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                                                                   EXHIBIT 10.7

                       K-SEA TRANSPORTATION PARTNERS L.P.

                            LONG-TERM INCENTIVE PLAN

1.   PURPOSE OF THE PLAN.

          The K-Sea Transportation Partners L.P. Long-Term Incentive Plan (the
"Plan") is intended to promote the interests of K-Sea Transportation Partners
L.P., a Delaware limited partnership (the "Partnership"), by providing to
employees and directors of K-Sea Transportation GP, LLC, a Delaware limited
liability company (the "Company"), and its Affiliates who perform services for
the Partnership, incentive compensation awards for superior performance that are
based on Units. The Plan is also contemplated to enhance the ability of the
Company and its Affiliates to attract and retain the services of individuals who
are essential for the growth and profitability of the Partnership and to
encourage them to devote their best efforts to the business of the Partnership,
thereby advancing the interests of the Partnership.

2.   DEFINITIONS.

          As used in the Plan, the following terms shall have the meanings set
forth below:

          "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.

          "Award" means an Option or Phantom Unit granted under the Plan, and
shall include any DER granted with respect to a Phantom Unit.

          "Award Agreement" means the agreement entered into between the
Partnership and the Participant evidencing the terms and conditions of the
Award.

          "Board" means the Board of Directors of K-Sea Transportation GP, LLC,
a Delaware limited liability company.

          "Cash-Out Value" means the amount determined in Clause (i) or (ii),
whichever is applicable, as follows: (i) the per Unit price offered to
equityholders of the Partnership in any merger or consolidation or (iii) in the
event of a reorganization, the Fair Market Value per Unit determined by the
Committee as of the date determined by the Committee to be the date of
cancellation and surrender of an Award. In the event that the consideration
offered to equityholders of the Partnership in any transaction described in this
definition consists of anything other than cash, the Committee shall determine
the fair cash equivalent of the portion of the consideration offered which is
other than cash.

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          "Change in Control" shall be deemed to have occurred upon the
occurrence of one or more of the following events: (i) any sale, lease, exchange
or other transfer (in one or a series of related transactions) of all or
substantially all of the assets of the Partnership or K-Sea Operating Partners
L.P. to any Person or its Affiliates, other than the Partnership, the Company or
any of their Affiliates or (ii) any merger, reorganization, consolidation or
other transaction pursuant to which more than 50% of the combined voting power
of the equity interests in the Partnership or K-Sea Operating Partners L.P.
ceases to be owned by Persons who own such interests, respectively, as of the
date of the initial public offering of Units.

          "Committee" means the Compensation Committee of the Board or such
other committee of the Board appointed by the Board to administer the Plan.

          "DER" means a right, granted in tandem with a Phantom Unit, to receive
an amount in cash equal to, and at the same time as, the cash distributions made
by the Partnership with respect to a Unit during the period such Phantom Unit is
outstanding.

          "Director" means a member of the Board or the board of directors or
managers of an Affiliate who is not an Employee.

          "Employee" means any employee of the Company or an Affiliate,
including, without limitation, K-Sea Transportation Inc., a Delaware
corporation, in each case as determined by the Committee. Notwithstanding the
foregoing, the term "Employee" shall not include any individual covered by a
collective bargaining or comparable agreement between representatives of such
employees and the Partnership, the Company or any Affiliate of the Partnership
or the Company.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Fair Market Value" means the closing sales price of a Unit on the
date of determination (or, if there is no trading in the Units on such date, the
closing sales price on the last date the Units were traded) as reported in The
Wall Street Journal (or other reporting service approved by the Committee). In
the event Units are not publicly traded at the time a determination of Fair
Market Value is required to be made hereunder, the determination of Fair Market
Value shall be made in good faith by the Committee.

          "Option" means an option to purchase Units granted under the Plan.

          "Participant" means any Employee or Director granted an Award under
the Plan.

          "Partnership Agreement" means the First Amended and Restated Agreement
of Limited Partnership of the Partnership.

