20-F

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC. 20549

                                    FORM 20-F
 (Mark One)

[ ]          REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR
[X]               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended         December 31, 2006

                                       OR

[ ]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

      For the transition period from _________________ to _________________

                                       OR
[ ]  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

Date of event requiring this shell company report
                                                 -------------------------------

For the transition period from
                              --------------------------------------------------

Commission file number        001-16601
                              --------------------------------------------------

                                  Frontline Ltd
- --------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                                  Frontline Ltd
- --------------------------------------------------------------------------------
                 (Translation of Registrant's name into English)

                                    Bermuda
- --------------------------------------------------------------------------------
                 (Jurisdiction of incorporation or organization)

       Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda

                    (Address of principal executive offices)

Securities registered or to be registered pursuant to section 12(b) of the Act

      Title of each class              Name of each exchange on which registered
Ordinary Shares, $2.50 Par Value               New York Stock Exchange
- ----------------------------------    ------------------------------------------

Securities registered or to be registered pursuant to section 12(g) of the Act.

                                      None
- --------------------------------------------------------------------------------
                                (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.

                        Ordinary Shares, $2.50 Par Value
- --------------------------------------------------------------------------------
                                (Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

                   74,825,169 Ordinary Shares, $2.50 Par Value
- --------------------------------------------------------------------------------

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.

                                 Yes |X| No |_|

If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.

                                 Yes |_| No |X|

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes |X| No |_|

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer |X|   Accelerated filer |_|    Non-accelerated filer |_|

Indicate by check mark which financial statement item the registrant has elected
to follow.

                             Item 17 | | Item 18 |X|

If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).

                                 Yes |_| No |X|


                          INDEX TO REPORT ON FORM 20-F

                                                                            PAGE
PART I
- ------
Item 1.      Identity of Directors, Senior Management and Advisers ........    1
Item 2.      Offer Statistics and Expected Timetable ......................    1
Item 3.      Key Information...............................................    1
Item 4.      Information on the Company....................................   13
Item 4A.     Unresolved Staff Comments.....................................   31
Item 5.      Operating and Financial Review and Prospects..................   31
Item 6.      Directors, Senior Management and Employees....................   51
Item 7.      Major Shareholders and Related Party Transactions.............   53
Item 8.      Financial Information.........................................   55
Item 9.      The Offer and Listing.........................................   56
Item 10.     Additional Information........................................   57
Item 11.     Quantitative and Qualitative Disclosures about Market Risk....   71
Item 12.     Description of Securities other than Equity Securities........   71

PART II
- -------
Item 13.     Defaults, Dividend Arrearages and Delinquencies...............   72
Item 14.     Material Modifications to the Rights of Security Holders
             and Use of Proceeds...........................................   72
Item 15.     Controls and Procedures.......................................   72
Item 16.     Reserved......................................................   73
Item 16A.    Audit Committee Financial Expert..............................   73
Item 16B.    Code of Ethics................................................   73
Item 16C.    Principal Accountant Fees and Services........................   73
Item 16D.    Exemptions from the Listing Standards for Audit Committees....   74
Item 16E.    Purchases of Equity Securities by the Issuer
             and Affiliated Purchasers.....................................   74

PART III
- --------
Item 17.     Financial Statements..........................................   75
Item 18.     Financial Statements..........................................   75
Item 19.     Exhibits......................................................   75


            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Matters discussed in this report may constitute forward-looking statements. The
Private Securities Litigation Reform Act of 1995 provides safe harbor
protections for forward-looking statements in order to encourage companies to
provide prospective information about their business. Forward-looking statements
include statements concerning plans, objectives, goals, strategies, future
events or performance, and underlying assumptions and other statements, which
are other than statements of historical facts.

Frontline Ltd., or the Company, desires to take advantage of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and is
including this cautionary statement in connection with this safe harbor
legislation. This report and any other written or oral statements made by us or
on our behalf may include forward-looking statements, which reflect our current
views with respect to future events and financial performance. When used in this
report, the words "believe," "anticipate," "intend," "estimate," "forecast,"
"project," "plan," "potential," "will," "may," "should," "expect" and similar
expressions identify forward-looking statements.

The forward-looking statements in this report are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management's examination of historical operating
trends, data contained in our records and other data available from third
parties. Although we believe that these assumptions were reasonable when made,
because these assumptions are inherently subject to significant uncertainties
and contingencies which are difficult or impossible to predict and are beyond
our control, we cannot assure you that we will achieve or accomplish these
expectations, beliefs or projections.

In addition to these important factors and matters discussed elsewhere herein
and in the documents incorporated by reference herein, important factors that,
in our view, could cause actual results to differ materially from those
discussed in the forward-looking statements include the strength of world
economies, fluctuations in currencies and interest rates, general market
conditions, including fluctuations in charterhire rates and vessel values,
changes in demand in the tanker market, including changes in demand resulting
from changes in OPEC's petroleum production levels and world wide oil
consumption and storage, changes in the Company's operating expenses, including
bunker prices, drydocking and insurance costs, changes in governmental rules and
regulations or actions taken by regulatory authorities, potential liability from
pending or future litigation, general domestic and international political
conditions, potential disruption of shipping routes due to accidents, political
events or acts by terrorists, and other important factors described from time to
time in the reports filed by the Company with the Securities and Exchange
Commission.


                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable

ITEM 3. KEY INFORMATION

Throughout this report, the "Company," "we," "us" and "our" all refer to
Frontline Ltd. and its subsidiaries. We use the term deadweight ton, or dwt, in
describing the size of vessels. Dwt, expressed in metric tons, each of which is
equivalent to 1,000 kilograms, refers to the maximum weight of cargo and
supplies that a vessel can carry. The Company operates tankers of two sizes:
very large crude carriers, or VLCCs, which are between 200,000 and 320,000
deadweight tons, or dwt, and Suezmaxes, which are vessels between 120,000 and
170,000 dwt. We also operate oil/bulk/ore or OBO carriers which can be used to
carry oil or dry cargo on any voyage. Unless otherwise indicated, all references
to "USD,""US$" and "$" in this report are U.S. dollars.

A. SELECTED FINANCIAL DATA

The selected income statement data of the Company with respect to the fiscal
years ended December 31, 2006, 2005 and 2004 and the selected balance sheet data
of the Company with respect to the fiscal years ended December 31, 2006 and 2005
have been derived from the Company's Consolidated Financial Statements included
in Item 18 of this annual report, prepared in accordance with United States
generally accepted accounting principles. The selected income statement data
with respect to the fiscal years ended December 31, 2003 and 2002 and the
selected balance sheet data with respect to the fiscal years ended December 31,
2004, 2003 and 2002 have been derived from consolidated financial statements of
the Company not included herein. The income statement data for the years ended
December 31, 2004, 2003 and 2002 has been restated to reflect discontinued
operations as a result of the sale of the Company's last remaining drybulk
carrier in 2005. The income statement and balance sheet data as at and for the
years ended December 31, 2005, 2004 and 2003 has been restated to change from
consolidation accounting to equity method accounting for four subsidiaries
acquired in 2003. During 2006, the Company revisited its analysis of the
accounting for these subsidiaries and determined that it was not the primary
beneficiary of these entities under FASB Interpretation No. 46 (revised December
2003) Consolidation of Variable Interest Entities, an Interpretation of ARB No.
51 and therefore has accounted for these subsidiaries using the equity method.
As the consolidation and equity accounting models result in the same net income,
there has been no change in opening equity or earnings per share data as a
result of this restatement. The following table should be read in conjunction
with Item 5. "Operating and Financial Review and Prospects" and the Company's
Consolidated Financial Statements and Notes thereto included herein.






                                                                  Fiscal year ended December 31,
                                                  2006           2005           2004          2003              2002
                                                              (restated)     (restated)    (restated)
                                              ----------------------------------------------------------------------
(in thousands of $, except ordinary shares, per ordinary share data and ratios)
                                                                                            
Income Statement Data:
Total operating revenues (1)                   1,583,863      1,504,516      1,842,923      1,159,439         543,637
Total operating expenses(1)                      856,939        717,054        737,389        683,515         450,371
Net operating income                             822,579        863,543      1,125,108        480,984          92,038
Net income from continuing operations
before income taxes, minority interest and
cumulative effect of change in accounting
principle                                        674,844        766,389        970,936        439,518          11,188
Net income from continuing operations
before cumulative effect of
change in accounting principle                   516,000        598,054        905,763        439,515          11,210
Discontinued operations (2)                            -          8,785        117,619          3,612          (5,967)
Cumulative effect of change in accounting
principle (3)                                          -              -              -        (33,767)        (14,142)
Net income (loss)                                516,000        606,839      1,023,382        409,360          (8,899)
Earnings from continuing operations
before cumulative effect of change in
accounting principle per ordinary share
- - basic                                            $6.90          $7.99         $12.21          $5.87           $0.15
- - diluted                                          $6.90          $7.99         $12.21          $5.86           $0.15
Net income (loss) per ordinary share
- - basic                                            $6.90          $8.11         $13.79          $5.47          $(0.12)
- - diluted                                          $6.90          $8.11         $13.79          $5.45          $(0.12)
Cash dividends declared per share                  $7.00         $10.10         $13.60          $4.55           $0.25

Balance Sheet Data (at end of year):
Cash and cash equivalents                        197,181         92,782         96,879        112,000          92,078
Newbuildings and vessel purchase options         166,851         15,927         24,231          8,370          27,405
Vessels and equipment, net                     2,446,278      2,584,847      2,254,361      2,165,239       2,373,329
Vessels under capital lease, net                 626,374        672,608        718,842        765,126         264,902
Investments in associated companies               17,825         15,783         28,881        179,416         119,329
Total assets                                   4,589,937      4,454,817      4,211,160      4,319,345       3,034,743
Short-term debt and current portion of
long-term debt                                   281,409        228,135        137,332        174,826         167,807
Current portion of obligations under
capital lease                                     28,857         25,142         21,498         20,138          13,164
Long-term debt                                 2,181,885      2,101,061      1,879,598      1,966,471       1,277,665
Obligations under capital lease                  723,073        706,279        732,153        753,823         259,527
Share capital                                    187,063        187,063        187,063        184,120         191,166
Stockholders' equity                             668,560        715,166        917,968      1,255,417       1,226,973
Ordinary shares outstanding                   74,825,169     74,825,169     74,825,169     73,647,930      76,466,566
Weighted average ordinary shares
outstanding                                   74,825,169     74,825,169     74,192,939     74,901,900      76,456,340

Other Financial Data:
Equity to assets ratio (percentage) (4)             14.6%          16.1%          21.8%          29.1%           40.4%
Debt to equity ratio (5)                             4.8            4.3            3.2            2.3             1.4
Price earnings ratio (6)                             4.6            4.7            3.2            4.7             neg
Time charter equivalent revenue (7)            1,172,566      1,163,418      1,477,537        832,950         406,068



Notes:

1.   Previously we have reported net operating revenues in our income statement
     data. Effective December 31, 2003 we have reclassified voyage expenses and
     commission as a component of total operating expenses and now report total
     operating revenues and total operating expenses.

2.   During the years ended December 31, 2005, 2004 and 2002 the Company
     disposed of portions of its dry-bulk operations which have been recorded as
     discontinued operations in the years ended December 31, 2005, 2004, 2003
     and 2002. These operations were acquired in 2000.

3.   In 2003, the Company adopted FIN 46R "Consolidation of Variable Interest
     Entities" and recorded a charge of $33.7 million as a result of this change
     in accounting principle. On January 1, 2002, the Company adopted FAS 142
     "Goodwill and Other Intangible Assets" and subsequently wrote off goodwill
     of $14.1 million.

4.   Equity to assets ratio is calculated as total stockholders' equity divided
     by total assets.

5.   Debt to equity ratio is calculated as total interest bearing current and
     long-term liabilities, including obligations under capital leases, divided
     by stockholders' equity.

6.   Price earnings ratio is calculated using the closing year end share price
     divided by basic earnings per share.

7.   A reconciliation of time charter equivalent revenues to total operating
     revenues as reflected in the consolidated statements of operations is as
     follows:



                                      2006          2005          2004         2003           2002
                                  ------------------------------------------------------------------
(in thousands of $)
                                                                             
Total operating revenues           1,583,863     1,504,516     1,842,923     1,159,439       543,637
Less:
Other revenue                        (14,721)       (3,877)       (3,777)       (3,111)       (2,639)
Voyage expense                      (396,576)     (337,221)     (361,609)     (323,378)     (134,930)
                                  ------------------------------------------------------------------
Time charter equivalent revenue    1,172,566     1,163,418     1,477,537       832,950       406,068
                                  ------------------------------------------------------------------


Our vessels are operated under time charters, bareboat charters, voyage
charters, pool arrangements and contracts of affreightment, or COAs. Under a
time charter, the charterer pays substantially all of the vessel voyage costs
which are primarily fuel and port charges. Under a bareboat charter the
charterer pays substantially all of the vessel voyage and operating costs. Under
a voyage charter, the vessel owner pays such costs. Under contracts of
affreightment, the owner carries an agreed upon quantity of cargo over a
specified route and time period. Accordingly, charter income from a voyage
charter would be greater than that from an equally profitable time charter to
take account of the owner's payment of vessel voyage costs, and charter income
from a bareboat charter would be lower than that from an equally profitable time
charter, to take account of the charterer's payment of vessel operating costs.
In order to compare vessels trading under different types of charters, it is
standard industry practice to measure the revenue performance of a vessel in
terms of time charter equivalent revenue, or TCE. Total TCE is the sum of time
charter, voyage charter and bareboat charter revenues, less voyage expenses.
Total TCE, which is not covered by generally accepted accounting principles, or
GAAP, provides more meaningful information to us than total operating revenues,
the most directly comparable GAAP measure. Average daily TCEs are also widely
used by investors and analysts in the tanker shipping industry for comparing
financial performance between companies and to industry averages. In order to
calculate the daily TCE figures disclosed in ITEM 5, TCEs for bareboat charters
include an allowance for estimated operating costs that would be paid by us
under an equivalently profitable time charter. Other companies may calculate TCE
using a different method.

B. CAPITALIZATION AND INDEBTEDNESS

Not Applicable

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable

D. RISK FACTORS

We are engaged primarily in transporting crude oil and oil products. The
following summarizes some of the risks that may materially affect our business,
financial condition or results of operations.

                          Risks Related to Our Industry

The cyclical nature of the tanker industry may lead to volatile changes in
charter rates and vessel values which may adversely affect our earnings

Historically, the tanker industry has been highly cyclical, with volatility in
profitability and asset values resulting from changes in the supply of and
demand for tanker capacity. If the tanker market is depressed in the future our
earnings and available cash flow may decrease. Our ability to re-charter our
vessels on the expiration or termination of their current spot and time and
bareboat charters and the charter rates payable under any renewal or replacement
charters will depend upon, among other things, economic conditions in the tanker
market. Fluctuations in charter rates and vessel values result from changes in
the supply and demand for tanker capacity and changes in the supply and demand
for oil and oil products.

The factors affecting the supply and demand for oil tankers are outside of our
control, and the nature, timing and degree of changes in industry conditions are
unpredictable. The factors that influence demand for tanker capacity include:

     o    demand for oil and oil products;
     o    global and regional economic conditions;
     o    changes in oil production and refining capacity;
     o    environmental and other regulatory developments;
     o    the distance oil and oil products are to be moved by sea; and
     o    changes in seaborne and other transportation patterns.

The factors that influence the supply of tanker capacity include:

     o    the number of newbuilding deliveries;
     o    the scrapping rate of older vessels;
     o    vessel casualties;
     o    price of steel;
     o    potential conversion of vessels to alternative use;
     o    the number of vessels that are out of service; and
     o    changes in environmental and other regulations that may effectively
          cause reductions in the carrying capacity of vessels or early
          obsolescence of tonnage.

The international tanker industry has experienced historically high charter
rates and vessel values in the recent past and there can be no assurance that
these historically high charter rates and vessel values will be sustained

Charter rates in the tanker industry are volatile. We anticipate that future
demand for our vessels, and in turn our future charter rates, will be dependent
upon continued economic growth in the world's economy as well as seasonal and
regional changes in demand and changes in the capacity of the world's fleet. We
believe that these charter rates are the result of continued economic growth in
the world economy that exceeds growth in global vessel capacity. There can be no
assurance that economic growth will not stagnate or decline leading to a
decrease in vessel values and charter rates. A decline in charter rates could
have a material adverse effect on our business, financial condition, results of
operation and ability to pay dividends.

Any decrease in shipments of crude oil may adversely affect our financial
performance

The demand for our oil tankers derives primarily from demand for Arabian Gulf
and West African crude oil, along with crude oil from the former Soviet Union,
or the FSU, which, in turn, primarily depends on the economies of the world's
industrial countries and competition from alternative energy sources. A wide
range of economic, social and other factors can significantly affect the
strength of the world's industrial economies and their demand for crude oil from
the mentioned geographical areas. One such factor is the price of worldwide
crude oil. The world's oil markets have experienced high levels of volatility in
the last 25 years. If oil prices were to rise dramatically, the economies of the
world's industrial countries may experience a significant downturn.

