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Marine Log

October 5, 2007

OSG wins Jones Act shuttle tanker contract

Overseas Shipholding Group, Inc. (NYSE: OSG) today announced that it has signed a definitive agreement to charter two 46,000 dwt Jones Act tankers to Petrobras America, Inc. (Petrobras), marking the first U.S. Flag shuttle tankers to transport oil from ultra-deepwater drilling projects in the U.S. Gulf of Mexico. Petrobras America, Inc. is a unit of Petroleo Brasileiro S.A. (NYSE: PBR/PBRA), the twelfth largest oil company in the world.

OSG will provide shuttle tanker services from a Floating Production Storage and Offloading facility, or FPSO, at the Chinook and Cascade ultra-deepwater fields in the Walker Ridge area of the Gulf of Mexico.

Ultra-deepwater discoveries are located in water at least 8,000 feet deep and require an additional 15,000 feet of drilling beneath the ocean floor. FPSOs and shuttle tankers are a cost-effective means of transporting offshore oil where pipeline infrastructure is too costly or technologically not feasible to construct. This will be the first FPSO and shuttle tanker project in U.S. waters.

"Being awarded the first contract to provide Jones Act shuttle tanker services for ultra-deepwater projects in the U.S. Gulf of Mexico is very exciting for OSG," commented Morten Arntzen, President and Chief Executive Officer. "This award clearly demonstrates the power of the U.S. flag franchise, which we have built by combining Maritrans and OSG's U.S. flag business. As more and more U.S. Gulf ultra-deepwater fields move from exploration to development, our 16 vessel newbuilding program positions us to serve that market and increases our presence in Jones Act trades. We look forward to collaborating with Petrobras and their field partners in this ground-breaking project."

OSG will convert to shuttle tankers two of the 12 product tankers that it has ordered from Aker Philadelphia Shipyard. The company expects to deliver the converted shuttle tankers to Petrobras in the first quarters of 2010 and 2011. With today's announcement, 11 of the 12 ships OSG has ordered from Aker have been chartered out to major oil companies and refiners.

Dave Meehan, Aker American Shipping President and CEO stated, "We are the first US owner and builder entering the new and exciting Shuttle Tanker market where growth prospects are seen as very strong. This is an important strategic milestone for Aker American Shipping and is another example of how we are reinventing and reinvigorating the U.S. Jones Act market. Since we began building ships in Philadelphia in 2000 we have been the first to construct containerships, product tankers, and now shuttle tankers."

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