          "Person" means an individual or a corporation, limited liability
company, partnership, joint venture, trust, unincorporated organization,
association, governmental agency or political subdivision thereof or other
entity.

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          "Phantom Unit" means a phantom (notional) unit granted under the Plan
which upon vesting entitles the Participant to receive a Unit or an amount of
cash equal to the Fair Market Value of a Unit, whichever is determined by the
Committee.

          "Plan" means this K-Sea Transportation Partners L.P. Long-Term
Incentive Plan, as amended from time to time.

          "Restricted Period" means the period established by the Committee with
respect to an Award during which the Award remains subject to forfeiture (I.E.,
it is not vested) and is not exercisable by or payable to the Participant.

          "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from time
to time.

          "SEC" means the Securities and Exchange Commission, or any successor
thereto.

          "Unit" means a Common Unit of the Partnership.

3.   ADMINISTRATION.

          The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum, and the acts of the members of the
Committee who are present at any meeting thereof at which a quorum is present,
or acts unanimously approved by the members of the Committee in writing, shall
be the acts of the Committee. Subject to the following and any applicable law,
the Committee, in its sole discretion, may delegate any or all of its powers and
duties under the Plan, including the power to grant Awards under the Plan, to
the Chief Executive Officer of K-Sea Transportation GP, LLC (provided that the
Chief Executive Officer is a member of the Board), subject to such limitations
on such delegated powers and duties as the Committee may impose, if any. Upon
any such delegation all references in the Plan to the "Committee," other than in
Section 7, shall be deemed to include the Chief Executive Officer; provided,
however, that such delegation shall not limit the Chief Executive Officer's
right to receive Awards under the Plan. Notwithstanding the foregoing, the Chief
Executive Officer may not grant Awards to, or take any action with respect to
any Award previously granted to, himself, a person who is an officer subject to
Rule 16b-3 or who is a member of the Board. Subject to the terms of the Plan and
applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to a Participant; (iii) determine the number of Units to be
covered by Awards; (iv) determine the terms and conditions of any Award; (v)
determine whether, to what extent, and under what circumstances Awards may be
settled, exercised, canceled, or forfeited; (vi) interpret and administer the
Plan and any instrument or agreement relating to an Award made under the Plan;
(vii) establish, amend, suspend, or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (viii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee, may
be made at any time and shall

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be final, conclusive, and binding upon all Persons, including the Company, the
Partnership, any Affiliate, any Participant, and any beneficiary of any Award.

4.   UNITS.

          (a)     UNITS AVAILABLE. Subject to adjustment as provided in Section
4(c), the number of Units with respect to which Options and Phantom Units may be
granted under the Plan is 440,000. If any Option or Phantom Unit is forfeited or
otherwise terminates or is canceled without the delivery of Units, then the
Units covered by such Award, to the extent of such forfeiture, termination or
cancellation, shall again be Units with respect to which an Option or Phantom
Unit, as the case may be, may be granted.

          (b)     SOURCES OF UNITS DELIVERABLE UNDER AWARDS. Any Units delivered
pursuant to an Award shall consist, in whole or in part, of Units acquired in
the open market, from any Affiliate, or from the Partnership, or any combination
of the foregoing, as determined by the Committee in its discretion.

          (c)     ADJUSTMENTS. In the event that the Committee determines that
any distribution (whether in the form of cash, Units, other securities, or other
property), recapitalization, split, reverse split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of Units
or other securities of the Partnership, issuance of warrants or other rights to
purchase Units or other securities of the Partnership, or other similar
transaction or event affects the Units such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Units (or other securities or property) with
respect to which Awards may be granted, (ii) the number and type of Units (or
other securities or property) subject to outstanding Awards, and (iii) the grant
or exercise price with respect to any Award or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award; provided
that the number of Units subject to any Award shall always be a whole number.