Any decrease in shipments of crude oil from the above mentioned geographical
areas would have a material adverse effect on our financial performance. Among
the factors which could lead to such a decrease are:

     o    increased crude oil production from other areas;
     o    increased refining capacity in the Arabian Gulf, West Africa or the
          FSU;
     o    increased use of existing and future crude oil pipelines in the
          Arabian Gulf, West Africa and FSU;
     o    a decision by Arabian Gulf, West African and FSU oil-producing nations
          to increase their crude oil prices or to further decrease or limit
          their crude oil production;
     o    armed conflict in the Arabian Gulf and West Africa and political or
          other factors; and
     o    the development and the relative costs of nuclear power, natural gas,
          coal and other alternative sources of energy.

An increase in the supply of vessel capacity without an increase in demand for
vessel capacity would likely cause charter rates and vessel values to decline,
which could have a material adverse effect on our results of operations and
financial condition

The supply of vessels generally increases with deliveries of new vessels and
decreases with the scrapping of older vessels, conversion of vessels to other
uses, such as floating production and storage facilities, and loss of tonnage as
a result of casualties. Currently there is significant new building activity
with respect to virtually all sizes and classes of vessels. If the amount of
tonnage delivered exceeds the number of vessels being scrapped, vessel capacity
will increase. If the supply of vessel capacity increases and the demand for
vessel capacity does not, the charter rates paid for our vessels as well as the
value of our vessels could materially decline. Such a decline in charter rates
and vessel values would likely have a material adverse effect on our revenues
and profitability.

Risks involved with operating ocean-going vessels could affect our business and
reputation, which could have a material adverse effect on our results of
operations and financial condition

The operation of an ocean-going vessel carries inherent risks. These risks
include the possibility of:

     o    marine disaster;
     o    piracy;
     o    environmental accidents;
     o    cargo and property losses or damage; and
     o    business interruptions caused by mechanical failure, human error, war,
          terrorism, piracy, political action in various countries, labour
          strikes, or adverse weather conditions.

Any of these circumstances or events could increase our costs or lower our
revenues. The involvement of our vessels in an oil spill or other environmental
disaster may harm our reputation as a safe and reliable tanker operator.

Maritime claimants could arrest our tankers, which could have a material adverse
effect on our results of operations and financial condition

Crew members, suppliers of goods and services to a vessel, shippers of cargo and
other parties may be entitled to a maritime lien against that vessel for
unsatisfied debts, claims or damages. In many jurisdictions a maritime
lienholder may enforce its lien by arresting a vessel through foreclosure
proceedings. The arrest or attachment of one or more of our vessels could
interrupt our cash flow and require us to pay a significant amount of money to
have the arrest lifted.

In addition, in some jurisdictions, such as South Africa, under the "sister
ship" theory of liability, a claimant may arrest both the vessel which is
subject to the claimant's maritime lien and any "associated" vessel, which is
any vessel owned or controlled by the same owner. Claimants could try to assert
"sister ship" liability against one vessel in our fleet for claims relating to
another of our ships.

Governments could requisition our vessels during a period of war or emergency,
which could have a material adverse effect on our results of operations and
financial condition

A government could requisition for title or seize our vessels. Requisition for
title occurs when a government takes control of a vessel and becomes her owner.
Also, a government could requisition our vessels for hire. Requisition for hire
occurs when a government takes control of a vessel and effectively becomes her
charterer at dictated charter rates. Generally, requisitions occur during a
period of war or emergency. Government requisition of one or more of our vessels
would negatively impact our revenues.

Terrorist attacks, such as the attacks on the United States on September 11,
2001, and other acts of violence or war may affect the financial markets and our
business, results of operations and financial condition

As a result of the September 11, 2001 terrorist attacks and subsequent events,
there has been considerable uncertainty in the world financial markets. The full
effect of these events, as well as concerns about future terrorist attacks, on
the financial markets is not yet known, but could include, among other things,
increased volatility in the price of securities. These uncertainties could also
adversely affect our ability to obtain additional financing on terms acceptable
to us or at all. Future terrorist attacks may also negatively affect our
operations and financial condition and directly impact our vessels or our
customers. Future terrorist attacks could result in increased volatility of the
financial markets in the United States and globally and could result in an
economic recession in the United States or the world. Any of these occurrences
could have a material adverse impact on our operating results, revenue, and
costs.

                          Risks Related to Our Business

We are highly dependent on spot oil voyage charters. Any decrease in spot
charter rates in the future may adversely affect our earnings

A significant portion of our vessels currently operate on a spot charter basis
or under contracts of affreightment under which we carry an agreed upon quantity
of cargo over a specified route and time period. Although spot chartering is
common in the tanker industry, the spot charter market is highly competitive and
spot charter rates may fluctuate significantly based upon tanker and oil supply
and demand. The successful operation of our vessels in the spot charter market
depends upon, among other things, obtaining profitable spot charters and
minimizing, to the extent possible, time spent waiting for charters and time
spent travelling unladen to pick up cargo. We cannot assure you that future spot
charters will be available at rates sufficient to enable our vessels trading in
the spot market to operate profitably. In addition, bunkering, or fuel, charges
that account for a substantial portion of the operating costs, and generally
reflect prevailing oil prices, are subject to sharp fluctuations.

Our revenues experience seasonal variations that may affect our income

We operate our tankers in markets that have historically exhibited seasonal
variations in demand and, therefore, charter rates. Historically, oil trade and
therefore charter rates increased in the winter months and eased in the summer
months as demand for oil in the Northern Hemisphere rose in colder weather and
fell in warmer weather. In addition, unpredictable weather patterns in the
winter months tend to disrupt vessel scheduling. The tanker industry in general
is less dependent on the seasonal transport of heating oil than a decade ago as
new uses for oil and oil products have developed, spreading consumption more
evenly over the year. Most apparent is a higher seasonal demand during the
summer months due to energy requirements for air conditioning and motor
vehicles. The oil price volatility resulting from these factors has historically
led to increased oil trading activities and demand for vessels. The change in
demand for vessels may affect the charter rates that we receive.

As at December 31, 2006, we charter 45 vessels from Ship Finance International
Limited at fixed rates on long-term charters. In addition, we charter 14 vessels
under medium term charters from third parties. We are obliged to make fixed rate
hire payments even though our income may decrease to levels that make these
charters unprofitable

The long term time charters to us from Ship Finance International Limited, which
we refer to as Ship Finance, extend for various periods depending on the age of
the vessels, ranging from approximately five to 21 years. With certain
exceptions as discussed below in Item 10C. "Material Contracts- Charter
Ancillary Agreement" the daily base charter rates, which are payable by us range
from $25,575 in 2006 to $24,175 from 2011 and beyond for very large crude
carriers, or VLCCs, and $21,100 in 2006 to $19,700 from 2011 and beyond for
Suezmaxes. The third party medium term charters to us extend from five to nine
years. Daily base charter rates payable by us under these charters range from
$20,995 to $25,615 in 2007 to $22,310 in 2015 for Suezmaxes and from
$29,580 to $31,200 in 2007 to $29,140 to $30,915 in 2015 for VLCCs.

If our earnings from the use of these vessels fall below these rates we will
incur losses.

Because the market value of our vessels may fluctuate significantly, we may
incur losses when we sell vessels which may adversely affect our earnings

The fair market value of vessels may increase and decrease depending on but not
limited to the following factors:

     o    general economic and market conditions affecting the shipping
          industry;
     o    competition from other shipping companies;
     o    types and sizes of vessels;
     o    other modes of transportation;
     o    cost of newbuildings;
     o    shipyard capacity;
     o    governmental or other regulations;
     o    age of vessels;
     o    prevailing level of charter rates; and
     o    technological advances.

If we sell a vessel at a time when ship prices have fallen, the sale may be at
less than the vessel's carrying amount on our financial statements, with the
result that we could incur a loss and a reduction in earnings. In addition, if
we determine at any time that a vessel's future limited useful life and earnings
require us to impair its value on our financial statements, that could result in
a charge against our earnings and a reduction of our shareholders' equity. It is
possible that the market value of our vessels will decline in the future.

An acceleration of the current prohibition to trade deadlines for our non-double
hull tankers could adversely affect our operations

Our tanker fleet includes nine non-double hull tankers. The United States, the
European Union and the International Maritime Organization, or the IMO, have all
imposed limits or prohibitions on the use of these types of tankers in specified
markets after certain target dates, depending on certain factors such as the
size of the vessel and the type of cargo. In the case of our non-double hull
tankers, these phase out dates range from 2010 to 2015. In 2005, the Marine
Environmental Protection Committee of the IMO has amended the International
Convention for the Prevention of Pollution from Ships to accelerate the phase
out of certain categories of single hull tankers, including the types of vessels
in our fleet, from 2015 to 2010 unless the relevant flag states extend the date.
This change could result in a number of our vessels being unable to trade in
many markets after 2010. The phase out of single hull tankers may therefore
reduce the demand for single hull tankers, and force the remaining single hull
tankers into employment on less desirable trading routes and increase the number
of tankers trading on those routes. As a result, single hull tankers may be
chartered less frequently and at lower rates. Moreover, additional regulations
may be adopted in the future that could further adversely affect the useful
lives of our non-double hull tankers, as well as our ability to generate income
from them.

Safety, environmental and other governmental and other requirements expose us to
liability, and compliance with current and future regulations could require
significant additional expenditures, which could have a material adverse affect
on our business and financial results

Our operations are affected by extensive and changing international, national,
state and local laws, regulations, treaties, conventions and standards in force
in international waters, the jurisdictions in which our tankers and other
vessels operate and the country or countries in which such vessels are
registered, including those governing the management and disposal of hazardous
substances and wastes, the cleanup of oil spills and other contamination, air
emissions, and water discharges and ballast water management. These regulations
include the U.S. Oil Pollution Act of 1990, or OPA, the International Convention
on Civil Liability for Oil Pollution Damage of 1969, International Convention
for the Prevention of Pollution from Ships, the IMO International Convention for
the Safety of Life at Sea of 1974, or SOLAS, the International Convention on
Load Lines of 1966 and the U.S. Marine Transportation Security Act of 2002. In
addition, vessel classification societies also impose significant safety and
other requirements on our vessels. In complying with current and future
environmental requirements, vessel owners and operators may also incur
significant additional costs in meeting new maintenance and inspection
requirements, in developing contingency arrangements for potential spills and in
obtaining insurance coverage. Government regulation of vessels, particularly in
the areas of safety and environmental requirements, can be expected to become
stricter in the future and require us to incur significant capital expenditures
on our vessels to keep them in compliance, or even to scrap or sell certain
vessels altogether.

Many of these requirements are designed to reduce the risk of oil spills and
other pollution, and our compliance with these requirements can be costly. These
requirements can also affect the resale value or useful lives of our vessels,
require a reduction in cargo-capacity, ship modifications or operational changes
or restrictions, lead to decreased availability of insurance coverage for
environmental matters or result in the denial of access to certain
jurisdictional waters or ports, or detention in, certain ports.

Under local, national and foreign laws, as well as international treaties and
conventions, we could incur material liabilities, including cleanup obligations,
natural resource damages and third-party claims for personal injury or property
damages, in the event that there is a release of petroleum or other hazardous
substances from our vessels or otherwise in connection with our current or
historic operations. We could also incur substantial penalties, fines and other
civil or criminal sanctions, including in certain instances seizure or detention
of our vessels, as a result of violations of or liabilities under environmental
laws, regulations and other requirements.

For example, OPA affects all vessel owners shipping oil to, from or within the
United States. OPA allows for potentially unlimited liability without regard to
fault for owners, operators and bareboat charterers of vessels for oil pollution
in United States waters. Similarly, the International Convention on Civil
Liability for Oil Pollution Damage, 1969, as amended, which has been adopted by
most countries outside of the United States., imposes liability for oil
pollution in international waters. OPA expressly permits individual states to
impose their own liability regimes with regard to hazardous materials and oil
pollution incidents occurring within their boundaries. Coastal states in the
United States have enacted pollution prevention liability and response laws,
many providing for unlimited liability.

We may be unable to successfully compete with other tanker operators for
charters

The operation of tankers and transportation of crude and petroleum products and
the other businesses in which we operate are extremely competitive. Through our
operating subsidiaries we compete with other oil tanker owners (including major
oil companies as well as independent companies), and, to a lesser extent, owners
of other size vessels. The tanker market is highly fragmented. It is possible
that our competitive position will erode in the future.

Our revenues may be adversely affected if we do not successfully employ our
tankers

As of May 31, 2007, 31 of our vessels are contractually committed to time or
bareboat charters, with the contracts expiring in 2007 for two vessels, on dates
between 2008 and 2013 for 20 vessels and on dates beyond 2013 for the remaining
9 vessels. In addition, we have six vessels contractually committed to time
charters based on spot market rates rather than fixed income. Although time
charters generally provide reliable revenues, they also limit the portion of our
fleet available for spot market voyages during an upswing in the tanker industry
cycle, when spot market voyages might be more profitable.

The spot charter market is highly competitive, and spot market voyage charter
rates may fluctuate dramatically based on tanker and oil supply and demand and
other factors. We cannot assure you that future spot market voyage charters will
be available at rates that will allow us to operate our tankers profitably.

Rising fuel prices may adversely affect our profits

Fuel is a significant, if not the largest, operating expense for many of our
shipping operations when our vessels are not under period charter. The price and
supply of fuel is unpredictable and fluctuates based on events outside our
control, including geopolitical developments, supply and demand for oil and gas,
actions by OPEC and other oil and gas producers, war and unrest in oil producing
countries and regions, regional production patterns and environmental concerns.
As a result, an increase in the price of fuel may adversely affect our
profitability. Further, fuel may become much more expensive in the future, which
may reduce the profitability and competitiveness of our business versus other
forms of transportation, such as truck or rail.

Our vessels may suffer damage and we may face unexpected drydocking costs, which
could affect our cash flow and financial condition

If our vessels suffer damage, they may need to be repaired at a drydocking
facility. The costs of drydock repairs are unpredictable and can be substantial.
We may have to pay drydocking costs that our insurance does not cover. The
inactivity of these vessels while they are being repaired and repositioned, as
well as the actual cost of these repairs, would decrease our earnings. In
addition, space at drydocking facilities is sometimes limited and not all
drydocking facilities are conveniently located. We may be unable to find space
at a suitable drydocking facility or we may be forced to move to a drydocking
facility that is not conveniently located to our vessels' positions. The loss of
earnings while our vessels are forced to wait for space or to relocate to
drydocking facilities that are farther away from the routes on which our vessels
trade would decrease our earnings.

An increase in costs could materially and adversely affect our financial
performance

Our vessel operating expenses depend on a variety of factors including crew
costs, provisions, deck and engine stores, lubricating oil, insurance,
maintenance and repairs, many of which are beyond our control and affect the
entire shipping industry. Some of these costs, primarily insurance and enhanced
security measures implemented after September 11, 2001, are increasing. The
terrorist attack of the VLCC Limburg in Yemen during October 2002 has resulted
in even more emphasis on security and pressure on insurance rates. If costs
continue to rise, our results of operations could be materially or adversely
affected.

Increased inspection procedures and tighter import and export controls could
increase costs and disrupt our business

International shipping is subject to various security and customs inspection and
related procedures in countries of origin and destination. Inspection procedures
can result in the seizure of contents of our vessels, delays in the loading,
offloading or delivery and the levying of customs duties, fines or other
penalties against us.

It is possible that changes to inspection procedures could impose additional
financial and legal obligations on us. Furthermore, changes to inspection
procedures could also impose additional costs and obligations on our customers
and may, in certain cases, render the shipment of certain types of cargo
uneconomical or impractical. Any such changes or developments may have a
material adverse effect on our business, financial condition, results of
operations and ability to pay dividends.

Our debt service obligations could affect our ability to incur additional
indebtedness or engage in certain transactions

Our existing financing agreements impose operational and financing restrictions
on us which may significantly limit or prohibit, among other things, our ability
to incur additional indebtedness, create liens, sell capital shares of
subsidiaries, make certain investments, engage in mergers and acquisitions,
purchase and sell vessels, enter into time or consecutive voyage charters or pay
dividends without the consent of our lenders. In addition, our lenders may
accelerate the maturity of indebtedness under our financing agreements and
foreclose on the collateral securing the indebtedness upon the occurrence of
certain events of default, including our failure to comply with any of the
covenants contained in our financing agreements, not rectified within the
permitted time. For instance, declining vessel values could lead to a breach of
covenants under our financing agreements. If we are unable to pledge additional
collateral or obtain waivers from our lenders, our lenders could accelerate our
debt and foreclose on our vessels. In addition, if the lenders accelerate the
debt outstanding under one facility in default, it could result in a default on
our other facilities.

