Exhibit 10.2

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666 Third Avenue
New York, NY 10017
Tel:  212 953 4100
www.osg.com

9/11/2006

Mr. Ian Blackley
9 Castle Road
Chappaqua, NY  10514

Dear Ian:

We are pleased to confirm your offer as managing Director & Chief Operating
Officer – OSG Ship Management (UK) Ltd., effective September 1, 2005.  The
relevant components of this offer are as follows:

1.      Title and Position.  You will be Managing Director & Chief Operating
Officer – OSG Ship Management (UK) Ltd., (“OSGUK”).  You will manage OSGUK (and
all its subsidiaries) with principal responsibility for the technical operation
of all vessels managed by OSGUK – currently OSG’s crude oil fleet and LNG
fleet.  In this position, you will report directly to the Global Head of
Shipping Operations.  You will continue to be based out of the New York office
and on secondment in Newcastle for the duration of this assignment.  You will be
located in Newcastle and will devote substantially all of your business time and
reasonable best efforts to the performance of your duties and shall discharge
your duties diligently, faithfully and in the best interests of the Company.
 
2.      Compensation and Benefits.   The Company will pay you a base salary at
the rate of $375,000 (“Base Salary”) per year and you will be eligible for
bonuses in accordance with our bonus plans which, for 2005, will be pro rated
for the portion of the year you are employed in this new position.  You will
continue to be paid out of this office and effectively carry forward your
existing benefits and programs for which you are currently eligible.  The
company will meet expenses of required filings including tax filings, and legal
and tax advice that are incurred with this assignment.

3.      Tax Equalization.   During your assignment you will be eligible for tax
equalization.  The objective of the company’s Tax Equalization Program is to
ensure that you neither gain nor lose as a result of your foreign
assignment.  The program ensures that your total taxes will be approximately the
same during your foreign assignment as they would have been had employment
continued here in the US.
During the year OSG will withhold a hypothetical tax which is an estimate of
your US Federal and State tax liability on your company and personal
income.  This calculation will be done prior to the start of your international
assignment and will be adjusted during your international assignment if there is
a change in your hypothetical tax.  Note, hypothetical tax withheld by OSG will
be used for payment of actual taxes [or application towards additional costs
relating to your overseas assignment].

 
 

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666 Third Avenue
New York, NY 10017
Tel:  212 953 4100
www.osg.com

At each year-end, after your US tax returns have been finalized, the final
hypothetical tax liability will be computed.  This tax equalization calculation
is based on applicable Federal and State tax laws in force during the period for
which the calculation is being made.  The final hypothetical tax will be
compared to the amounts withheld during the year.  A settlement between you and
the Company will be made at that time.

4.      Moving Expenses.  In recognition of this move to Newcastle and the
various expenses that may be incurred, you will be given a lump sum payment of
$40,000.  Upon completion of this assignment, the company will meet all
reasonable moving expenses for your return to the US.  This provision will not
apply in the event of your voluntary resignation from the company.

5.      Termination.   If your employment with the Company terminates as a
result of your resignation the Company will pay (i) any Base Salary earned but
not yet paid, (ii) any accrued vacation pay, (iii) any bonus for any prior
completed year earned to the extent provided under the terms of the applicable
plan or program but not yet paid, and (iv) any amounts due under any other plan
of the Company applicable to you.  You will not be entitled to any other
amounts.

Once you have accepted this offer by signing this letter, please return a copy
to me.

 
/s/Robert Johnston
 
Robert Johnston
     
Sr. Vice President and Chief Commercial Officer
   
Agreed & Accepted:
     
/s/Ian Blackley
 
Ian Blackley
 

 
 
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