          (d)     CASH-OUT OF AWARDS. In the event that the Partnership is
reorganized, merged or consolidated with another entity, the Committee may, in
its sole discretion, (i) require the mandatory surrender to the Partnership by
selected holders of Options of some or all of the outstanding Options held by
such holder (irrespective of whether such Options are then exercisable under the
provisions of the Plan) as of a date (before or after the reorganization, merger
or consolidation) specified by the Committee, in which event the Committee shall
thereupon cancel such Options and pay to each holder thereof an amount of cash
per Unit equal to the excess, if any, of the Cash-Out Value of the Units subject
to such Option over the exercise price(s) under such Options for such Units or
(ii) require the mandatory surrender to the Partnership by selected holders of
Phantom Units of some or all of the outstanding Phantom Units held by such
holder (irrespective of whether such Phantom Units are vested under the
provisions of the Plan) as of a date (before or after the reorganization, merger
or consolidation) specified by the Committee, in which event the Committee shall
thereupon cancel such Phantom Units and pay to each holder an amount of cash per
Phantom Unit equal to the Cash-Out Value of the Units.

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5.   ELIGIBILITY.

          Any Employee who performs services for the benefit of the Partnership
as determined by the Committee, or any Director shall be eligible to be
designated a Participant and receive an Award under the Plan.

6.   AWARDS.

          (a)     OPTIONS. The Committee shall have the authority to determine
the Employees and Directors to whom Options shall be granted, the number of
Units to be covered by each Option, the purchase price therefor, the Restricted
Period and the conditions and limitations applicable to the exercise of the
Option, including the following terms and conditions and such additional terms
and conditions, as the Committee shall determine, that are not inconsistent with
the provisions of the Plan.

                  (i)    EXERCISE PRICE. The purchase price per Unit purchasable
          under an Option shall be determined by the Committee at the time the
          Option is granted and may not be less than its Fair Market Value as
          of the date of grant.

                  (ii)   TIME AND METHOD OF EXERCISE. The Committee shall
          determine the Restricted Period with respect to an Option, which may
          include, without limitation, accelerated vesting upon the
          achievement of specified performance goals, and the method or
          methods by which payment of the exercise price with respect thereto
          be made or deemed to have been made, which may include, without
          limitation: (a) cash, (b) check acceptable to K-Sea Transportation
          GP, LLC, (c) a "cashless-broker" exercise through procedures
          approved by K-Sea Transportation GP, LLC or (d) any combination
          thereof, having a Fair Market Value on the exercise date equal to
          the relevant exercise price.

                  (iii)  FORFEITURE. Except as otherwise provided in the terms
          of the Option grant, upon termination of a Participant's employment
          with the Company and its Affiliates or membership on the Board,
          whichever is applicable, for any reason during the applicable
          Restricted Period, all Options shall be forfeited by the Participant
          (or any transferee) unless otherwise provided in a written
          employment agreement between the Participant and the Company or its
          Affiliates. The Committee may, in its discretion, waive in whole or
          in part such forfeiture with respect to a Participant's Options.

          (b)     PHANTOM UNITS. The Committee shall have the authority to
determine the Employees and Directors to whom Phantom Units shall be granted,
the number of Phantom Units to be granted to each such Participant, the
Restricted Period, the conditions under which the Phantom Units may become
vested or forfeited, which may include, without limitation, the accelerated
vesting upon the achievement of specified performance goals, and such other
terms and conditions as the Committee may establish with respect to such Awards
including whether DERs are granted with respect to such Phantom Units.

                  (i)    DERs. Phantom Units granted under the Plan may include
          a tandem DER grant.

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                  (ii)   FORFEITURE. Except as otherwise provided in the terms
          of the Phantom Units grant, upon termination of a Participant's
          employment with the Company and its Affiliates or membership on the
          Board, whichever is applicable, for any reason during the applicable
          Restricted Period, all Phantom Units shall be forfeited by the
          Participant (or any transferee) unless otherwise provided in a
          written employment agreement between the Participant and the Company
          or its Affiliates. The Committee may, in its discretion, waive in
          whole or in part such forfeiture with respect to a Participant's
          Phantom Units.