An increase in interest rates could adversely affect our financial performance

At December 31, 2006 we had total interest bearing debt outstanding of $2,463.3
million, of which $1,602.9 million is floating rate debt. We use interest rate
swaps to manage interest rate risk. As at December 31, 2006, our interest rate
swap arrangements effectively fix the Company's interest rate exposure on $738.7
million of floating rate debt. Our maximum exposure to interest rate
fluctuations is $864.2 million at December 31, 2006. If interest rates rise
significantly, our results of operations could be adversely affected.

We may be unable to attract and retain key management personnel in the tanker
industry, which may negatively impact the effectiveness of our management and
our results of operation

Our success depends to a significant extent upon the abilities and efforts of
our senior executives, and particularly John Fredriksen, our Chairman and Chief
Executive Officer, and Tor Olav Troim, our Vice-President, for the management of
our activities and strategic guidance. While we believe that we have an
experienced management team, the loss or unavailability of one or more of our
senior executives, and particularly Mr. Fredriksen or Mr. Troim, for any
extended period of time could have an adverse effect on our business and results
of operations.

We may not have adequate insurance to compensate us if our vessels are damaged
or lost

We procure insurance for our fleet against those risks that we believe the
shipping industry commonly insures against. These insurances include hull and
machinery insurance, protection and indemnity insurance, which include
environmental damage and pollution insurance coverage, and war risk insurance.
We can give no assurance that we are adequately insured against all risks. We
may not be able to obtain adequate insurance coverage at reasonable rates for
our fleet in the future. Additionally, our insurers may not pay particular
claims. Our insurance policies contain deductibles for which we will be
responsible, limitations and exclusions which, although we believe are standard
in the shipping industry, may nevertheless increase our costs or lower our
revenue.

Our operations outside the United States expose us to global risks that may
interfere with the operation of our vessels

We are an international company and primarily conduct our operations outside of
the United States. Changing economic, regulatory, political and governmental
conditions in the countries where we are engaged in business or where our
vessels are registered affect us. Hostilities or other political instability in
regions where our vessels trade could affect our trade patterns and adversely
affect our operations and performance. The terrorist attacks against targets in
the United States on September 11, 2001 and the military response by the United
States has increased the likelihood of acts of terrorism worldwide. Acts of
terrorism, regional hostilities or other political instability, as shown by the
attack on the Limburg in Yemen in October 2002, attacks on oil pipelines during
and subsequent to the Iraq war in 2003 and attacks on expatriate workers in the
Middle East could adversely affect the oil trade and reduce our revenue or
increase our expenses.

We may not be exempt from U.S. taxation on our U.S. source shipping income,
which would reduce our net income and cash flow by the amount of the applicable
tax

Under the United States Internal Revenue Code of 1986, or the Code, 50% of the
gross shipping income of a vessel owning or chartering corporation, such as
ourselves and our subsidiaries, that is attributable to transportation that
begins or ends, but that does not both begin and end, in the United States, is
characterized as United States source shipping income and such income is subject
to a 4% United States federal income tax without allowance for deduction, unless
that corporation qualifies for exemption under Section 883 of the Code.

We expect that we and each of our subsidiaries will qualify for this statutory
tax exemption and we will take this position for United States federal income
tax return reporting purposes. However, there are factual circumstances beyond
our control that could cause us to lose the benefit of this tax exemption and
thereby become subject to United States federal income tax on our United States
source income. Therefore, we can give no assurances on our tax--exempt status or
that of any of our subsidiaries.

If we or our subsidiaries are not entitled to this statutory tax exemption under
Section 883 for any taxable year, we or our subsidiaries would be subject for
those years to a 4% United States federal income tax on United States sources
shipping income. The imposition of this taxation could have an adverse effect on
our business.

Our Liberian subsidiaries may not be exempt from Liberian taxation, which would
materially reduce our Liberian subsidiaries', and consequently our, net income
and cash flow by the amount of the applicable tax.

The Republic of Liberia enacted an income tax law generally effective as of
January 1, 2001, ("the New Act"), which repealed, in its entirety, the prior
income tax law in effect since 1977, pursuant to which our Liberian
subsidiaries, as non-resident domestic corporations, were wholly exempt from
Liberian tax.

In 2004, the Liberian Ministry of Finance issued regulations, ("the New
Regulations"), pursuant to which a non-resident domestic corporation engaged in
international shipping, such as our Liberian subsidiaries, will not be subject
to tax under the New Act retroactive to January 1, 2001. In addition, the
Liberian Ministry of Justice issued an opinion that the New Regulations were a
valid exercise of the regulatory authority of the Ministry of Finance.
Therefore, assuming that the New Regulations are valid, our Liberian
subsidiaries will be wholly exempt from tax as under prior law.

If our Liberian subsidiaries were subject to Liberian income tax under the New
Act, our Liberian subsidiaries would be subject to tax at a rate of 35% on their
worldwide income. As a result, their, and subsequently our, net income and cash
flow would be materially reduced by the amount of the applicable tax. In
addition, we, as a shareholder of the Liberian subsidiaries, would be subject to
Liberian withholding tax on dividends paid by the Liberian subsidiaries at rates
ranging from 15% to 20%.

                       Risks Related to Our Ordinary Shares

Because we are a foreign corporation, you may not have the same rights that a
shareholder in a U.S. corporation may have

We are a Bermuda corporation. Our memorandum of association and bye-laws and the
Bermuda Companies Act 1981, as amended, govern our affairs. Investors may have
more difficulty in protecting their interests in the face of actions by
management, directors or controlling shareholders than would shareholders of a
corporation incorporated in a United States jurisdiction. Under Bermuda law a
director generally owes a fiduciary duty only to the company; not to the
company's shareholder. Our shareholders may not have a direct course of action
against our directors. In addition, Bermuda law does not provide a mechanism for
our shareholders to bring a class action lawsuit under Bermuda law. Further, our
Bye-laws provide for the indemnification of our directors or officers against
any liability arising out of any act or omission except for an act or omission
constituting fraud, dishonesty or illegality.

Because our offices and most of our assets are outside the United States, you
may not be able to bring suit against us, or enforce a judgement obtained
against us in the United States

Our executive offices, administrative activities and assets are located outside
the United States. As a result, it may be more difficult for investors to effect
service of process within the United States upon us, or to enforce both in the
United States and outside the United States judgments against us in any action,
including actions predicated upon the civil liability provisions of the federal
securities laws of the United States.

Investor confidence and the market price of our common stock may be adversely
impacted if we are unable to comply with Section 404 of the Sarbanes-Oxley Act
of 2002

We are subject to Section 404 of the Sarbanes-Oxley Act of 2002, which requires
us to include in our annual report on Form 20-F our management's report on, and
assessment of the effectiveness of, our internal controls over financial
reporting. In addition, our independent registered public accounting firm is
required to attest to and report on management's assessment of the effectiveness
of our internal controls over financial reporting. These requirements first
apply to this annual report. If we fail to achieve and maintain the adequacy of
our internal controls over financial reporting, we will not be in compliance
with all of the requirements imposed by Section 404. Any failure to comply with
Section 404 could result in an adverse reaction in the financial marketplace due
to a loss of investor confidence in the reliability of our financial statements,
which ultimately could harm our business and could negatively impact the market
price of our common stock. We believe that future ongoing costs of complying
with these requirements may be substantial.

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

The Company

We are Frontline Ltd., a Bermuda based shipping company and we were incorporated
in Bermuda on June 12, 1992 (Company No. EC-17460). Our registered and principal
executive offices are located at Par-la-Ville Place, 14 Par-la-Ville Road,
Hamilton, HM 08, Bermuda, and our telephone number is +1 (441) 295-6935.

We are engaged primarily in the ownership and operation of oil tankers,
including oil/bulk/ore, or OBO carriers. We operate tankers of two sizes: VLCCs,
which are between 200,000 and 320,000 dwt, and Suezmaxes, which are vessels
between 120,000 and 170,000 dwt. We operate through subsidiaries and
partnerships located in the Bahamas, Bermuda, the Cayman Islands, the Isle of
Man, Liberia, Norway, Marshall Islands, Cyprus, the United Kingdom, Malta, Hong
Kong and Singapore. We are also involved in the charter, purchase and sale of
vessels. Since 1996, we have emerged as a leading tanker company within the VLCC
and Suezmax size sectors of the market.

We have our origin in Frontline AB, which was founded in 1985, and which was
listed on the Stockholm Stock Exchange from 1989 to 1997. In May 1997, Frontline
AB was redomiciled from Sweden to Bermuda and its shares were listed on the Oslo
Stock Exchange. The change of domicile was executed through a share for share
exchange offer from the then newly formed Bermuda company, Frontline Ltd ("Old
Frontline"). In September 1997, Old Frontline initiated an amalgamation with
London & Overseas Freighters Limited ("LOF"), also a Bermuda company. This
process was completed in May 1998. As a result of this transaction, Frontline
became listed on the London Stock Exchange and on the NASDAQ National Market (in
the form of American Depositary Shares, or ADSs, represented by American
Depositary Receipts, or ADRs) in addition to its listing on the Oslo Stock
Exchange.

The ADR program was terminated on October 5, 2001 and the ADSs were delisted
from the NASDAQ National Market on August 3, 2001. The Company's ordinary shares
began trading on the NYSE on August 6, 2001.

Vessel Acquisitions, Disposals and Other Significant Transactions

In February 2004, through a reorganization of joint ventures, we exchanged our
50.1% interests in three double-hull VLCCs for the remaining 49.9% interests in
three double-hull VLCCs of which we already owned 50.1%. We accounted for these
exchanges as non-cash exchanges of assets at book value. We received a net cash
settlement of $2.3 million as a result of equalization of the values of the
assets exchanged and recorded a gain of $0.2 million on the transactions.

We also acquired five single-hull Suezmax tankers in 2004 for a total cost of
$125.1 million. The vessel Golden Fountain was sold for gross proceeds of $61.0
million, realizing a gain of $19.7 million. The spin-off of our wholly owned
subsidiary Golden Ocean Group Limited, which we refer to as Golden Ocean,
resulted in the disposal of two dry bulk carriers in 2004.

In 2005, we acquired seven VLCC tankers for a total cost of $460.0 million and
two containerships for a total cost of $98.6 million. We sold five Suezmax
tankers for total proceeds of $231.3 million. We also sold one VLCC for total
proceeds of $40.5 million. We also sold our last dry bulk carrier the Cos Hero
for total proceeds of $20.7 million.

We entered into the following acquisitions and dispositions in 2006:

     o    In February and March 2006, we entered into shipbuilding contracts
          with the Jiangnan Shipyard for the construction and acquisition of
          four VLCC newbuilding vessels. In June 2006, we sold two of these
          newbuilding contracts for a net gain of $9.8 million. Subsequent to
          this sale, we entered into two further shipbuilding contracts with the
          Jiangnan Shipyard for the construction and acquisition of two VLCC
          newbuildings and an option for an additional two VLCC newbuildings.

     o    In September 2006, we exercised two options for VLCC newbuilding
          contracts with Jiangnan Shipyard and simultaneously sold these
          newbuilding contracts to a third party for a net gain of $6.2 million.

     o    In March 2006, we acquired the Aframax tanker "Gerrita" (renamed
          "Front Puffin") for a purchase price of $35.9 million. This vessel was
          converted to a Floating, Production, Storage and Offloading vessel, or
          FPSO. It was sold as part of the spin off of the Sea Production group
          (see below).

     o    In March 2006, we sold the VLCC Golden Stream for gross sale proceeds
          of $53.1 million.

     o    In June 2006, a subsidiary of Ship Finance bought a jack up rig for a
          cost of $210.0 million.

     o    In September 2006, we sold the VLCC Front Beijing, which we had taken
          delivery of in July, for gross sale proceeds of $141.5 million.

     o    In September 2006, a subsidiary of Ship Finance purchased a Panamax
          vessel, Front Shadow, for a cost of $28.4 million.

     o    In September 2006, a subsidiary of Ship Finance announced the sale of
          the VLCC Front Tobago to a third party for gross proceeds of $45.0
          million. Frontline received a compensation payment from Ship Finance
          on termination of the charter.

     o    In September 2006, we took delivery of the VLCC Front Shanghai at a
          cost of approximately $81.0 million.

     o    In July 2006, we entered into shipbuilding contracts with Jiangsu
          Rongsheng Heavy Industries Group Co Ltd, or Rongsheng, in China for
          the delivery of two 156,000 dwt Suezmax newbuildings and
          simultaneously entered into options for four further similar Suezmax
          newbuilding contracts.

     o    In August 2006, we exercised options for four 156,000 dwt Suezmax
          newbuilding contracts at Rongsheng and sold two of these Suezmax
          newbuilding contracts to Ship Finance.

We have also entered into a number of acquisitions and dispositions in 2007:

     o    In January 2007, Ship Finance sold its single hull Suezmax tanker
          Front Transporter to an unrelated third party for a gross sales price
          of $38.0 million. We received a compensation payment of $14.8 million
          from Ship Finance on termination of the charter. The vessel was
          delivered to her new owner in March 2007.

     o    In March 2007, the single hull VLCC Front Vanadis was sold to an
          unrelated third party and delivery took place in May 2007. Upon
          delivery, the long term charter party between Frontline and Ship
          Finance was terminated, and Frontline received a compensation payment
          in the amount of $13.2 million for the early termination of the
          charter party, which will be recorded in the second quarter of 2007.

     o    In June 2007, we announced the sale of the single hull Suezmax tanker
          Front Horizon for net sale proceeds of $28.0 million. Delivery to the
          buyers is expected to be in the period July to August 2007. The buyer
          of the vessel is a joint venture in which our Chairman, John
          Fredriksen has an indirect interest in one of the joint venture
          partners. The vessel will stop active trading and is intended to be
          used for other purposes.

     o    In March and April 2007, we exercised options with Rongsheng for four
          Suezmax newbuilding contracts.

At the end of May 2007, we had newbuilding contracts for four VLCCs and eight
Suezmaxes with expected deliveries in the period from the third quarter of 2008
through the fourth quarter of 2010. We paid $68.9 million in newbuilding
instalments for these contracts in 2006, $27.9 million for these contracts in
2007 and we have future commitments of $885 million.

Establishment of Sealift Ltd

In January 2007, we established a separate entity to develop our heavy lift
activity named Sealift Ltd, or Sealift. Sealift completed a private placement of
$180.0 million in equity and its shares have been listed on the Norwegian
over-the-counter (OTC) market since January 2007. We invested $60.0 million in
the company and following the initial private placement in January we became a
33% shareholder. Sealift acquired four single-hull Suezmax vessels from
Frontline for $100 million each which Frontline has the obligation to convert
from Suezmax vessels to heavy lift vessels. Our current remaining commitment for
these conversions is $118.8 million. Sealift also acquired two Suezmax vessels
from Frontline for $38 million each and option contracts with a shipyard to
convert these two additional Suezmax vessels into heavy lift vessels. The total
consideration for all six vessels acquired by Sealift is $476 million, of which
$396 million has been received in cash and $80 million will be settled by way of
non-interest bearing Seller's Credit. Forty million of the Seller's Credit is
payable on delivery of each of the final two converted vessels. Five of the
vessels sold to Sealift were first acquired from Ship Finance. One converted
heavy lift vessel was delivered in May 2007. The agreed delivery dates for the
three remaining converted heavy lift vessels are from September 2007 to May
2008. If Frontline's delivery of a converted vessel to Sealift is delayed more
than six months beyond the agreed delivery date for the vessel, Sealift has the
option to cancel its purchase of the vessel. The expected profit of $155 million
from the sale of vessels to Sealift is likely to be recognized over the course
of the conversions and is dependant on the cost of the conversions. Two of these
vessels are currently chartered back to Frontline until conversion commences on
a bareboat rate of $15,000 per day and two of the vessels on a bareboat rate of
$12,500 per day.

In May 2007, Sealift completed the combination of its businesses with the
Dockwise group of companies. Frontline is the second largest shareholder in the
combined group with an ownership interest of 17.1%.

Spin-Off of Ship Finance

In October 2003, we formed Ship Finance as our wholly-owned subsidiary for the
purpose of acquiring certain of our shipping assets. In December 2003, Ship
Finance issued $580.0 million of 8.5% Senior Notes due 2013, which we refer to
as the Notes. In the first quarter of 2004, Ship Finance used the proceeds of
the Notes, together with a refinancing of existing debt, to fund the acquisition
from us of a fleet of 46 crude oil tankers and an option to purchase one
additional tanker from a third party. We have chartered each of the vessels back
from Ship Finance for most of their remaining lives through our wholly owned
subsidiary Frontline Shipping Limited which we refer to as Frontline Shipping.
We also entered into fixed rate management and administrative services
agreements with Ship Finance to provide for the operation and maintenance of the
Company's vessels and administrative support services. The charters and the
management agreements were each given economic effect as of January 1, 2004.

