General Dynamics Nassco has acknowledged receipt of a $1 billion contract to build nine tankers designed to carry petroleum and chemicals.
U.S. Shipping Partners L.P. of Edison, N.J., placed the order for the 600-foot, double-hulled tankers, capable of holding 331,000 barrels of liquid.
On top of the nine, U.S. Shipping has options to order five more of the ships.
“This contract is the largest commercial shipbuilding contract in Nassco’s history,” said Frederick Harris, Nassco’s president, on Aug. 7, the day the company announced the deal.
Nassco employs 4,500 people in San Diego. While it’s too early to discuss specifics on how the new deal will affect those employees, Nassco spokesman Karl Johnson acknowledged that “there will be significant work for this work force at Nassco well into the next decade.”
The tankers are based on an existing design from South Korea-based Daewoo Shipbuilding and Marine Engingeering. Nassco announced in March that it was teaming up with Daewoo to produce ships for U.S. trade. Under a law known as the Jones Act, ships that carry freight from one U.S. port to another must be built in the United States.
Daewoo will provide other services related to the construction of the ships and will be a supplier, Johnson said.
A joint venture providing financing for the deal includes affiliates of the Blackstone Group as well as the shipping company and other unnamed investors.
Nassco crews are scheduled to start building the first ship in the third quarter of 2007. Delivery of the first ship is scheduled for the second quarter of 2009.
The product carrier tankers, known in-house as PCs, are smaller than the four oil tankers Nassco recently turned out for BP Shipping Co. of Alaska. The double-hulled BP tankers are 941 feet long and have roughly four times the capacity of the PCs.
Nassco is scheduled to deliver the final tanker to BP on Aug. 18.
The shipyard is also in the middle of filling a Navy order for nine ammunition and cargo ships. Nassco expects the Navy will exercise options for two more ships, Johnson said, adding that the Navy might ask for three more on top of that.
Nassco is a subsidiary of General Dynamics of Falls Church, Va.
