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Reroute the ship even if it means a huge diversion
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GOLDEN STATE

December 10, 2008

NASSCO product tanker on sea trials

The M/T Golden State, the first product tanker built by General Dynamics NASSCO under a $1 billion, nine ship contract with U.S. Shipping Partners recently departed San Diego on its inaugural sea trials.

The 600-foot-long vessel is scheduled to be delivered to U.S. Shipping Partners in January 2009.

Designated as the PC-1 class, the product tankers in the series will be 183 meters (600.4 feet) in length and 32.2 meters (105.6 feet) in beam, with a design draft of 11.8 meters (38.7 feet). The ships will be double hulled, displace 49,000 dead weight tons (DWT) and have a cargo capacity of 331,000 barrels. Target operating speed is 14.8 knots.

The PC tankers are based on an existing design from DSEC, a wholly owned subsidiary of Daewoo Shipbuilding and Marine Engineering of Okpo, Korea. NASSCO entered into an agreement with DSEC in March 2006, to produce ships for the U.S. market under the Jones Act. DSEC is providing provide detail designs and some services related to construction of the ships.

U.S. Shipping Partners' recent financial problems raise some questions as to who will ultimately control these ships when completed.

U.S. Shipping Partners entered the contract with NASSCO through its subsidiary USS Product Carriers LLC. On August 7, 2006, that subsidiary entered into a joint venture, USS Products Investor LLC, to finance the construction of the first five tankers. U.S. Shipping Partners manages and owns a 40% interest in the Joint Venture and third parties own the remaining 60% interest. In its most recent quarterly report filed with the SEC, U.S. Shipping Partners said that its "ability to take delivery of the tanker vessels from the Joint Venture will depend on the Partnership's ability to finance the purchase of these vessels upon their completion which, based on the contractual purchase price, current market values and the Partnership's financial condition, is highly uncertain. If the vessels remain in the Joint Venture, the Partnership will not receive the majority of the benefits associated with ownership of these vessels and there is substantial doubt that the Partnership's interest in the Joint Venture will be realized."


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