In May 2004, we announced the distribution of 25% of Ship Finance's ordinary
shares to our ordinary shareholders in a partial spin off. In June 2004, each
Frontline shareholder received one share of Ship Finance for every four
Frontline shares held. In June 2004, the Ship Finance common shares commenced
trading on the New York Stock Exchange under the ticker symbol "SFL". Two
further dividends of shares of Ship Finance were distributed in 2004. In
September 2004, every Frontline shareholder received one share of Ship Finance
for every 10 shares of ours that they held and in December 2004, every Frontline
shareholder received two shares of Ship Finance for every 15 shares of ours that
they held. At December 31, 2004, our remaining shareholding in Ship Finance was
approximately 50.8%.

In January 2005 and February 2005 our Board of Directors approved further spin
offs of the shares of Ship Finance. In February 2005, each shareholder of
Frontline received one share of Ship Finance for every four shares of ours held
and in March 2005 each shareholder of Frontline received one share of Ship
Finance for every ten shares of ours held. Following these transactions our
shareholding in Ship Finance was approximately 16.2% at December 31, 2005.

In February 2006, our Board approved a further spin off of the shares of Ship
Finance. In March 2006, each shareholder of Frontline received one share of Ship
Finance for every twenty shares of ours held. Following these transactions our
shareholding in Ship Finance was approximately 11.1% at December 31, 2006 and
Ship Finance remained consolidated under the provisions of FASB Interpretation
46(R) "Consolidation of Variable Interest Entities".

In February 2007, our Board approved a further spin off of our remaining
interest in the shares of Ship Finance and this occurred in March 2007. After
this spin off we still hold 73,383 shares in Ship Finance, which represents
0.01% of Ship Finance's total shares. As a result of this spin off, we no longer
consolidate Ship Finance as of March 31, 2007.

Establishment and Spin-Off of Sea Production Ltd

In February 2007, the Company's wholly owned subsidiary, Frontline Floating
Production Ltd ("FFP"), sold its assets to Sea Production. The assets of FFP
included a 70% investment in Puffin Ltd, the entity who ultimately owns the
vessel Front Puffin. Sea Production was incorporated in 2007 as a wholly owned
subsidiary of the Company. Also in February 2007, Sea Production raised $180.0
million in equity in a private placement. The shares have been listed on the
Norwegian OTC market. We held 28.33% of the shares in Sea Production following
the private placement. We recorded a gain on the issuance of these shares of
$39.8 million in the first quarter of 2007. In June 2007, we sold our entire
holding in Sea Production in line with our strategy to remain a pure crude oil
transportation company and our previously announced strategy to either sell or
spin off the Sea Production shares. We expect to record a gain of approximately
$32 million in the second quarter of 2007 as a result of this sale.

Spin-Off of Golden Ocean Group Limited

In November 2004, we established Golden Ocean as a wholly owned subsidiary in
Bermuda for the purpose of transferring, by way of contribution, certain of our
dry bulk shipping interests. Three of our subsidiaries and cash equal to the
difference between $22.45 million and the historical net book value of those
subsidiaries was transferred to Golden Ocean on December 1, 2004. On the same
date, our Board resolved to distribute all of our shares of Golden Ocean to our
shareholders in proportion to their ownership in Frontline. On December 13, 2004
we distributed 76.0% of the shares of Golden Ocean to our shareholders in a
three for one stock dividend. Certain of our U.S. shareholders were excluded
from the distribution and received a cash payment in lieu of shares equal to
$0.60 per Golden Ocean share, which represents the average price per share of
the Golden Ocean shares during their first five days of trading on the Oslo
Stock Exchange. Golden Ocean was listed on the Oslo Stock Exchange on December
15, 2004. The Company sold 30 million Golden Ocean shares, equivalent to 13.3%,
to provide funds for the cash payment and the Company retained a 10.7% interest
in Golden Ocean which was subsequently sold in February 2005. The Company has
not retained any significant continuing involvement in these dry bulk
operations.

At the time of the spin off of Golden Ocean, we granted Golden Ocean options to
acquire newbuilding contracts for two Panamax vessels. In 2005 Golden Ocean
exercised these options to acquire from us the shares in two single purpose
companies each owning a newbuilding contract for a Panamax vessel. These options
were exercised at a total price of $16.8 million.

Acquisition of Independent Tankers Corporation

On July 1, 2003, we purchased a call option for $10.0 million to acquire all of
the shares of Independent Tankers Corporation, or ITC from Hemen Holdings Inc.,
or Hemen for a total consideration of $4.0 million plus 4% interest per year.
Hemen is indirectly controlled by our Chairman, John Fredriksen. On May 27, 2004
we exercised this purchase option and acquired all of the shares of ITC. ITC
operates a total of six VLCCs and four Suezmax tankers, which are on long-term
charters to subsidiaries of BP Plc and Chevron Corporation, or Chevron. In 2006,
the Front Voyager was redelivered from Chevron and is on bareboat charter to
Frontline. The initial fixed terms of the charters range from eight to 10 years.
After the initial fixed term the charterers have options to extend the charters
of the vessels for further periods of between eight to twelve years. ITC is
financed by Term and Serial Notes. These notes mature between 2006 and 2021 and
are secured by ITC's vessels and long-term charters. Interest is payable on the
Notes at fixed rates which range between 6.5% and 8.52%.

B. BUSINESS OVERVIEW

At May 31, 2007 we operate a tanker fleet consisting of 81 vessels, which we
believe is one of the largest and most modern in the world. The fleet consists
of 40 VLCCs which are either owned or chartered in, 21 Suezmax tankers which are
either owned or chartered in, 8 Suezmax OBOs which are chartered in, and 8
VLCCs, 3 Suezmax tankers and 1 Aframax tanker under our commercial management.
We also have four VLCC newbuildings and eight Suezmax newbuildings on order.

As of May 31, 2007, the fleet that we operate has a total tonnage of
approximately 19.35 million dwt, including the 2.8 million dwt under commercial
management. Our tanker vessels have an average age of approximately 10 years
compared with an estimated industry average of approximately 9.3 years. We
believe that our vessels comply with the most stringent of generally applicable
environmental regulations for tankers.

We own various vessel owning and operating subsidiaries. Our operations take
place substantially outside of the United States. Our subsidiaries, therefore,
own and operate vessels which may be affected by changes in foreign governments
and other economic and political conditions. We are engaged primarily in
transporting crude oil and, in addition, raw materials like coal and iron ore.
Our VLCCs are specifically designed for the transportation of crude oil and, due
to their size, are primarily used to transport crude oil from the Middle East
Gulf to the Far East, Northern Europe, the Caribbean and the Louisiana Offshore
Oil Port, or LOOP. Our Suezmax tankers are similarly designed for worldwide
trading, but the trade for these vessels is mainly in the Atlantic Basin and
Middle East to South East Asia.

Historically, the tanker industry has been highly cyclical, with attendant
volatility in profitability and asset values resulting from changes in the
supply of and demand for tanker capacity. Our OBO carriers are specifically
designed to carry oil or dry cargo and may be used to transport either oil or
dry cargo on any voyage. When freight rates in both the oil and dry cargo
markets are equivalent OBO carriers are operated most profitably transporting
oil on one leg of the voyage and dry cargo on the other leg of a voyage.
Currently, our eight Suezmax OBOs are configured to carry dry bulk cargo and are
fixed on long term charters.

The supply of tanker and OBO capacity is influenced by the number of new vessels
built, the number of older vessels scrapped, converted, laid up and lost, the
efficiency of the world tanker or OBO fleet and government and industry
regulation of maritime transportation practices. The demand for tanker and OBO
capacity is influenced by global and regional economic conditions, increases and
decreases in industrial production and demand for crude oil and petroleum
products, the proportion of world oil output supplied by Middle Eastern and
other producers, political changes and armed conflicts (including wars in the
Middle East) and changes in seaborne and other transportation patterns. The
demand for OBO capacity is, in addition, influenced by increases and decreases
in the production and demand for raw materials such as iron ore and coal. In
particular, demand for our tankers and our services in transporting crude oil
and petroleum products and dry cargoes has been dependent upon world and
regional markets. Any decrease in shipments of crude oil or raw materials in
world markets could have a material adverse effect on our earnings.
Historically, these markets have been volatile as a result of, among other
things, general economic conditions, prices, environmental concerns, weather and
competition from alternative energy sources. Because many factors influencing
the supply of and demand for tankers and OBO carriers are unpredictable, the
nature, timing and degree of changes in industry conditions are also
unpredictable.

We are committed to providing quality transportation services to all of our
customers and to developing and maintaining long term relationships with the
major charterers of tankers. Increasing global environmental concerns have
created a demand in the petroleum products/crude oil seaborne transportation
industry for vessels that are able to conform to the stringent environmental
standards currently being imposed throughout the world. Our fleet of modern
single hull VLCCs may discharge crude oil at LOOP until the year 2015, and our
single hull Suezmax tanker (Front Voyager) may call at U.S. ports until the year
2010 under the phase-in schedule for double hull tankers presently prescribed
under OPA.

The tanker industry is highly cyclical, experiencing volatility in
profitability, vessel values and freight rates. Freight rates are strongly
influenced by the supply of tanker vessels and the demand for oil
transportation. Refer to Item 5 "Operating and Financial Review and Prospects"
for a discussion of the tanker market in 2007.

Similar to structures commonly used by other shipping companies, our vessels are
all owned by, or chartered to, separate subsidiaries or associated companies.
Frontline Management AS, and Frontline Management (Bermuda) Limited which we
refer to as Frontline Management, both wholly-owned subsidiaries, support us in
the implementation of our decisions. Frontline Management is responsible for the
commercial management of our shipowning subsidiaries, including chartering and
insurance. Each of our vessels is registered under the Bahamas, French,
Liberian, Panamanian, Cypriot, Singaporean, Norwegian, Isle of Man, Marshall
Islands, Hong Kong or Maltese flag.

Frontline has a strategy of extensive outsourcing. Ship management, crewing and
accounting services are provided by a number of independent and competing
suppliers. Our vessels are managed by independent ship management companies.
Pursuant to management agreements, each of the independent ship management
companies provides operations, ship maintenance, crewing, technical support,
shipyard supervision and related services to Frontline. A central part of our
strategy is to benchmark operational performance and cost level amongst our ship
managers. Independent ship managers provide crewing for our vessels. Currently,
our vessels are crewed with Russian, Ukrainian, Croatian, Romanian, Indian and
Filipino officers and crews, or combinations of these nationalities. Accounting
services for each of our shipowning subsidiaries are also provided by the ship
managers.

Strategy

Our strategy is to be a world leading operator and charterer of modern, high
quality oil tankers with flexibility to adjust our exposure to the tanker market
depending on existing factors such as charter rates, newbuilding costs, vessel
resale and scrap values and vessel operating expenses resulting from, among
other things, changes in the supply of and demand for tanker capacity. We may
adjust our exposure through time charters, bareboat charters, sale and
leasebacks, straight sales and purchases of vessels and acquisitions.

We are currently a significant shareholder in Sealift and our intention is to
sell or dividend the shares in line with our overall strategy of focusing on the
oil tanker business.

Our business strategy is primarily based upon the following principles:

     o    emphasizing operational safety and quality maintenance for all of our
          vessels;
     o    complying with all current and proposed environmental regulations;
     o    outsourcing technical operations and crewing;
     o    continuing to achieve competitive operational costs;
     o    operating a modern and homogeneous fleet of tankers;
     o    achieving high utilization of our vessels;
     o    achieving competitive financing arrangements;
     o    achieving a satisfactory mix of term charters, contracts of
          affreightment and spot voyages; and
     o    developing and maintaining relationships with major oil companies and
          industrial charterers.

After having delivered their cargo, spot market vessels typically operate in
ballast until being rechartered. It is the time element associated with these
ballast legs that we seek to minimize by efficiently chartering OBO carriers and
tankers that we operate. Our strategies to minimize time spent on ballast legs
include allocating cargoes among our vessels so as to achieve the minimum total
time spent on ballast legs across our fleet.

We continue to evaluate opportunities in the time charter market. On the basis
of the strength of the drybulk market, two three year charters, one four year
charter and two five year charters were recently concluded for Front Breaker and
Front Driver at a gross time charter rate of $52,360 per day, for Front Rider at
a gross time charter rate of $50,000 per day and for Front Climber and Front
Leader a gross time charter rate of $40,000 per day. The charters commence in
the period June 2007 to January 2008. After this, all of our eight OBO carriers
are now on long term charters at an average rate of about $39,000 in 2007 and
about $43,000 in 2008. As of June 15, 2007 approximately 39% of our remaining
operating days for 2007 are on fixed time charter.

We believe that fleet size in the industrial shipping sector is important in
negotiating terms with major clients and charterers. We believe that a large,
high-quality VLCC and Suezmax fleet will enhance our ability to obtain
competitive terms from suppliers and shipbuilders and to produce cost savings in
chartering and operations.

We currently have four VLCC and eight Suezmax newbuildings on order, all
favorably priced compared to current newbuilding prices. We order new tonnage to
renew our fleet in line with our opportunistic investment approach. Our order
book confirms our position as a leading operator of quality Suezmax and VLCC
tonnage.

We seek to pay quarterly dividends to our shareholders. The amount of dividends
will be guided by present earnings, market prospects, current capital
expenditure programs as well as investment opportunities.

Although there has been a trend to consolidation over the past 15 years, the
tanker market remains highly fragmented. We estimate, based on available
industry data that we currently own or operate approximately 9.4% of the world
VLCC fleet and 9.4% of the world Suezmax tanker fleet. It is our intention to
use our strong operational cash flow together with our available financing to
continue the consolidation of the tanker market. We always look
opportunistically for attractive investments and acquisitions and will finance
such investments through a combination of debt and equity. Our role in the
consolidation of the tanker market may include the acquisition of new vessels
and second-hand vessels and we may also engage in business acquisitions and
strategic transactions such as marketing joint ventures. In the ordinary course
of our business, we engage in the evaluation of potential candidates for
acquisitions and strategic transactions. While we are constantly evaluating
opportunities for acquisitions and growth, at this time we do not have any
planned acquisitions.

Seasonality

Historically, oil trade and therefore charter rates increased in the winter
months and eased in the summer months as demand for oil in the Northern
Hemisphere rose in colder weather and fell in warmer weather. The tanker
industry in general is less dependent on the seasonal transport of heating oil
than a decade ago as new uses for oil and oil products have developed, spreading
consumption more evenly over the year. Most apparent is a higher seasonal demand
during the summer months due to energy requirements for air conditioning and
motor vehicles.

Customers

Our customers include major oil companies, petroleum products traders,
government agencies and various other entities. During the year ended December
31, 2006, one customer (2005: one customer) accounted for more than 10% of our
consolidated operating revenues.

Competition

The market for international seaborne crude oil transportation services is
highly fragmented and competitive. Seaborne crude oil transportation services
generally are provided by two main types of operators: major oil company captive
fleets (both private and state-owned) and independent shipowner fleets. In
addition, several owners and operators pool their vessels together on an ongoing
basis, and such pools are available to customers to the same extent as
independently owned and operated fleets. Many major oil companies and other oil
trading companies, the primary charterers of the vessels owned or controlled by
us, also operate their own vessels and use such vessels not only to transport
their own crude oil but also to transport crude oil for third party charterers
in direct competition with independent owners and operators in the tanker
charter market. Competition for charters is intense and is based upon price,
location, size, age, condition and acceptability of the vessel and its manager.
Competition is also affected by the availability of other size vessels to
compete in the trades in which the Company engages. Charters are to a large
extent brokered through international independent brokerage houses that
specialize in finding the optimal ship for any particular cargo based on the
aforementioned criteria. Brokers may be appointed by the cargo shipper or the
ship owner.

Risk of Loss and Insurance

Our business is affected by a number of risks, including mechanical failure of
the vessels, collisions, property loss to the vessels, cargo loss or damage and
business interruption due to political circumstances in foreign countries,
hostilities and labour strikes. In addition, the operation of any ocean-going
vessel is subject to the inherent possibility of catastrophic marine disaster,
including oil spills and other environmental mishaps, and the liabilities
arising from owning and operating vessels in international trade. OPA, which
imposes virtually unlimited liability upon owners, operators and demise
charterers of any vessel trading in the United States exclusive economic zone
for certain oil pollution accidents in the United States, has made liability
insurance more expensive for ship owners and operators trading in the United
States market.

Frontline Management is responsible for arranging the insurance of our vessels
in line with standard industry practice. In accordance with that practice, we
maintain marine hull and machinery and war risks insurance, which include the
risk of actual or constructive total loss, and protection and indemnity
insurance with mutual assurance associations. From time to time we carry
insurance covering the loss of hire resulting from marine casualties in respect
of some of our vessels. Currently, the amount of coverage for liability for
pollution, spillage and leakage available to us on commercially reasonable terms
through protection and indemnity associations and providers of excess coverage
is $1.0 billion per vessel per occurrence. Protection and indemnity associations
are mutual marine indemnity associations formed by shipowners to provide
protection from large financial loss to one member by contribution towards that
loss by all members.

