Keystone Shipping charters in two Jones Act tankers

Oslo-listed American Shipping Company ASA (AMSC), reports that it has entered into bareboat charter agreements with Philadelphia headquartered Keystone Shipping for two of its Jones Act tanker vessels, commencing in December 2022.

The bareboat charters have minimum terms of three years that may be extended at the charterer’s options. The charters are secured by back-to-back time charters of the same duration between Keystone and a major U.S. based oil and refinery group. The new charters add almost $60 million to American Shipping Company’s existing charter backlog, excluding any proceeds from a profit share component of the charters.

AMSC CEO Pål Lothe Magnussen commented, “We are pleased to have secured employment for these two vessels ahead of the expiration of their current charters at the end of this year. In doing so, we have increased our backlog and further ensured the visibility of our cash flows. Jones Act tanker capacity will remain constrained for the foreseeable future, and these charters are indicative of strong demand for our vessels. Chartering our vessels to a premium U.S. tanker operator like Keystone gives us a great deal of confidence that our vessels will be operated and maintained to the highest standards in order to serve U.S. oil companies’ transportation needs going forward.”

Keystone President Donald Kurz said, “Taking the two AMSC vessels on back-to-back bareboat charters will fall well within our strategy to operate ships in the domestic tanker trade. We are very happy to have concluded this bareboat transaction which allows us to service a key oil and refinery group in the U.S. Gulf.”

American Shipping Company ASA, whose largest shareholder is Aker ASA with a 19% stake, owns 10 Jones Act tankers delivered between 2007 and 2011 by the then Aker Philadelphia Shipyard (now Philly Shipyard).

Originally, all 10 were on bareboat charter to Overseas Shipholding Group, Inc. (NYSE: OSG). However, back in December 2021, OSG announced that it had exercised options to extend its bareboat charter agreements for two vessels, but would not be exercising extension options for three other vessels. The two bareboat charter extensions provided 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,” said OSG, adding that it “will operate the three vessels whose charters have not been extended for the next 12 months until the end of their current bareboat term in December 2022.”

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.”