                  (iii)  LAPSE OF RESTRICTIONS. Unless a different payment time
          is specified in the Award agreement, the Participant shall be
          entitled to receive from the Company one Unit or cash equal to the
          Fair Market Value of a Unit, as determined by the Committee, in its
          discretion, upon or as soon as reasonably practical following the
          vesting of each Phantom Unit.

          (c)     GENERAL.

                  (i)    AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards
          may, in the discretion of the Committee, be granted either alone or
          in addition to, in tandem with, or in substitution for any other
          Award granted under the Plan or any award granted under any other
          plan of the Company or any Affiliate. Awards granted in addition to
          or in tandem with other Awards or awards granted under any other
          plan of the Company or any Affiliate may be granted either at the
          same time as or at a different time from the grant of such other
          Awards or awards.

                  (ii)   LIMITS ON TRANSFER OF AWARDS. Unless otherwise provided
          in the Award agreement, each Option shall be exercisable only by the
          Participant during the Participant's lifetime, or by the person to
          whom the Participant's right shall pass by will or the law of
          descent and distribution. Unless otherwise provided in the Award
          agreement, no Award and no right under any such Award may be
          assigned, alienated, pledged, attached, sold or otherwise
          transferred or encumbered by a Participant and any such purported
          assignment, alienation, pledge, attachment, sale, transfer or
          encumbrance shall be void and unenforceable against the Company and
          any Affiliate.

                  (iii)  TERM OF AWARDS. The term of each Award shall be for
          such period as may be determined by the Committee.

                  (iv)   UNIT CERTIFICATES. All certificates for Units or other
          securities of the Partnership delivered under the Plan pursuant to
          any Award or the exercise thereof shall be subject to such stop
          transfer orders and other restrictions as the Committee may deem
          advisable under the Plan or the rules, regulations, and other
          requirements of the SEC, any stock exchange upon which such Units or
          other securities are then listed, and any applicable federal or
          state laws. The Committee may cause a legend or legends to be put on
          any such certificates to make appropriate reference to such
          restrictions.

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                  (v)    CONSIDERATION FOR GRANTS. Awards may be granted for
          such consideration, including services, as the Committee determines.

                  (vi)   DELIVERY OF UNITS OR OTHER SECURITIES AND PAYMENT BY
          PARTICIPANT OF CONSIDERATION. Notwithstanding anything in the Plan
          or any grant agreement to the contrary, delivery of Units pursuant
          to the exercise or vesting of an Award may be deferred for any
          period during which, in the good faith determination of the
          Committee, K-Sea Transportation GP, LLC is not reasonably able to
          obtain Units to deliver pursuant to such Award without violating the
          rules or regulations of any applicable law or securities exchange.
          No Units or other securities shall be delivered pursuant to any
          Award until payment in full of any amount required to be paid
          pursuant to the Plan or the applicable Award Agreement (including,
          without limitation, any exercise price or tax withholding) is
          received by K-Sea Transportation GP, LLC. Such payment may be made
          by such method or methods and in such form or forms as the Committee
          shall determine, including, without limitation, cash, other Awards,
          withholding of Units, cashless-broker exercises with simultaneous
          sale, or any combination thereof; provided that the combined value,
          as determined by the Committee, of all cash and cash equivalents and
          the Fair Market Value of any such Units or other property so
          tendered to K-Sea Transportation GP, LLC, as of the date of such
          tender, is at least equal to the full amount required to be paid to
          K-Sea Transportation GP, LLC pursuant to the Plan or the applicable
          Award agreement.

                  (vii)  CHANGE IN CONTROL. Subject to additional or contrary
          provisions in the Award agreement, upon a Change in Control or such
          period prior thereto as may be established by the Committee, all
          Awards shall automatically vest and become payable or exercisable,
          as the case may be, in full. In this regard, all Restricted Periods
          shall terminate and all performance criteria, if any, shall be
          deemed to have been achieved at the maximum level. To the extent an
          Option is not exercised upon a Change in Control, the Committee may,
          in its discretion, cancel such Award without payment or provide for
          a replacement grant with respect to such Award on such terms as it
          deems appropriate.