We believe that our current insurance coverage is adequate to protect us against
the accident-related risks involved in the conduct of our business and that we
maintain appropriate levels of environmental damage and pollution insurance
coverage, consistent with standard industry practice. However, there is no
assurance that all risks are adequately insured against, that any particular
claims will be paid or that we will be able to procure adequate insurance
coverage at commercially reasonable rates in the future.

Environmental Regulation and Other Regulations

Government regulations and laws significantly affect the ownership and operation
of our tankers. We are subject to various international conventions, laws and
regulations in force in the countries in which our vessels may operate or are
registered.

A variety of government, quasi-governmental and private organizations subject
our tankers to both scheduled and unscheduled inspections. These organizations
include the local port authorities, national authorities, harbor masters or
equivalent, classification societies, flag state and charterers, particularly
terminal operators and oil companies. Some of these entities require us to
obtain permits, licenses and certificates for the operation of our tankers. Our
failure to maintain necessary permits or approvals could require us to incur
substantial costs or temporarily suspend operation of one or more of the vessels
in our fleet.

We believe that the heightened levels of environmental and quality concerns
among insurance underwriters, regulators and charterers have led to greater
inspection and safety requirements on all tankers and may accelerate the
scrapping of older vessels throughout the industry. Increasing environmental
concerns have created a demand for tankers that conform to the stricter
environmental standards. We are required to maintain operating standards for all
of our vessels emphasizing operational safety, quality maintenance, continuous
training of our officers and crews and compliance with applicable local,
national and international environmental laws and regulations. We believe that
the operation of our vessels will be in substantial compliance with applicable
environmental laws and regulations and that our vessels have all material
permits, licenses, certificates or other authorizations necessary for the
conduct of our operations; however, because such laws and regulations are
frequently changed and may impose increasingly stricter requirements, we cannot
predict the ultimate cost of complying with these requirements, or the impact of
these requirements on the resale value or useful lives of our tankers. In
addition, a future serious marine incident that results in significant oil
pollution or otherwise causes significant adverse environmental impact could
result in additional legislation or regulation that could negatively affect our
profitability.

International Maritime Organization

The International Maritime Organization, or IMO (the United Nations agency for
maritime safety and the prevention of pollution by ships), has adopted the
International Convention for the Prevention of Marine Pollution from Ships,
1973, as modified by the Protocol of 1978 relating thereto, which has been
updated through various amendments, or the MARPOL Convention. The MARPOL
Convention implements environmental standards including oil leakage or spilling,
garbage management, as well as the handling and disposal of noxious liquids,
harmful substances in packaged forms, sewage and air emissions. These
regulations, which have been implemented in many jurisdictions in which our
vessels operate, provide, in part, that:

     o    25-year old tankers must be of double hull construction or of a
          mid-deck design with double-sided construction, unless:

               (1)  they have wing tanks or double-bottom spaces not used for
                    the carriage of oil which cover at least 30% of the length
                    of the cargo tank section of the hull or bottom; or

               (2)  they are capable of hydrostatically balanced loading
                    (loading less cargo into a tanker so that in the event of a
                    breach of the hull, water flows into the tanker, displacing
                    oil upwards instead of into the sea);

     o    30-year old tankers must be of double hull construction or mid-deck
          design with double-sided construction; and

     o    all tankers will be subject to enhanced inspections.

Also, under IMO regulations, a tanker must be of double hull construction or a
mid-deck design with double-sided construction or be of another approved design
ensuring the same level of protection against oil pollution if the tanker:

     o    is the subject of a contract for a major conversion or original
          construction on or after July 6, 1993;

     o    commences a major conversion or has its keel laid on or after January
          6, 1994; or

     o    completes a major conversion or is a newbuilding delivered on or after
          July 6, 1996.

Our vessels are also subject to regulatory requirements, including the phase-out
of single hull tankers, imposed by the IMO. Effective September 2002, the IMO
accelerated its existing timetable for the phase-out of single hull oil tankers.
At that time, these regulations required the phase-out of most single hull oil
tankers by 2015 or earlier, depending on the age of the tanker and whether it
has segregated ballast tanks.

Under the regulations, the flag state may allow for some newer single hull ships
registered in its country that conform to certain technical specifications to
continue operating until the 25th anniversary of their delivery. Any port state,
however, may deny entry of those single hull tankers that are allowed to operate
until their 25th anniversary to ports or offshore terminals. These regulations
have been adopted by over 150 nations, including many of the jurisdictions in
which our tankers operate.

As a result of the oil spill in November 2002 relating to the loss of the MT
Prestige, which was owned by a company not affiliated with us, in December 2003,
the Marine Environmental Protection Committee of the IMO, or MEPC, adopted an
amendment to the MARPOL Convention, which became effective in April 2005. The
amendment revised an existing regulation 13G accelerating the phase-out of
single hull oil tankers and adopted a new regulation 13H on the prevention of
oil pollution from oil tankers when carrying heavy grade oil. Under the revised
regulation, single hull oil tankers were required to be phased out no later than
April 5, 2005 or the anniversary of the date of delivery of the ship on the date
or in the year specified in the following table:



- ------------------------------------------------------- -------------------------------------------------------
Category of Oil Tankers                                 Date or Year for Phase Out
- ------------------------------------------------------- -------------------------------------------------------
                                                     
Category 1 - oil tankers of 20,000 dwt and above
carrying crude oil, fuel oil, heavy diesel oil or       April 5, 2005 for ships delivered on April 5, 1982 or
lubricating oil as cargo, and of 30,000 dwt and         earlier; or
above carrying other oils, which do not comply with     2005 for ships delivered after April 5, 1982
the requirements for protectively located segregated
ballast tanks
- ------------------------------------------------------- -------------------------------------------------------
Category 2 - oil tankers of 20,000 dwt and above
carrying crude oil, fuel oil, heavy diesel oil or       April 5, 2005 for ships delivered on April 5, 1977 or
lubricating oil as cargo, and of 30,000 dwt and         earlier
above carrying other oils, which do comply with the     2005 for ships delivered after April 5, 1977
protectively located segregatedballast tank             but before January 1, 1978
requirements                                            2006 for ships delivered in 1978 and 1979
                                                        2007 for ships delivered in 1980 and 1981
and                                                     2008 for ships delivered in 1982
                                                        2009 for ships delivered in 1983
Category 3 - oil tankers of 5,000 dwt and above but     2010 for ships delivered in 1984 or later
less than the tonnage specified for Category 1 and 2
tankers.
- ------------------------------------------------------- -------------------------------------------------------


Under the revised regulations, a flag state may permit continued operation of
certain Category 2 or 3 tankers beyond their phase date in accordance with the
above schedule. Under regulation 13G, the flag state may allow for some newer
single hull oil tankers registered in its country that conform to certain
technical specifications to continue operating until the earlier of the
anniversary of the date of delivery of the vessel in 2015 or the 25th
anniversary of their delivery. Under regulation 13G and 13H, as described below,
certain Category 2 and 3 tankers fitted only with double bottoms or double sides
may be allowed by the flag state to continue operations until their 25th
anniversary of delivery. Any port state, however, may deny entry of those single
hull oil tankers that are allowed to operate under any of the flag state
exemptions.

The following table summarizes the impact of such regulations on the Company's
single hull (SH) and double sided (DS) tankers:



                                   Vessel        Year
Vessel Name          Vessel type   Category(s)   Built   IMO phase out   Flag state exemption
- ------------------   -----------   -----------   -----   -------------   --------------------
                                                          
Front Birch(**)      Suezmax       DS             1991            2010                   2016
Front Horizon(*)     Suezmax       SH             1988            2010                   2013
         1991            2010                   2016
Front Voyager        Suezmax       SH
Front Voyager        Suezmax       SH             1992            2010                   2015
Edinburgh(**)        VLCC          DS             1993            2010                   2018
Front Ace(**)        VLCC          SH             1993            2010                   2015
Front Duchess(**)    VLCC          SH             1993            2010                   2015
Front Duke(**)       VLCC          SH             1992            2010                   2015
Front Highness(**)   VLCC          SH             1991            2010                   2015
Front Lady(**)       VLCC          SH             1991            2010                   2015
Front Lord(**)       VLCC          SH             1991            2010                   2015
Front Sabang(**)     VLCC          SH             1990            2010                   2015


(*) Vessel sold in June 2007 with expected delivery in July or August 2007.
(**) Vessel owned through Ship Finance and not consolidated after March 31,
2007.

Under regulation 13H, the double sided tankers will be allowed to continue
operations until their 25th anniversary.

In October 2004, the MEPC adopted a unified interpretation of regulation 13G
that clarified the delivery date for converted tankers. Under the
interpretation, where an oil tanker has undergone a major conversion that has
resulted in the replacement of the fore-body, including the entire cargo
carrying section, the major conversion completion date shall be deemed to be the
date of delivery of the ship, provided that:

     o    the oil tanker conversion was completed before July 6, 1996;

     o    the conversion included the replacement of the entire cargo section
          and fore-body and the tanker complies with all the relevant provisions
          of MARPOL Convention applicable at the date of completion of the major
          conversion; and

     o    the original delivery date of the oil tanker will apply when
          considering the 15 years of age threshold relating to the first
          technical specifications survey to be completed in accordance with
          MARPOL Convention.

In December 2003, the MEPC adopted a new regulation 13H on the prevention of oil
pollution from oil tankers when carrying heavy grade oil, or HGO, which includes
most of the grades of marine fuel. The new regulation bans the carriage of HGO
in single hull oil tankers of 5,000 dwt and above after April 5, 2005, and in
single hull oil tankers of 600 dwt and above but less than 5,000 dwt, no later
than the anniversary of their delivery in 2008.

Under regulation 13H, HGO means any of the following:

     o    crude oils having a density at 15(0)C higher than 900 kg/m(3);

     o    fuel oils having either a density at 15(0)C higher than 900 kg/m(3) or
          a kinematic viscosity at 50(0)C higher than 180 mm(2)/s; or

     o    bitumen, tar and their emulsions.

Under the regulation 13H, the flag state may allow continued operation of oil
tankers of 5,000 dwt and above, carrying crude oil with a density at 15(0)C
higher than 900 kg/m3 but lower than 945 kg/m3, that conform to certain
technical specifications and, in the opinion of the such flag state, the ship is
fit to continue such operation, having regard to the size, age, operational area
and structural conditions of the ship and provided that the continued operation
shall not go beyond the date on which the ship reaches 25 years after the date
of its delivery. The flag state may also allow continued operation of a single
hull oil tanker of 600 dwt and above but less than 5,000 dwt, carrying HGO as
cargo, if, in the opinion of the such flag state, the ship is fit to continue
such operation, having regard to the size, age, operational area and structural
conditions of the ship, provided that the operation shall not go beyond the date
on which the ship reaches 25 years after the date of its delivery.

The flag state may also exempt an oil tanker of 600 dwt and above carrying HGO
as cargo if the ship is either engaged in voyages exclusively within an area
under the its jurisdiction, or is engaged in voyages exclusively within an area
under the jurisdiction of another party, provided the party within whose
jurisdiction the ship will be operating agrees. The same applies to vessels
operating as floating storage units of HGO.

Any port state, however, can deny entry of single hull tankers carrying HGO
which have been allowed to continue operation under the exemptions mentioned
above, into the ports or offshore terminals under its jurisdiction, or deny
ship-to-ship transfer of HGO in areas under its jurisdiction except when this is
necessary for the purpose of securing the safety of a ship or saving life at
sea.

Revised Annex I to the MARPOL Convention entered into force in January 2007.
Revised Annex I incorporates various amendments adopted since the MARPOL
Convention entered into force in 1983, including the amendments to regulation
13G (regulation 20 in the revised Annex) and Regulation 13H (Regulation 21 in
the revised Annex). Revised Annex I also imposes construction requirements for
oil tankers delivered on or after January 1, 2010. A further amendment to
revised Annex I includes an amendment to the definition of heavy grade oil that
will broaden the scope of Regulation 21.

In September 1997, the IMO adopted Annex VI to the International Convention for
the Prevention of Pollution from Ships to address air pollution from ships.
Annex VI was ratified in May 2004, and became effective May 19, 2005. Annex VI
sets limits on sulphur oxide and nitrogen oxide emissions from ship exhausts and
prohibits deliberate emissions of ozone depleting substances, such as
chlorofluorocarbons. Annex VI also includes a global cap on the sulphur content
of fuel oil and allows for special areas to be established with more stringent
controls on sulphur emissions. We believe that all our vessels are currently
compliant in all material respects with these regulations. Additional or new
conventions, laws and regulations may be adopted that could adversely affect our
business, cash flows, results of operations and financial condition.

The IMO has also adopted the International Convention for the Safety of Life at
Sea, or SOLAS Convention, and the International Convention on Load Lines, 1966,
or LL Convention, which impose a variety of standards to regulate design and
operational features of ships. SOLAS Convention and LL Convention standards are
revised periodically. We believe that all our vessels are in substantial
compliance with SOLAS Convention and LL Convention standards. Under Chapter IX
of SOLAS, the requirements contained in the International Safety Management Code
for the Safe Operation of Ships and for Pollution Prevention, or ISM Code,
promulgated by the IMO, also affect our operations. The ISM Code requires the
party with operational control of a vessel to develop an extensive safety
management system that includes, among other things, the adoption of a safety
and environmental protection policy setting forth instructions and procedures
for operating its vessels safely and describing procedures for responding to
emergencies. We intend to rely upon the safety management system that the
appointed ship managers have developed.

The ISM Code requires that vessel ship manager or operators obtain a safety
management certificate for each vessel they operate. This certificate evidences
compliance by a vessel's management with the ISM Code requirements for a safety
management system. No vessel can obtain a safety management certificate unless
its manager has been awarded a document of compliance, issued by each flag
state, under the ISM Code. The appointed ship managers have obtained documents
of compliance for their offices and safety management certificates for all of
our vessels for which the certificates are required by the IMO.

Non-compliance with the ISM Code and other IMO regulations may subject the
shipowner or bareboat charterer to increased liability, may lead to decreases in
available insurance coverage for affected vessels and may result in the denial
of access to, or detention in, some ports. The U.S. Coast Guard and European
Union authorities have indicated that vessels not in compliance with the ISM
Code by the applicable deadlines will be prohibited from trading in U.S. and
European Union ports, as the case may be.

The IMO has negotiated international conventions that impose liability for oil
pollution in international waters and a signatory's territorial waters.
Additional or new conventions, laws and regulations may be adopted which could
limit our ability to do business and which could have a material adverse effect
on our business and results of operations. The IMO adopted an International
Convention for the Control and Management of Ships' Ballast Water and Sediments,
or the BWM Convention, in February 2004. The BWM Convention's implementing
regulations call for a phased introduction of mandatory ballast water exchange
requirements (beginning in 2009), to be replaced in time with mandatory
concentration limits. The BWM Convention will not enter into force until 12
months after it has been adopted by 30 states, the combined merchant fleets of
which represent not less than 35% of the gross tonnage of the world's merchant
shipping.

The flag state, as defined by the United Nations Convention on Law of the Sea,
has overall responsibility for the implementation and enforcement of
international maritime regulations for all ships granted the right to fly its
flag. The "Shipping Industry Guidelines on Flag State Performance" evaluates
flag states based on factors such as sufficiency of infrastructure, ratification
of international maritime treaties, implementation and enforcement of
international maritime regulations, supervision of surveys, casualty
investigations and participation at IMO meetings. Our vessels are flagged in the
Marshall Islands. Marshall Islands-flagged vessels generally receive a good
assessment in the shipping industry.

Although the United States is not a party to these conventions, many countries
have ratified and follow the liability plan adopted by the IMO and set out in
the International Convention on Civil Liability for Oil Pollution Damage of
1969, as amended in 2000, or the CLC. Under this convention and depending on
whether the country in which the damage results is a party to the 1992 Protocol
to the CLC, a vessel's registered owner is strictly liable for pollution damage
caused in the territorial waters of a contracting state by discharge of
persistent oil, subject to certain complete defenses. The limits on liability
outlined in the 1992 Protocol use the International Monetary Fund currency unit
of Special Drawing Rights, or SDR. Under an amendment to the 1992 Protocol that
became effective on November 1, 2003, for vessels of 5,000 to 140,000 gross tons
(a unit of measurement for the total enclosed spaces within a vessel), liability
will be limited to approximately 4.51 million SDR plus 631 SDR for each
additional gross ton over 5,000. For vessels of over 140,000 gross tons,
liability will be limited to 89.77 million SDR. The exchange rate between SDRs
and U.S. dollars was 0.669487 SDR per U.S. dollar on February 6, 2007. As the
convention calculates liability in terms of a basket of currencies, these
figures are based on currency exchange rates on March 13, 2007. The right to
limit liability is forfeited under the International Convention on Civil
Liability for Oil Pollution Damage where the spill is caused by the owner's
actual fault and under the 1992 Protocol where the spill is caused by the
owner's intentional or reckless conduct. Vessels trading to states that are
parties to these conventions must provide evidence of insurance covering the
liability of the owner. In jurisdictions where the International Convention on
Civil Liability for Oil Pollution Damage has not been adopted, various
legislative schemes or common law govern, and liability is imposed either on the
basis of fault or in a manner similar to that convention. We believe that our
P&I insurance will cover the liability under the plan adopted by the IMO.

