to Keystone apparently, any rumors on where the third is headed? (@argonbeam)

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Yea……not a great week for OSG.

No rumors on the third yet, but it’s the Texas City.

Hopefully Sam gets sacked after all this. He drove the company straight into the ground.

Sam Norton, OSG’s president and CEO, said at the time that, “the 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.”

And what’s the niche business? You’ve lost the lightering business in Philly. Your gamble on 3 shuttle tankers hasn’t paid off since one is laid up and off charter. And then you went and bought ATC?

Which one is that? I thought they were all working now?

Overseas Tampa. Laid up in Orange.

Just finished their yard in Freeport, arrived in Galveston today. I had assumed they had a charter which is why they finally started their yard period but I can’t confirm that.

Vessel OVERSEAS TAMPA is a Oil/Chemical Tanker,

The chemical tanker is a bit different from shuttler tankers. I thought it was a mistake, but in fact the ship was converted from a chemical tanker to shuttle tanker four years after it was built.
I know a bit about shuttle tankers, a bit more about product tankers and quite a lot of chemical tankers.
In my opinion, this ship was probably a very simple chemical tanker, or rather only an ordinary petroleum product carrier and now it is probably quite a difficult shuttle tanker to operate. Otherwise it was an unimaginably costly rebuilding.

I rarely contribute to a discussion because I simply don’t understand the specifics of the US Merchant Navy, and this is a good example. I cannot imagine what could have been dictated by the decisions to convert a four-year-old chemical (product?) tanker into a shuttle tanker and what effect was finally achieved.

It’s a long story, but I can promise you that it and two of its sisters are shuttle tankers. Yes, they were costly, but they were down for a charter. There are two FPSOs operating in the Gulf of Mexico that need Jones Act shuttle tankers to discharge to.

Ah! I missed that part. The reason they laid her up was to not go to the yard, so hopefully she has work ahead of her.

Tampa needed ballast water treatment system - it was just installed and Tampa back in action. Chinook and Cascade on longer-term charters offloading from Stones field. Long Beach is in Freeport drydock now. I will ask OSG mgmt why soon.

@Hawespiper. I don’t know the fate of Texas City yet. Some speculation OSG might try and negotiate better terms with AMSC to keep it, but I don’t really know at this point. Regarding their niche stuff, yeah, only one lightering ATB (Horizon) needed at this point. The second (Vision) is doing standard crude transport in Gulf right now. Even if Paulsboro restarted its crude distillation unit again, I don’t know if there will ever be enough lightering work in Delaware Bay for 2 ATBs since PES was such a big user of that service. The ATC acquisition was actually on really good terms and predictable cash flow there helped keep the lights on during 2021 - OSG was in bad shape financially and bleeding cash, and had to sell one of the int’l flag tankers, Gulf Coast, to raise cash. Sam mentions the MSP/TSP program all the time, so I think if given the opportunity to pick up another int’l-built MR tanker for a fourth TSP spot, OSG may go for it. Currently they have US-flagged Mykonos and Santorini doing MSP/DOD stuff - these are Korean-built so they can’t do Jones Act work. Sun Coast is doing standard int’l work, also being Korean-built and Marshall Island flag currently. As soon as TSP money is allocated by the feds, OSG will US-flag Sun Coast and there should be employment opportunities for US mariners there.

OSG also announced share buyback program recently. As a shareholder, I was very happy to see that. Whether or not they follow through remains to be seen. Sam has never been too enthusiastic about the idea in any quarterly report/earnings call, but the board of directors is clearly doing their job to try and do something to shore up the share price. OSG will make OK profit Q2 and should do quite well Q3.

OK, I am rambling a bit, as usual. Thanks for starting this thread @Hawespiper

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Once the TSP program comes online, what guarantee is there that OSG will get ANY slots? Has there been confirmation that existing tankers in MSP will automatically transfer to TSP? Even if that is the case, what makes OSG so confident that the Sun Coast will also get one of the (few) remaining slots?