7.   AMENDMENT AND TERMINATION.

          Except to the extent prohibited by applicable law:

          (a)     AMENDMENTS TO THE PLAN. Except as required by the rules of the
principal securities exchange on which the Units are traded and subject to
Section 7(b) below, the Board or the Committee may amend, alter, suspend,
discontinue, or terminate the Plan in any manner, including increasing the
number of Units available for Awards under the Plan, without the consent of any
partner, Participant, other holder or beneficiary of an Award, or other Person.

          (b)     AMENDMENTS TO AWARDS. Subject to Section 7(a), the Committee
may waive any conditions or rights under, amend any terms of, or alter any Award
theretofore granted, provided no change, other than pursuant to Section 7(c), in
any Award shall materially reduce the benefit to a Participant without the
consent of such Participant.

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          (c)     ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(c) of the Plan) affecting the Partnership or the
financial statements of the Partnership, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan.

8.   GENERAL PROVISIONS.

          (a)     NO RIGHTS TO AWARD. No Person shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment of Participants. The terms and conditions of Awards need not be the
same with respect to each recipient.

          (b)     WITHHOLDING. The Company, its Affiliate or its designated
third party administrator shall have the right to deduct applicable taxes from
any Award payment and withhold, at the time of delivery or vesting of cash or
Units under this Plan, an appropriate amount of cash or number of Units or a
combination thereof for payment of taxes or other amounts required by law or to
take such other action as may be necessary in the opinion of the Company or its
Affiliate to satisfy all obligations for withholding of such taxes. The
Committee may also permit withholding to be satisfied by the transfer to the
Company or its Affiliate of Units theretofore owned by the holder of the Award
with respect to which withholding is required. If Units are used to satisfy tax
withholding, such Units shall be valued based on the Fair Market Value when the
tax withholding is required to be made.

          (c)     NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate or to remain on the Board, as applicable. Further, the
Company or an Affiliate may at any time dismiss a Participant from employment.

          (d)     GOVERNING LAW. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware without regard to its conflict
of laws principles.

          (e)     SEVERABILITY. If any provision of the Plan or any Award
becomes invalid, illegal, or unenforceable in any jurisdiction or as to any
Person or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be deemed amended to conform
to the applicable laws, or if it cannot be construed or deemed amended without
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.

          (f)     OTHER LAWS. Notwithstanding anything in the Plan or any Award
agreement to the contrary, the Committee may refuse to issue or transfer any
Units or other consideration under an Award if, in its sole discretion, it
determines that the issuance or transfer

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of such Units or such other consideration might violate any applicable law or
regulation, the rules of the principal securities exchange on which the Units
are then traded.

          (g)     NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any participating Affiliate and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company or any participating Affiliate pursuant to
an Award, such right shall be no greater than the right of any general unsecured
creditor of the Company or any participating Affiliate.

          (h)     NO FRACTIONAL UNITS. No fractional Units shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Units or whether such fractional Units or any rights
thereto shall be canceled, terminated, or otherwise eliminated.

          (i)     HEADINGS. Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

          (j)     FACILITY OF PAYMENT. Any amounts payable hereunder to any
individual under legal disability or who, in the judgment of the Committee, is
unable to properly manage his financial affairs, may be paid to the legal
representative of such person, or may be applied for the benefit of such person
in any manner that the Committee may select, and the Company and its Affiliates
shall be relieved of any further liability for payment of such amounts.

          (k)     GENDER AND NUMBER. Words in the masculine gender shall include
the feminine gender, the plural shall include the singular and the singular
shall include the plural.

9.   TERM OF THE PLAN.

          The Plan shall be effective on the date of its approval by the Board
and shall continue until the date terminated by the Board or the date Units are
no longer available for the payment of Awards under the Plan, whichever occurs
first. However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted prior to such termination, and the
authority of the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights
under such Award, shall extend beyond such termination date.

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