United States Requirements

In 1990, the United States Congress enacted OPA to establish an extensive
regulatory and liability regime for environmental protection and cleanup of oil
spills. OPA affects all owners and operators whose vessels trade with the United
States or its territories or possessions, or whose vessels operate in the waters
of the United States, which include the U.S. territorial sea and the 200
nautical mile exclusive economic zone around the United States. The
Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA,
imposes liability for cleanup and natural resource damage from the release of
hazardous substances (other than oil) whether on land or at sea. Both OPA and
CERCLA impact our operations.

Under OPA, vessel owners, operators and bareboat charterers are responsible
parties who are jointly, severally and strictly liable (unless the spill results
solely from the act or omission of a third party, an act of God or an act of
war) for all containment and clean-up costs and other damages arising from oil
spills from their vessels. These other damages are defined broadly to include:

     o    natural resource damages and related assessment costs;

     o    real and personal property damages;

     o    net loss of taxes, royalties, rents, profits or earnings capacity; and

     o    net cost of public services necessitated by a spill response, such as
          protection from fire, safety or health hazards; and loss of
          subsistence use of natural resources.

OPA previously limited the liability of responsible parties to the greater of
$1,200 per gross ton or $10.0 million per tanker that is over 3,000 gross tons
(subject to possible adjustment for inflation). Amendments to OPA signed into
law in July 2006 increased these limits on the liability of responsible parties
to the greater of $1,900 per gross ton or $16.0 million per double hull tanker
that is over 3,000 gross tons. The act specifically permits individual states to
impose their own liability regimes with regard to oil pollution incidents
occurring within their boundaries, and some states have enacted legislation
providing for unlimited liability for discharge of pollutants within their
waters. In some cases, states which have enacted this type of legislation have
not yet issued implementing regulations defining tanker owners' responsibilities
under these laws. CERCLA, which applies to owners and operators of vessels,
contains a similar liability regime and provides for cleanup, removal and
natural resource damages. Liability under CERCLA is limited to the greater of
$300 per gross ton or $5.0 million.

These limits of liability do not apply, however, where the incident is caused by
violation of applicable U.S. federal safety, construction or operating
regulations, or by the responsible party's gross negligence or wilful
misconduct. These limits do not apply if the responsible party fails or refuses
to report the incident or to cooperate and assist in connection with the
substance removal activities. OPA and CERCLA each preserve the right to recover
damages under existing law, including maritime tort law. We believe that we are
in substantial compliance with OPA, CERCLA and all applicable state regulations
in the ports where our vessels call.

OPA requires owners and operators of vessels to establish and maintain with the
U.S. Coast Guard evidence of financial responsibility sufficient to meet the
limit of their potential strict liability under the act. The U.S. Coast Guard
has enacted regulations requiring evidence of financial responsibility in the
amount of $1,500 per gross ton for tankers, coupling the former OPA limitation
on liability of $1,200 per gross ton with the CERCLA liability limit of $300 per
gross ton. The U.S. Coast Guard has indicated that it expects to adopt
regulations requiring evidence of financial responsibility in amounts that
reflect the higher limits of liability imposed by the July 2006 amendments to
OPA, as described above. Under the regulations, evidence of financial
responsibility may be demonstrated by insurance, surety bond, self-insurance or
guaranty. Under OPA regulations, an owner or operator of more than one tanker is
required to demonstrate evidence of financial responsibility for the entire
fleet in an amount equal only to the financial responsibility requirement of the
tanker having the greatest maximum strict liability under OPA and CERCLA. We
have provided such evidence and received certificates of financial
responsibility from the U.S. Coast Guard for each of our vessels required to
have one.

We insure each of our vessels with pollution liability insurance in the maximum
commercially available amount of $1.0 billion. A catastrophic spill could exceed
the insurance coverage available, which could have a material adverse effect on
our business.

Under OPA, with certain limited exceptions, all newly-built or converted vessels
operating in U.S. waters must be built with double hulls, and existing vessels
that do not comply with the double hull requirement will be prohibited from
trading in U.S. waters over a 20-year period (1995-2015) based on size, age and
place of discharge, unless retrofitted with double hulls. Notwithstanding the
prohibition to trade schedule, the act currently permits existing single hull
and double-sided tankers to operate until the year 2015 if their operations
within U.S. waters are limited to discharging at the LOOP or off-loading by
lightering within authorized lightering zones more than 60 miles off-shore.
Lightering is the process by which vessels at sea off-load their cargo to
smaller vessels for ultimate delivery to the discharge port.

Owners or operators of tankers operating in the waters of the United States must
file vessel response plans with the U.S. Coast Guard, and their tankers are
required to operate in compliance with their U.S. Coast Guard approved plans.
These response plans must, among other things:

     o    address a worst case scenario and identify and ensure, through
          contract or other approved means, the availability of necessary
          private response resources to respond to a worst case discharge;

     o    describe crew training and drills; and

     o    identify a qualified individual with full authority to implement
          removal actions.

We have obtained vessel response plans approved by Coast Guard for our vessels
operating in the waters of the United States. In addition, the U.S. Coast Guard
has announced it intends to propose similar regulations requiring certain
vessels to prepare response plans for the release of hazardous substances.

In addition, the United States Clean Water Act prohibits the discharge of oil or
hazardous substances in United States navigable waters and imposes strict
liability in the form of penalties for unauthorized discharges. The Clean Water
Act also imposes substantial liability for the costs of removal, remediation and
damages and complements the remedies available under OPA and CERCLA, discussed
above. The United States Environmental Protection Agency, or EPA, has exempted
the discharge of ballast water and other substances incidental to the normal
operation of vessels in U.S. ports from Clean Water Act permitting requirements.
However, on March 31, 2005, a U.S. District Court ruled that the EPA exceeded
its authority in creating an exemption for ballast water. On September 18, 2006,
the court issued an order invalidating the exemption in EPA's regulations for
all discharges incidental to the normal operation of a vessel as of September
30, 2008, and directing the EPA to develop a system for regulating all
discharges from vessels by that date. The EPA filed a notice of appeal of this
decision and, if the EPA's appeals are successful and exemption is repealed, our
vessels may be subject to Clean Water Act permit requirements that could include
ballast water treatment obligations that could increase the cost of operating in
the United States. For example, this could require the installation of equipment
on our vessels to treat ballast water before it is discharged or the
implementation of other port facility disposal arrangements or procedures at
potentially substantial cost, and/or otherwise restrict our vessels from
entering U.S. waters.

Other Regulations

In July 2003, in response to the MT Prestige oil spill in November 2002, the
European Union adopted legislation that prohibits all single hull tankers from
entering into its ports or offshore terminals by 2010. The European Union has
also banned all single hull tankers carrying heavy grades of oil from entering
or leaving its ports or offshore terminals or anchoring in areas under its
jurisdiction. Commencing in 2005, certain single hull tankers above 15 years of
age will also be restricted from entering or leaving European Union ports or
offshore terminals and anchoring in areas under European Union jurisdiction. The
European Union has also adopted legislation that would: (1) ban manifestly
sub-standard vessels (defined as those over 15 years old that have been detained
by port authorities at least twice in a six month period) from European waters
and create an obligation of port states to inspect vessels posing a high risk to
maritime safety or the marine environment; and (2) provide the European Union
with greater authority and control over classification societies, including the
ability to seek to suspend or revoke the authority of negligent societies. The
sinking of the MT Prestige and resulting oil spill in November 2002 has led to
the adoption of other environmental regulations by certain European Union
nations, which could adversely affect the remaining useful lives of all of our
vessels and our ability to generate income from them. It is impossible to
predict what legislation or additional regulations, if any, may be promulgated
by the European Union or any other country or authority.

In addition, most U.S. states that border a navigable waterway have enacted
environmental pollution laws that impose strict liability on a person for
removal costs and damages resulting from a discharge of oil or a release of a
hazardous substance. These laws may be more stringent than U.S. federal law.

The U.S. Clean Air Act of 1970, as amended by the Clean Air Act Amendments of
1977 and 1990, or the CAA, requires the U.S. Environmental Protection Agency, or
EPA, to promulgate standards applicable to emissions of volatile organic
compounds and other air contaminants. Our vessels are subject to vapor control
and recovery requirements for certain cargoes when loading, unloading,
ballasting, cleaning and conducting other operations in regulated port areas.
Our vessels that operate in such port areas with restricted cargoes are equipped
with vapor recovery systems that satisfy these requirements. The CAA also
requires states to draft State Implementation Plans, or SIPs, designed to attain
national health-based air quality standards in primarily major metropolitan
and/or industrial areas. Several SIPs regulate emissions resulting from vessel
loading and unloading operations by requiring the installation of vapor control
equipment. As indicated above, our vessels operating in covered port areas are
already equipped with vapor recovery systems that satisfy these requirements.
Although a risk exists that new regulations could require significant capital
expenditures and otherwise increase our costs, based on the regulations that
have been proposed to date, we believe that no material capital expenditures
beyond those currently contemplated and no material increase in costs are likely
to be required.

The U.S. National Invasive Species Act, or NISA, was enacted in 1996 in response
to growing reports of harmful organisms being released into U.S. ports through
ballast water taken on by ships in foreign ports. The United States Coast Guard
adopted regulations under NISA in July 2004 that impose mandatory ballast water
management practices for all vessels equipped with ballast water tanks entering
U.S. waters. These requirements can be met by performing mid-ocean ballast
exchange, by retaining ballast water on board the ship, or by using
environmentally sound alternative ballast water management methods approved by
the United States Coast Guard. Mid-ocean ballast exchange is the primary method
for compliance with the United States Coast Guard regulations, since holding
ballast water can prevent ships from performing cargo operations upon arrival in
the United States, and alternative methods are still under development. Vessels
that are unable to conduct mid-ocean ballast exchange due to voyage or safety
concerns may discharge minimum amounts of ballast water (in areas other than the
Great Lakes and the Hudson River), provided that they comply with recordkeeping
requirements and document the reasons they could not follow the required ballast
water management requirements. The United States Coast Guard is developing a
proposal to establish ballast water discharge standards, which could set maximum
acceptable discharge limits for various invasive species, and/or lead to
requirements for active treatment of ballast water.

Our operations occasionally generate and require the transportation, treatment
and disposal of both hazardous and non-hazardous solid wastes that are subject
to the requirements of the U.S. Resource Conservation and Recovery Act, or RCRA,
or comparable state, local or foreign requirements. In addition, from time to
time we arrange for the disposal of hazardous waste or hazardous substances at
offsite disposal facilities. If such materials are improperly disposed of by
third parties, we may still be held liable for clean up costs under applicable
laws.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of
initiatives intended to enhance vessel security. On November 25, 2002, the U.S.
Maritime Transportation Security Act of 2002, or MTSA, came into effect. To
implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard
issued regulations requiring the implementation of certain security requirements
aboard vessels operating in waters subject to the jurisdiction of the United
States. Similarly, in December 2002, amendments to SOLAS created a new chapter
of the convention dealing specifically with maritime security. The new chapter
became effective in July 2004 and imposes various detailed security obligations
on vessels and port authorities, most of which are contained in the
International Ship and Port Facilities Security Code, or the ISPS Code. The ISPS
Code is designed to protect ports and international shipping against terrorism.
After July 1, 2004, to trade internationally, a vessel must attain an
International Ship Security Certificate from a recognized security organization
approved by the vessel's flag state. Among the various requirements are:

     o    on-board installation of automatic identification systems to provide a
          means for the automatic transmission of safety-related information
          from among similarly equipped ships and shore stations, including
          information on a ship's identity, position, course, speed and
          navigational status;

     o    on-board installation of ship security alert systems, which do not
          sound on the vessel but only alerts the authorities on shore;

     o    the development of vessel security plans;

     o    ship identification number to be permanently marked on a vessel's
          hull;

     o    a continuous synopsis record kept onboard showing a vessel's history
          including, name of the ship and of the state whose flag the ship is
          entitled to fly, the date on which the ship was registered with that
          state, the ship's identification number, the port at which the ship is
          registered and the name of the registered owner(s) and their
          registered address; and

     o    compliance with flag state security certification requirements.

The U.S. Coast Guard regulations, intended to align with international maritime
security standards, exempt from MTSA vessel security measures non-U.S. vessels
that have on board, as of July 1, 2004, a valid ISSC attesting to the vessel's
compliance with SOLAS security requirements and the ISPS Code. We have
implemented the various security measures addressed by MTSA, SOLAS and the ISPS
Code, and our fleet is in compliance with applicable security requirements.

Inspection by Classification Societies

The classification society certifies that the vessel is "in-class," signifying
that the vessel has been built and maintained in accordance with the rules of
the classification society and complies with applicable rules and regulations of
the vessel's country of registry and the international conventions of which that
country is a member. In addition, where surveys are required by international
conventions and corresponding laws and ordinances of a flag state, the
classification society will undertake them on application or by official order,
acting on behalf of the authorities concerned.

The classification society also undertakes on request other surveys and checks
that are required by regulations and requirements of the flag state. These
surveys are subject to agreements made in each individual case and/or to the
regulations of the country concerned.

For maintenance of the class, regular and extraordinary surveys of hull,
machinery, including the electrical plant, and any special equipment classed are
required to be performed as follows:

     o    Annual Surveys. For seagoing ships, annual surveys are conducted for
          the hull and the machinery, including the electrical plant and where
          applicable for special equipment classed, at intervals of 12 months
          from the date of commencement of the class period indicated in the
          certificate.

     o    Intermediate Surveys. Extended annual surveys are referred to as
          intermediate surveys and typically are conducted two and one-half
          years after commissioning and each class renewal. Intermediate surveys
          may be carried out on the occasion of the second or third annual
          survey.

     o    Class Renewal Surveys. Class renewal surveys, also known as special
          surveys, are carried out for the ship's hull, machinery, including the
          electrical plant and for any special equipment classed, at the
          intervals indicated by the character of classification for the hull.
          At the special survey the vessel is thoroughly examined, including
          audio-gauging to determine the thickness of the steel structures.
          Should the thickness be found to be less than class requirements, the
          classification society would prescribe steel renewals. The
          classification society may grant a one year grace period for
          completion of the special survey. Substantial amounts of money may
          have to be spent for steel renewals to pass a special survey if the
          vessel experiences excessive wear and tear. In lieu of the special
          survey every four or five years, depending on whether a grace period
          was granted, a ship owner has the option of arranging with the
          classification society for the vessel's hull or machinery to be on a
          continuous survey cycle, in which every part of the vessel would be
          surveyed within a five year cycle. At an owner's application, the
          surveys required for class renewal may be split according to an agreed
          schedule to extend over the entire period of class. This process is
          referred to as continuous class renewal.

All areas subject to survey as defined by the classification society are
required to be surveyed at least once per class period, unless shorter intervals
between surveys are prescribed elsewhere. The period between two subsequent
surveys of each area must not exceed five years.

Most vessels are also drydocked every 30 to 36 months for inspection of the
underwater parts and for repairs related to inspections. If any defects are
found, the classification surveyor will issue a recommendation which must be
rectified by the ship owner within prescribed time limits.

C. ORGANIZATIONAL STRUCTURE

See Exhibit 8.1 for a list of our significant subsidiaries and equity interests.

