1409134--3/12/2008--OSG_America

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Capital expenditures and other costs necessary to maintain our vessels tend to increase with the age of the vessel. The capacity of our fleet will be reduced when four of our vessels are phased-out due to OPA 90. Delays or the failure in the delivery of newbuilds we have agreed to bareboat charter will result in the failure to replace this capacity and the reduction of our operating results. The cost of bringing certain of our vessels into compliance with OPA 90 will be significant and may cause us to reduce the amount of our cash distributions or prevent us from increasing the amount of our cash distributions. We intend to finance the purchase of the newbuild ATBs for which we have options to purchase from OSG with a combination of debt and equity securities. Depending on how we finance the acquisition of these ATBs, our ability to make cash distributions may be diminished or our unitholders could suffer dilution of their holdings. In addition, if we expand the size of our fleet, we generally will be required to make significant installment payments for newbuild vessels prior to their delivery and generation of revenue. Our ability to acquire additional newbuild product carriers may be limited. OSG s ability to obtain business from the Military Sealift Command ( MSC ) or other U.S. government agencies may be adversely affected by a determination by the MSC that OSG is not presently responsible for a single contract. American Shipping Corporation ( Aker ) has informed OSG that as a result of OSG s order of three articulated tug barges ( ATBs ) from Bender Shipbuilding Repair Co., Inc. ( Bender ), Aker is exercising a right it claims to have under its agreement with OSG to impose a five year extension of the term of each of the bareboat charters for the ten Jones Act product carriers that subsidiaries of OSG are chartering from subsidiaries of Aker. Our debt levels may limit our flexibility to obtain additional financing and to pursue other business opportunities. Our secured term loans and our senior secured revolving credit facility will contain restrictive covenants, which may limit our business and financing activities. Decreases in U.S. refining activity, particularly in the Gulf Coast region, could adversely affect our ability to grow our fleet, revenues and profitability. Delays in deliveries of newbuild product carriers or in the double-hulling of our remaining single-hulled ATB will affect our ability to grow and could harm our operating results. Drydocking of our vessels may require substantial expenditures and may result in the vessels being off-hire for significant periods of time, which could affect our ability to make cash distributions. We have high levels of fixed costs that will be incurred regardless of our level of business activity. We may not be able to renew time charters when they expire or obtain new time charters. An increase in the supply of Jones Act vessels without an increase in demand for such vessels could cause charter rates to decline, which could have a material adverse effect on our revenues and profitability. We may be unable to make or realize expected benefits from acquisitions and implementing our growth strategy through acquisitions may harm our business, financial condition and operating results. We depend on OSG and its affiliates to assist us in operating and expanding our business. Our growth depends on our ability to compete successfully against other shipping companies to expand relationships with existing customers and obtain new customers. We derive our revenues from certain major customers and the loss of any of these customers or time charters with any of them could result in a significant loss of revenues and cash flow. A decrease in the demand for our lightering services resulting from the deepening of the Delaware River or conditions affecting the Delaware Bay refineries could adversely affect our business and results of operations. Certain potential customers will not use vessels older than a specified age, even if they have been recently rebuilt. The U.S. flag shipping industry is unpredictable, which may lead to lower charter hire rates and lower vessel values. Decreased utilization of our vessels due to bad weather could have a material adverse effect on our operating results and financial condition. A decrease in the cost of importing refined petroleum products could cause demand for U.S. flag product carrier and barge capacity and charter rates to decline, which would decrease our revenues and our ability to pay cash distributions on our units. Our business would be adversely affected if the Jones Act provisions on coastwise trade were modified or repealed or if changes in international trade agreements were to occur. We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business. Marine transportation is inherently risky and an incident involving significant loss of environmental contamination by any of our vessels could harm our reputation and business. Our insurance may be insufficient to cover losses that may occur to our property or result from our operations. Increased competition from pipelines could result in reduced profitability. An increase in the price of fuel may adversely affect our business and results of operations. Over time, vessel values may fluctuate substantially and, if these values are lower at a time when we are attempting to dispose of a vessel, we may incur a loss. Maritime claimants could arrest our vessels, which could interrupt our cash flow. The U.S. government could requisition our vessels during a period of war or emergency without adequate compensation. Terrorist attacks, increased hostilities or war could lead to further economic instability, increased costs and disruption of our business. We depend on key personnel of OSGM for the success of our business and some of those persons face conflicts in the allocation of their time to our business. Risks Related to Our Common Units Following the establishment of cash reserves and payment of fees and expenses, including payments to our general partner, we may not have sufficient cash from operations to enable us to pay the minimum quarterly distribution on our common units. OSG controls our general partner, which has sole responsibility for conducting our business and managing our operations. Our general partner and its affiliates, including OSG, have conflicts of interest with us and limited fiduciary duties, and may favor their own interests to our unitholders detriment. We do not have 100% ownership of some of our assets and may need the consent of third parties to take certain actions, which may prevent us from operating or dealing with those assets as we deem them appropriate or necessary. Our partnership agreement limits our general partner s fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty. Cost reimbursements payable to our general partner and its affiliates, which will be determined by our general partner, will be substantial and will reduce our cash available for distribution to our unitholders. Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors, which could reduce the price at which the common units will trade. Even if unitholders are dissatisfied, they cannot remove our general partner without its consent. Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units. The control of our general partner may be transferred to a third party without unitholder consent. We may issue additional equity securities without unitholders approval, which would dilute the ownership interests. OSG may sell units in the public or private markets, which may have adverse effects on the price of our common units. We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets, which may affect our ability to make distributions to our unitholders. Our partnership agreement currently limits the ownership of our partnership interests by individuals or entities that are not U.S. citizens. This restriction could limit the liquidity of our common units. In establishing cash reserves, our general partner may reduce the amount of cash available for distributions to our unitholders. Our general partner has a limited call right that may require our unitholders to sell their common units at an undesirable time or price and is not required to obtain a fairness opinion in connection with the exercise of its call right. Our general partner may elect to cause us to issue Class B units and general partner units to it in connection with a resetting of the target distribution levels related to our general partner s incentive distribution rights, without the approval of the conflicts committee of our general partner or our unitholders. This could result in lower distributions to our common unitholders. If we make distributions out of capital surplus, as opposed to operating surplus, such distributions will constitute a return of capital and will result in a reduction in the minimum quarterly distribution and the target distribution levels. Unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business. We can borrow money to pay distributions, which would reduce the amount of borrowing capacity available to operate our business. Restrictions in our debt agreements will limit our ability to pay distributions upon the occurrence of certain events. Increases in interest rates may cause the market price of our common units to decline. Unitholders may have liability to repay distributions that were wrongfully distributed to them. Our tax treatment depends on our status as a partnership for federal income tax purposes and not being subject to entity-level taxation by states. If the IRS was to treat us as a corporation or if we were to become subject to entity-level taxation for state tax purposes, then our cash available for distribution to you would be substantially reduced. The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis. If the IRS contests the federal income tax positions we take, the market for our common units may be adversely affected and the costs of any contest will be borne by our unitholders and our general partner.

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1409134--3/12/2008--OSG_America_L.P.