TSP is for 10 ships. Assuming existing MSP tankers transfer over, how many slot remain to be filled? If (for example) there are 5 available slots and 10 ships apply, what makes OSG confident that they will get any of those slots?

Furthermore, will Mykonos and Santorini even be eligible for the TSP? Per text of the bill:

Section §53402. Establishment of the Tanker Security Fleet

(b) Vessel Eligibility.—A vessel is eligible to be included in the Fleet if the vessel—


(4) is not more than 10 years of age on the date the vessel is first included in the Fleet;

As Mykonos and Santorini are both 2010 built, I read this to mean they are too old to be enrolled. (Sun Coast [2019] would be ok on this front.) Perhaps existing MSP ships will have this grandfathered up to the max age of 20 years? Any indication that will be the case? Is there something that gives them confidence or are they just assuming at this point?

Sam has stated the Mykonos/Santorini pair will be grandfathered in and he is confident about the Sun Coast getting a third spot. There is talk to expand TSP to 20 tankers. That would likely be the only way OSG could get a 4th spot. During quarterly calls Sam has mentioned other types of ships like hydrogen ships, or CO2 transport, etc. I really hope they don’t go in that direction. I think OSG would be better off owned by Saltchuk and not a publicly-listed corporation. Too much anti-oil stuff in the US, and impossible for them to get any financing, etc, due to ESG mandates. Go private seems to be the best path forward, but that is just my opinion.

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I would be interested to know what his source of certainty/confidence is on those two points. Not saying he’s wrong, I would just like to know.

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As it was built in 2007, I would assume this is for the 15 year drydock period.

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From communication a few months ago: " While not yet codified, we expect the two OSG vessels currently in the MSP – the Overseas Santorini and the Overseas Mykonos to be transferred out of the MSP and be grandfathered into the TSP. "

I agree with you it is obviously not set in stone - I will inquire again about their degree of confidence regarding grandfathering.

Appreciate your comment on the Long Beach - I hadn’t looked at its age, so your 15 year survey comment is appreciated. I don’t know it is has a BWTS installed either - I will inquire about this as well and respond here when I have an answer. Overall, I would like to see an expansion of TSP to 20 vessels simply to have additional employment opportunities for American mariners. While not a mariner myself (I am a VA surgeon actually), I have a long line of Navy veterans in my family and wholeheartedly support strengthening the US mariner population. I imagine if TSP was expanded, it would be difficult to crew an additional 10 tankers immediately.
Cheers - Josh


From Sam’s mouth - " There is no certainty about anything TSP related as MARAD is working through rules as we speak. That being said, we have been given as clear a response as can be hoped for that Mykonos and Santorini will be accepted into the program subject OSG”s agreement to withdraw these vessels from the MSP program. I think that you can work on that scenario as a reliable base case assumption".

Regarding Long Beach, you (@Hawespiper) were spot on - survey + BWTS. Nikiski intermediate survey and BWTS in September, and Los Angeles special survey in November prior to being returned to American Shipping.

Cheers - Josh

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Unfortunately you can’t trust a thing Sam says. Hopefully his days in charge are numbered.

Isn’t Keystone another MEBA contracted company? At least the ships aren’t changing Unions. So thankfully no crew on those OSG vessels will be losing their jobs, pay, etc. Everyone will just end up changing boiler suits.

The deck officers are company employees, not MEBA.

Oh dang if I was a deck officer with them especially on the transferring vessels, I would be calling MEBA to see what’s up. They probably need Deck officers with PICs, more specifically senior officers with experience. Those guys most likely get a great deal joining. If I was a Junior officer I would be trying my hardest to get on those transferring vessels going to MEBA. I can’t image the MEBA wouldn’t guarantee their permanent jobs, pay, and then you get all the Union benefits like paid training, pension, etc.

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Really? SeaKay Spirit was meba top to bottom as are all the marad ships ksc operates. OSG has company mates but KSC tankers have been meba since around 2006