D. PROPERTY, PLANT AND EQUIPMENT

The Company's Vessels

The following table sets forth the fleet that we operate as of May 31, 2007
(including contracted newbuildings not yet delivered):



Vessel                      Built   Approximate Dwt.   Construction   Flag   Type of Employment
- -------------------------   -----   ----------------   ------------   ----   ------------------
                                                              

Tonnage Owned Directly
- ----------------------

VLCCs
- -----
Antares Voyager              1998            310,000   Double-hull    BA     Bareboat charter
Phoenix Voyager              1999            308,500   Double-hull    BA     Bareboat charter
Hull 2396 (Newbuilding)      2009            297,000   Double-hull    n/a    n/a
Hull 2397 (Newbuilding)      2009            297,000   Double-hull    n/a    n/a
Hull 2419 (Newbuilding)      2010            297,000   Double-hull    n/a    n/a
Hull 2420 (Newbuilding)      2010            297,000   Double-hull    n/a    n/a
Front Shanghai               2006            298,500   Double-hull    HK     Spot market

Suezmax Tankers
- ---------------
Hull 1017 (Newbuilding)      2008            156,000   Double-hull    n/a    n/a
Hull 1018 (Newbuilding)      2009            156,000   Double-hull    n/a    n/a
Hull 1019 (Newbuilding)      2008            156,000   Double-hull    n/a    n/a
Hull 1026 (Newbuilding)      2009            156,000   Double-hull    n/a    n/a
Hull 1056 (Newbuilding)      2010            156,000   Double-hull    n/a    n/a
Hull 1057 (Newbuilding)      2010            156,000   Double-hull    n/a    n/a
Hull 1060 (Newbuilding)      2010            156,000   Double-hull    n/a    n/a
Hull 1061 (Newbuilding)      2010            156,000   Double-hull    n/a    n/a
Front Horizon(*)             1988            149,500   Single-hull    MI     Spot market
Front Voyager                1992            155,000   Single-hull    BA     Spot market
Cygnus Voyager               1993            157,000   Double-hull    BA     Bareboat charter
Altair Voyager               1993            136,000   Double-hull    BA     Bareboat charter
Sirius Voyager               1994            156,000   Double-hull    BA     Bareboat charter

Tonnage chartered in from Ship Finance
- --------------------------------------

VLCCs
- -----
Front Sabang                 1990            286,000   Single-hull    SG     Time charter
Front Highness               1991            284,000   Single-hull    SG     Time charter
Front Lady                   1991            284,000   Single-hull    SG     Time charter
Front Lord                   1991            284,000   Single-hull    SG     Time charter
Front Duke                   1992            284,000   Single-hull    SG     Time charter
Front Duchess                1993            284,000   Single-hull    SG     Time charter
Edinburgh                    1993            302,000   Double-side    LIB    Spot market
Front Ace                    1993            276,000   Single-hull    LIB    Time charter
Front Vanguard               1998            300,000   Double-hull    MI     Spot market
Front Century                1998            311,000   Double-hull    MI     Spot market
Front Champion               1998            311,000   Double-hull    BA     Time charter
Front Vista                  1998            300,000   Double-hull    MI     Spot market
Front Comanche               1999            300,000   Double-hull    FRA    Time charter
Golden Victory               1999            300,000   Double-hull    MI     Time charter
Front Circassia              1999            306,000   Double-hull    MI     Spot market
Front Opalia                 1999            302,000   Double-hull    MI     Spot market
Ocana (Ex Front Commerce)    1999            300,000   Double-hull    IoM    Bareboat charter
Front Scilla                 2000            303,000   Double-hull    MI     Spot market
Oliva (Ex Ariake)            2001            299,000   Double-hull    IoM    Bareboat charter
Front Serenade               2002            299,000   Double-hull    LIB    Time charter
Otina (Ex Hakata)            2002            298,000   Double-hull    IoM    Bareboat charter
Ondina (Ex Front Stratus)    2002            299,000   Double-hull    LIB    Bareboat charter
Front Falcon                 2002            309,000   Double-hull    BA     Spot market
Front Page                   2002            299,000   Double-hull    LIB    Time charter
Front Energy                 2004            305,000   Double-hull    CYP    Spot market
Front Force                  2004            305,000   Double-hull    CYP    Spot market

Suezmax OBO Carriers
- --------------------
Front Breaker                1991            169,000   Double-hull    MI     Time charter
Front Climber                1991            169,000   Double-hull    SG     Time charter
Front Driver                 1991            169,000   Double-hull    MI     Time charter
Front Guider                 1991            169,000   Double-hull    SG     Time charter
Front Leader                 1991            169,000   Double-hull    SG     Time charter
Front Rider                  1992            169,000   Double-hull    SG     Time charter
Front Striver                1992            169,000   Double-hull    SG     Time charter
Front Viewer                 1992            169,000   Double-hull    SG     Time charter

Suezmax Tankers
- ---------------
Front Birch                  1991            150,000   Double-side    MI     Spot market
Front Maple                  1991            150,000   Double-side    MI     Spot market
Front Pride                  1993            150,000   Double-hull    NIS    Spot market
Front Glory                  1995            150,000   Double-hull    NIS    Time charter
Front Splendour              1995            150,000   Double-hull    NIS    Spot market
Front Ardenne                1997            150,000   Double-hull    NIS    Spot market
Front Brabant                1998            150,000   Double-hull    NIS    Spot market
Mindanao                     1998            150,000   Double-hull    SG     Spot market

Containerships
- --------------
Sea Alfa                     2005         1,700 TEU(1) n/a            CYP    Time charter
Sea Beta                     2005         1,700 TEU    n/a            CYP    Time charter

Tonnage chartered in from Third Parties
- ---------------------------------------

VLCCs
- -----
Front Chief                  1999            311,000   Double-hull    BA     Spot market
Front Commander              1999            311,000   Double-hull    BA     Spot market
Front Crown                  1999            311,000   Double-hull    BA     Spot market
British Pioneer              1999            307,000   Double-hull    IoM    Bareboat charter
British Pride                2000            307,000   Double-hull    IoM    Bareboat charter
British Progress             2000            307,000   Double-hull    IoM    Bareboat charter
British Purpose              2000            307,000   Double-hull    IoM    Bareboat charter
Front Tina                   2000            299,000   Double-hull    LIB    Spot market
Front Commodore              2000            299,000   Double-hull    LIB    Time charter
Front Eagle                  2002            309,000   Double-hull    BA     Spot market
Cosgreat Lake                2002            298,833   Double-hull    PAN    Spot market

Suezmax Tankers
- ---------------
Front Warrior                1998            153,000   Double-hull    BA     Spot market
Front Melody                 2001            150,000   Double-hull    LIB    Spot market
Front Symphony               2001            150,000   Double-hull    LIB    Spot market
Front Traveller              1990            150,000   Single-hull    MI     Spot market
Front Granite                1991            150,000   Single-hull    MI     Spot market
Front Comor                  1993            150,000   Single-hull    MI     Time charter
Marble                       1992            150,000   Single-hull    MI     Spot market
Front Target                 1990            150,000   Single-hull    MI     Spot market


(*) Vessel sold in June 2007 with expected delivery in July or August 2007.

Our chartered in fleet is contracted to us under leasing arrangements with fixed
terms of between eight and twenty four years. Lessors have options to require us
to extend nine of these leases by up to an additional five years from expiry of
the fixed term. We have fixed price purchase options to buy nine of these
vessels at certain future dates and the lessors have fixed price options to put
nine of these vessels to us at the end of the lease period. The remaining four
lease agreements are not cancellable by us without agreement of the end-user of
the vessel.

Key to Flags:
BA - Bahamas, IoM - Isle of Man, LIB - Liberia, NIS - Norwegian International
Ship Register, PAN - Panama, SG - Singapore, FRA - France, MI - Marshall
Islands, CYP - Cyprus, HK - Hong Kong.

(1) Measured in "twenty-foot equivalent units" (TEU)

Other than our interests in the vessels described above, we do not own any
material physical properties. We lease office space in Hamilton, Bermuda from an
unaffiliated third party. Frontline Management AS leases office space, at market
rates, in Oslo, Norway from Bryggegata AS, a company indirectly affiliated
with Hemen, our principal shareholder.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

The following discussion should be read in conjunction with Item 3 "Selected
Financial Data", Item 4 "Information on the Company" and our audited
Consolidated Financial Statements and Notes thereto included herein.

Our principal focus and expertise is the transportation of crude oil and oil
product cargoes for major integrated oil companies and other customers. As at
December 31, 2006, our tanker fleet consisted of 30 VLCCs, four VLCC newbuilding
contracts and 28 Suezmax tankers, of which eight are Suezmax OBOs, six Suezmax
newbuilding contracts and one Aframax tanker. We also charter in eleven modern
VLCCs and three modern Suezmax tankers from third parties. A full fleet list is
provided in Item 4.D. "Information on the Company" showing the vessels that we
currently own and charter in.



Fleet Changes

Refer to Item 4 for discussion on acquisitions and disposals of vessels. A
summary of our fleet changes for the years ended December 31, 2006, 2005 and
2004 is as follows:

- ----------------------------------------------------
                                  2006   2005   2004
- ----------------------------------------------------
VLCCs
At start of period                  43     38     36
Acquisitions                         2      5      3
Dispositions                         4      -      1
- ----------------------------------------------------
At end of period                    41     43     38
- ----------------------------------------------------

VLCCs owned by equity investees
At start of period                   -      1      7
Acquisitions                         -      -      -
Dispositions                         -      1      6
- ----------------------------------------------------
At end of period                     -      -      1
- ----------------------------------------------------

Suezmax
At start of period                  23     28     23
Acquisitions                         -      -      5
Dispositions                         -      5      -
- ----------------------------------------------------
At end of period                    23     23     28
- ----------------------------------------------------

Suezmax OBOs
- ----------------------------------------------------
At start and end of period           8      8      8
- ----------------------------------------------------

Aframax
At start of period                   -      -      -
Acquisitions                         1      -      -
Dispositions                         -      -      -
- ----------------------------------------------------
At end of period                     1      -      -
- ----------------------------------------------------

Drybulk
At start of period                   -      1      3
Dispositions                         -      1      2
- ----------------------------------------------------
At end of period                     -      -      1
- ----------------------------------------------------

Total fleet
At start of period                  74     76     77
Acquisitions                         3      5      8
Dispositions                         4      7      9
- ----------------------------------------------------
At end of period                    73     74     76
- ----------------------------------------------------

Summary of Fleet Employment

As discussed below, our vessels are operated under time charters, bareboat
charters, voyage charters, pool arrangements and COAs.

- ---------------------------------------------------------------------------
                                           As at December 31,
                                     2006          2005           2004
                                  No.     %      No.     %      No.     %
- ---------------------------------------------------------------------------
VLCCs
Spot or pool                        18     44%     29     67%     25     66%
Time charter                        13     32%      9     21%      2      5%
Bareboat charter                    10     24%      5     12%     11     29%
- ---------------------------------------------------------------------------
Total                               41    100%     43    100%     38    100%
- ---------------------------------------------------------------------------

VLCCs owned by equity investees
Spot or pool                         -      -       -      -       1    100%
- ---------------------------------------------------------------------------
Total                                -      -       -      -       1    100%
- ---------------------------------------------------------------------------

Suezmax
Spot or pool                        16     70%     22     96%     24     86%
Time charter                         3     13%      1      4%      -      -
Bareboat charter                     3     13%      -      -       4     14%
Under Conversion                     1      4%      -      -       -      -
- ---------------------------------------------------------------------------
Total                               23    100%     23    100%     28    100%
- ---------------------------------------------------------------------------

Aframax
Under Conversion                     1    100%      -      -       -      -
- ---------------------------------------------------------------------------
Total                                1    100%      -      -       -      -
- ---------------------------------------------------------------------------

Suezmax OBOs
Spot or pool                         -      -       -      -       -      -
Time charter                         8    100%      8    100%      8    100%
- ---------------------------------------------------------------------------
Total                                8    100%      8    100%      8    100%
- ---------------------------------------------------------------------------

Drybulk
Time charter                         -      -       -      -       -      -
Bareboat charter                     -      -       -      -       1    100%
- ---------------------------------------------------------------------------
Total                                -      -       -      -       1    100%
- ---------------------------------------------------------------------------

Total fleet
Spot or pool                        34     47%     51     69%     50     66%
Time charter                        24     32%     18     24%     10     13%
Bareboat charter                    13     18%      5      7%     16     21%
Under Conversion                     2      3%      -      -       -      -
- ---------------------------------------------------------------------------
Total                               73    100%     74    100%     76    100%
- ---------------------------------------------------------------------------

Market Overview and Trend Information

The tanker market continued to strengthen in 2006 and it was the demand side
which had the greatest influence on rates and the seasonal pattern for the
Suezmax and VLCC segments were quite similar though the Suezmaxes witnessed more
volatility. The year started at a TCE of approximately $81,000 per day for the
VLCCs and about $70,000 per day for the Suezmaxes. Rates then followed the
traditional seasonal pattern by softening to about $33,000 per day for the VLCCs
and about $25,000 per day for the Suezmaxes around the middle of April 2006.
From this point, the rates began to firm against market predictions at the time
and rose to about $89,000 per day for the VLCCs and about $75,000 per day for
the Suezmaxes by the end of August. The fear of another active hurricane season
in the US Gulf, geopolitical uncertainty and increased risk of supply
disruptions gave strong incentives to build oil reserves throughout the summer.
On land storage capacity was in some regions filled to capacity, driven by
extraordinarily strong future rates compared to market rates, resulting in the
wide use of tankers for storage purposes.

The reserve build up triggered a sharp drop in crude prices, from $76 per barrel
in early August to $56 per barrel in early October. This led to the market
weakening and rates fell to about $45,000 per day for the VLCCs and about
$30,000 per day for the Suezmaxes by the middle of December 2006. Depending on
the source of information, the average TCE for the year was about $63,000 per
day for a double hulled VLCC and about $50,000 per day for a double hulled
Suezmax.


There is a trend that oil majors discriminate single hull tonnage when
transporting persistent oils and therefore also avoid inspecting single hull
ships on the same basis. Oil traders with crude or fuel oil cargoes often
require double hull tonnage in order to have full flexibility with regards to
cargo delivery. Hence, single hull ships appear no longer able to trade to their
full capacity compared to the double hull vessels which implies a further gap in
the already existing 'two tier market' between the double and the single
vessels.

Bunkers followed the movements in the oil market closely in 2006 with Fujairah's
highest bunker quote for the year set early May at $359 per metric ton, or mt,
with the low set at the end of November at $258/mt. The average bunker price in
2006 was calculated to about of $309/mt.

In order to prevent an uncontrolled price dive, OPEC cut production by 1.2
million barrels per day from November 2006. It was reported by the International
Energy Agency, or IEA, that average OPEC Oil production, including Iraq but not
Angola, was approximately 29.7 million barrels per day during 2006, a 0.02
million barrel per day decrease from 2005. Even if OPEC crude production was
unchanged from 2005 to 2006 there was a noticeable shift in production from
Nigeria and Venezuela to the Middle East. On January 1, 2007, Angola became the
twelfth member of OPEC and it will be interesting to see if the inclusion of
Angola will strengthen the capability of OPEC in fulfilling its objectives and
help to further stabilize the market.

OPEC producers are expected to add a net 2.6 million barrels per day, or mb/d,
to installed crude capacity in 2007 and 2008 according to IEA. Capacity is
expected to reach 34.8 mb/d by the end of 2007, compared with 33.9 mb/d at the
end of 2006. Growth could accelerate in 2008, with capacity reaching 36.5 mb/d
by the end of the year. Capacity growth is expected to be heavily skewed towards
Angola and Saudi Arabia, together accounting for half of the net increase.

The Middle East Gulf exports dropped in the first half of 2007 but are expected
to rebound in the second half. The long haul trade route West Africa-Asia is
expected to be stable in 2007.

The IEA further estimates that the average world oil demand was 84.5 million
barrels per day in 2006, a 1% increase from 2005. For 2007 a 1.8% or 1.55
million barrels per day growth is forecasted in world oil demand with North
America, China and the Middle East as the main drivers.

The International Monetary Fund, or IMF, expect global growth to moderate to
4.9% in 2007 and 2008, approximately half a percentage point lower than in 2006
according to their World Economic Outlook report released April 2007. In the
United States, growth is expected to come down to 2.2% this year, from 3.3% in
2006. Growth is also expected to ease in Europe, while in Japan it is expected
that the expansion continue at about the same pace as in 2006. Emerging markets
and developing countries are expected to continue to grow strongly, albeit at a
some what slower pace than in 2006. China's growth is projected to remain rapid
in 2007 and 2008, albeit a little below the torrid pace in 2006, while India's
economy should also continue to grow rapidly.

The total Suezmax fleet increased by 7.5% in 2006 to 346 vessels according to
industry sources, who also state that a total of 25 new vessels were delivered
to owners during 2006 while 77 new orders were made. The majority of these are
set to be delivered in 2009. The total order book amounted to 123 vessels at the
end of the year which represented approximately 35% of the existing fleet.

The total VLCC fleet increased by 3.2% in 2006 to 479 vessels with a total of 18
new vessels delivered to owners during 2006 while 79 new orders were made. The
total order book amounted to 161 vessels at the end of the year which
represented approximately 34% of the existing fleet.

We believe it is likely that more tankers will be either converted or scrapped
compared to recent years. We expect approximately 30 VLCCs and about 25
Suezmaxes to be delivered from shipyards during 2007.

