Marine Log

August 7, 2006

OSG in CNG ship venture

Overseas Shipholding Group, Inc. (NYSE:OSG) has announced a strategic partnership agreement with TransCanada CNG Technologies Ltd, a subsidiary of TransCanada Corporation (NYSE:TRP) (TSX:TRP).

Under the agreement, OSG will own and operate a new type of tanker vessel, capable of moving large quantities of compressed natural gas (CNG). The ships will utilize TransCanada's patented technology for the design, construction and operation of Gas Transport Modules (GTMs) for the transportation of CNG from stranded gas fields throughout the world.

Morten Arntzen, President and CEO said, "We are very excited about working with TransCanada on both the development of these unique gas carriers and the projects for which they are intended. As the world seeks alternative energy resources and fuel substitutions, this proprietary technology is a real breakthrough for facilitating the recovery of natural gas from fields that were once not cost effective to reach."

Arntzen continued, "Combining TransCanada's unique technology with OSG's in-depth knowledge of marine transportation and vessel construction, will enable our respective companies to be the first to develop an efficient and commercially viable CNG vessel."

Compressed natural gas, or CNG, is gas that has been compressed for transportation in pressurized containers on ships, barges or trucks, rather than by pipeline. In many parts of the world, gas fields that cannot be readily connected by pipeline or developed for liquefied natural gas (LNG) are excellent candidates for CNG development. By mounting GTMs on barges or ships and providing a constant flow of natural gas into the market, the ships, in effect, become a floating pipeline.

TransCanada's GTM technology utilizes a proprietary composite reinforced steel pressure container system manufactured under license from NCF Industries Inc. (U.S. and foreign patents issued and pending).

Angus Campbell, the Head of OSG's Gas transportation unit further commented, "The CNG venture with TransCanada, one of the world's leading pipeline operators, is a natural extension of our LNG transportation platform and an exciting opportunity to bring new technologies to the marine energy transportation marketplace."