Accounting Changes

In December 2003 we implemented the provisions of FIN 46. The effect of our
implementation of FIN 46 was to require consolidation of certain entities in
which we held interests but which had not previously been consolidated. This
resulted in us recording a cumulative effect of a change in accounting principle
of $33.7 million effective December 31, 2003 as discussed below.

     o    During 2004, we owned 50% of the issued shares of and had made loans
          to Golden Fountain Corporation, owner of a VLCC. Prior to the adoption
          of FIN 46, we accounted for our interest in Golden Fountain
          Corporation using the equity method. We determined that Golden
          Fountain Corporation was a variable interest entity and that we were
          the primary beneficiary. Accordingly we consolidated the assets and
          liabilities of Golden Fountain Corporation effective December 31,
          2003. The effect of consolidation of Golden Fountain Corporation as of
          December 31, 2003 was a cumulative change in accounting principle of
          $8.5 million. Golden Fountain Corporation sold its vessel in December
          17, 2004.

     o    On July 1, 2003, we purchased a call option for $10.0 million to
          acquire all of the shares of ITC from Hemen, a related party, for a
          total consideration of $4.0 million plus 4% interest per year. Prior
          to the adoption of FIN 46 we did not consolidate ITC. We determined
          that ITC was a variable interest entity and that we were the primary
          beneficiary. Accordingly we consolidated the assets and liabilities of
          ITC effective December 31, 2003, with the exception of certain
          subsidiaries which have been accounted for using the equity method.
          The consolidation of ITC as of December 31, 2003 had a cumulative
          effect of a change in accounting principle of $25.2 million.

     o    Nine of the vessels we leased as at December 31, 2006 are leased from
          special purpose lessor entities which were established and are owned
          by independent third parties who provide financing through debt and
          equity participation. Each entity owns one vessel, which is leased to
          us, and has no other activities. Prior to the adoption of FIN 46R, we
          did not consolidate these special purpose lessor entities. At December
          31, 2006, one of these leases is accounted for as an operating lease
          and eight of these leases are accounted for as capital leases. We
          determined that due to the existence of certain put and call options
          over the leased vessels, these entities are variable interest
          entities. The determination of the primary beneficiary of a variable
          interest entity requires knowledge of the participations in the equity
          of that entity by individual and related equity holders. Our lease
          agreements with the leasing entities do not give us any right to
          obtain this information and we have been unable to obtain this
          information by other means. Accordingly we are unable to determine the
          primary beneficiary of these leasing entities. At December 31, 2006,
          the original cost to the lessor of the assets under such arrangements
          was $618.5 million. At December 31, 2006, our residual value
          guarantees associated with these leases, which represent the maximum
          exposure to loss, are $84.5 million.

     o    We had both an obligation and an option to purchase the VLCC Oscilla
          on expiry of a five-year time charter, which commenced in March 2000.
          Oscilla was owned and operated by an unrelated special purpose entity.
          Prior to the adoption of FIN 46R, we did not consolidate this special
          purpose entity. We determined that the entity that owns Oscilla is a
          variable interest entity and that we were the primary beneficiary. At
          December 31, 2004 through to January 2005, when we exercised our
          option to acquire the vessel, we were unable to obtain the accounting
          information necessary to be able to consolidate the entity that owns
          Oscilla. If we had exercised our option at December 31, 2004, the cost
          to us of the Oscilla would have been approximately $28.5 million and
          the maximum exposure to loss was $15.4 million. On January 17, 2005,
          we exercised our option to acquire the Oscilla and the vessel was
          delivered to us on April 4, 2005.

With effect from December 2003, the IMO implemented new regulations that result
in the accelerated phase-out of single hull vessels. As a result of this, we
have re-evaluated the estimated useful life of our single hull vessels and
determined this to be either 25 years or the vessel's anniversary date in 2015
whichever comes first. As a result, the estimated useful lives of fourteen of
our wholly owned vessels and two vessels owned by associated companies were
reduced in the fourth quarter of 2003. A change in accounting estimate was
recognised to reflect this decision, resulting in an increase in depreciation
expense and consequently decreasing net income by $1.3 million and basic and
diluted earnings per share by $0.02, for 2003.

Following the dividend of most of our remaining interest in Ship Finance on
March 22, 2007, we re-evaluated the basis of our consolidation of Ship Finance
under FIN 46(R) and determined that consolidation of Ship Finance and its
subsidiaries was no longer appropriate and that the vessels chartered in from
Ship Finance should be accounted for as assets held under finance leases.

Restatement of Prior Years

During 2006, we reassessed our accounting treatment of certain subsidiaries in
the ITC Group under FIN 46(R) and determined that we are not the primary
beneficiary of the variable interest entities CalPetro Tankers (Bahamas I)
Limited, CalPetro Tankers (Bahamas II) Limited, CalPetro Tankers (Bahamas III)
Limited and CalPetro Tankers (IOM) Limited for the years ended December 31, 2004
and December 31, 2005. In prior years these entities were fully consolidated but
as a result of the reassessment they are now being accounted for under the
equity method. As a result of this reassessment we have retroactively restated
our financial statements for the years ended December 31, 2004 and 2005. The
impact of the restatement is detailed fully in note 3 of the financial
statements included in Item 18. Because the equity accounting and consolidation
models result in the same net income, the restatement has not resulted in a
change in net assets, however, there have been several reclassifications in the
balance sheets and statements of operations.

In April 2006, Chevron terminated its bareboat charter with CalPetro Tankers
(Bahamas III) Limited. Under FIN 46(R) this is considered a triggering event and
we began to consolidate the variable interest entity from that date.

Discontinued Operations

In November 2004, we established Golden Ocean as a wholly owned subsidiary in
Bermuda for the purpose of transferring, by way of contribution, certain dry
bulk shipping interests. We will not have any significant continuing involvement
in these dry bulk operations and as a result, the financial results from our dry
bulk operations transferred to Golden Ocean have been reported under
"discontinued operations" for 2004, 2003 and 2002. We have accounted for the
spin off of Golden Ocean at fair value and have recorded a gain of $99.5 million
in the year ended December 31, 2004.

In 2005, we disposed of our last remaining dry bulk carrier which has been
accounted for as discontinued operations as we do not plan on having any
continued involvement in dry bulk operations. Discontinued operations also
includes a portion of the gain on sale of shares of Golden Ocean in February
2005 representing the difference between the cost of the shares sold and the
fair value of the shares at the date of the spin off of Golden Ocean.

Critical Accounting Policies and Estimates

The preparation of our financial statements in accordance with accounting
principles generally accepted in the United States requires that management make
estimates and assumptions affecting the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.

Management believes that the following accounting policies are the most critical
in fully understanding and evaluating our reported financial results as they
require a higher degree of judgement in their application resulting from the
need to make estimates about the effect of matters that are inherently
uncertain. See Note 2 to our audited Consolidated Financial Statements included
herein for details of all of our material accounting policies.

Revenue Recognition
- -------------------
Revenues are generated from freight billings, time charter and bareboat charter
hires. Time charter and bareboat charter revenues are recorded over the term of
the charter as service is provided. Under a voyage charter the revenues and
associated voyage costs are recognized rateably over the estimated duration of
the voyage, which is measured from completion of discharge to completion of
discharge. The operating results of voyages in progress at a reporting date are
estimated and recognized pro-rata on a per day basis. Probable losses on voyages
are provided for in full at the time such losses can be estimated. Amounts
receivable or payable arising from profit sharing arrangements are accrued based
on the estimated results of the voyage recorded as at the reporting date.

Revenues and voyage expenses of the vessels operating in pool arrangements, are
pooled and the resulting net pool revenues, calculated on a time charter
equivalent basis, are allocated to the pool participants according to an agreed
formula. Formulae used to allocate net pool revenues vary among different pools
but generally allocate revenues to pool participants on the basis of the number
of days a vessel operates in the pool with weighting adjustments made to reflect
vessels' differing capacities and performance capabilities. The same revenue and
expenses principles stated above are applied in determining the pool's net pool
revenues. Certain pools are responsible for paying voyage expenses and
distribute net pool revenues to the participants. We account for the net pool
revenues allocated by these pools as "pool revenues" which are included in
voyage revenues in our statements of operations. Certain pools require the
participants to pay and account for voyage expenses, and distribute gross pool
revenues to the participants such that the participants' resulting net pool
revenues are equal to net pool revenues calculated according to the agreed
formula. We account for gross pool revenues allocated by these pools as "pool
revenues" which are included in voyage revenues in our statements of operations.

Vessels and Depreciation
- ------------------------

The cost of the vessels less estimated residual value is depreciated on a
straight-line basis over the vessels' estimated remaining economic useful lives.
The estimated economic useful life of the Company's double hull vessels is 25
years and for single hull vessels is either 25 years or the vessel's anniversary
date in 2015, whichever comes first. Other equipment is depreciated over its
estimated remaining useful life, which approximates five years.

With effect from December 2003, the International Maritime Organisation
implemented new regulations that resulted in the accelerated phase-out of single
hull vessels. As a result of this, the Company re-evaluated the estimated useful
life of its single hull vessels and determined this to be either 25 years or the
vessel's anniversary date in 2015 whichever comes first. As a result, the
estimated useful lives of fourteen of the Company's wholly owned vessels and two
vessels owned by associated companies were reduced in the fourth quarter of
2003.

If the estimated economic useful life is incorrect, or circumstances change such
that the estimated economic useful life has to be revised, an impairment loss
could result in future periods. We will continue to monitor the situation and
revise the estimated useful lives of our non-double hull vessels as appropriate
when new regulations are implemented or expectations of the impact of current
rules change.

The vessels held and used by us are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. In assessing the recoverability of the vessels' carrying
amounts, we must make assumptions regarding estimated future cash flows. These
assumptions include assumptions about the spot market rates for vessels, the
operating costs of our vessels and the estimated economic useful life of our
vessels. In making these assumptions we refer to historical trends and
performance as well as any known future factors. Factors we consider important
which could affect recoverability and trigger impairment include significant
underperformance relative to expected operating results, new regulations that
change the estimated useful economic lives of our vessels and significant
negative industry or economic trends.

Variable Interest Entities
- --------------------------

A variable interest entity is a legal entity that lacks either (a) equity
interest holders as a group that lack the characteristics of a controlling
financial interest, including: decision making ability and an interest in the
entity's residual risks and rewards or (b) the equity holders have not provided
sufficient equity investment to permit the entity to finance its activities
without additional subordinated financial support. FIN 46 requires a variable
interest entity to be consolidated if any of its interest holders are entitled
to a majority of the entity's residual return or are exposed to a majority of
its expected losses.

In applying the provisions of Interpretation 46, we must make assumptions in
respect of, but not limited to, the sufficiency of the equity investment in the
underlying entity. These assumptions include assumptions about the future
revenues, operating costs and estimated economic useful lives of assets of the
underlying entity.

We initially applied the provisions of Interpretation 46 to all special purpose
entities and other entities created after January 31, 2003 on December 31, 2003.
We initially applied its provisions to entities that are not considered to be
special purpose entities that were created before January 31, 2003 as of March
31, 2004. The impact on the results of operations and financial position of the
Company is explained above in "Accounting Changes".

Leases
- ------

Leases are classified as either capital leases or operating leases based on an
assessment of the terms of the lease. Classification of leases involves the use
of estimates or assumptions about fair values of leased vessels, expected future
values of vessels and, if lessor's rates of return are not known, lessee's cost
of capital. We generally base our estimates of fair value on the average of
three independent broker valuations of a vessel. Our estimates of expected
future values of vessels are based on current fair values amortised in
accordance with our standard depreciation policy for owned vessels. Lessee's
cost of capital is estimated using an average which includes estimated return on
equity and estimated incremental borrowing cost. The classification of leases in
our accounts as either capital leases or operating leases is sensitive to
changes in these underlying estimates and assumptions.

Factors Affecting our Results

The principal factors which affect our results of operations and financial
position include:

     o    the earnings of our vessels in the charter market;
     o    vessel operating expenses;
     o    administrative expenses;
     o    depreciation;
     o    interest expense;
     o    minority interest

We have derived our earnings from bareboat charters, time charters, voyage
charters, pool arrangements and contracts of affreightment.

As at December 31, 2006, 2005 and 2004, 34, 51 and 50, respectively, of our
vessels operated in the voyage charter market. The tanker industry has
historically been highly cyclical, experiencing volatility in profitability,
vessel values and freight rates. In particular, freight and charter rates are
strongly influenced by the supply of tanker vessels and the demand for oil
transportation services.

Operating costs are the direct costs associated with running a vessel and
include crew costs, vessel supplies, repairs and maintenance, drydockings,
lubricating oils and insurance.

Administrative expenses are composed of general corporate overhead expenses,
including personnel costs, property costs, legal and professional fees and other
general administrative expenses. Personnel costs include, among other things,
salaries, pension costs, fringe benefits, travel costs and health insurance.

Depreciation, or the periodic cost charged to our income for the reduction in
usefulness and long-term value of our vessels, is also related to the number of
vessels we own or lease. We depreciate the cost of our vessels, less their
estimated residual value, over their estimated useful life on a straight-line
basis. No charge is made for depreciation of vessels under construction until
they are delivered.

Interest expense relates to vessel specific debt facilities and corporate debt.
Interest expense depends on our overall borrowing levels and may significantly
increase when we acquire vessels or on the delivery of newbuildings. Interest
incurred during the construction of a newbuilding is capitalized in the cost of
the newbuilding. Interest expense may also change with prevailing interest
rates, although the effect of these changes may be reduced by interest rate
swaps or other derivative instruments.

All of our charter and management arrangements with Ship Finance are eliminated
on consolidation. However, due to the spin-off of our holdings of Ship Finance
shares, we record as an expense the share of total consolidated income
attributable to the minority interest.

Inflation

Although inflation has had a moderate impact on our vessel operating expenses
and corporate overheads, management does not consider inflation to be a
significant risk to direct costs in the current and foreseeable economic
environment other than potentially in relation to insurance costs and crew
costs. It is anticipated that insurance costs, which have risen considerably
over the last three years, may well continue to rise over the next few years.
Oil transportation is a specialized area and the number of vessels is
increasing. There will therefore be an increased demand for qualified crew and
this has and will continue to put inflationary pressure on crew costs. However,
in a shipping downturn, costs subject to inflation can usually be controlled
because shipping companies typically monitor costs to preserve liquidity and
encourage suppliers and service providers to lower rates and prices in the event
of a downturn.

Year ended December 31, 2006 compared with the year ended December 31, 2005

Total operating revenues and voyage expenses and commission

- ------------------------------------------------------------------------------
                                Year ended December 31,           Change
(in thousands of $)                2006        2005           $            %
- ------------------------------------------------------------------------------
Voyage charter revenues         1,114,531   1,152,240     (37,709)          (3)
Time charter revenues             364,956     205,837     159,119           77
Bareboat charter revenues          89,655     142,562     (52,907)         (37)
Finance lease interest income       9,411           -       9,411          100
Other income                        5,310       3,877       1,433           37
- ------------------------------------------------------------------------------
Total operating revenues        1,583,863   1,504,516      79,347            5
- ------------------------------------------------------------------------------

Total operating revenues were relatively stable between 2005 and 2006 due to
similar market conditions. During 2006 there was a change in fleet employment
from the spot market to the time charter market in order to reduse exposure to
the spot market, especially in the case of non-double hull vessels. The change
in fleet employment has resulted in an increase in total time charter revenues
and a decrease in voyage charter revenues. See the table above "Summary of Fleet
Employment" for more details of our fleet employment during 2006.  Bareboat
charter revenues declined due to the redelivery from bareboat charters of four
vessels in the first and second quarters of 2006.

Voyage charter revenues include pool revenues. Certain pools are responsible for
paying voyage expenses and distribute net pool revenues to the participants
while other pools require the participants to pay and account for voyage
expenses, and distribute gross pool revenues to the participants such that the
participants' resulting net pool revenues are equal to net pool revenues
calculated according to the agreed formula. An analysis of our pool revenues
included in voyage revenues is as follows:

- ----------------------------------------------------------
(in thousands of $)                         2006      2005
- ----------------------------------------------------------
Pool earnings allocated on gross basis   131,099   128,726
Pool earnings allocated on net basis           -    25,015
- ----------------------------------------------------------
Total pool earnings                      131,099   153,741
- ----------------------------------------------------------

Our vessels are operated under time charters, bareboat charters, voyage
charters, pool arrangements and COAs. Under a time charter, the charterer pays
substantially all of the vessel voyage costs. Under a bareboat charter the
charterer pays substantially all of the vessel voyage and operating costs. Under
a voyage charter, the vessel owner pays such costs. Vessel voyage costs are
primarily fuel and port charges. Accordingly, charter income from a voyage
charter would be greater than that from an equally profitable time charter to
take account of the owner's payment of vessel voyage costs. In order to compare
vessels trading under different types of charters, it is standard industry
practice to measure the revenue performance of a vessel in terms of average
daily TCEs. For voyage charters, this is calculated by dividing net voyage
revenues by the number of days on charter. Days spent off-hire are excluded from
this calculation. For comparability, TCEs for bareboat charters include an
allowance for estimated operating costs that would be paid by us under an
equivalently profitable time charter. In 2006 we include an allowance of $6,500
per day for estimated operating costs (2005 and 2004-$6,500 per day).

A summary of average time charter equivalent earnings per day for our fleet is
as follows:

(in $ per day)     2006     2005     2004     2003     2002
- -----------------------------------------------------------
VLCC             57,800   57,400   78,000   42,300   22,500
Suezmax          37,800   40,300   57,900   33,900   18,400
Suezmax OBO      31,700   34,900   27,900   31,900   17,700
Containerships   22,700   26,100        -        -        -

Ship operating expenses

                       Year ended December 31,         Change
(in thousands of $)       2006        2005          $           %
- -------------------------------------------------------------------
Suezmax OBO              32,111      17,658      14,453          82
Suezmax                  63,068      53,935       9,133          17
VLCC                    100,113      75,931      24,182          32
Containerships            4,085       1,178       2,907         247
- -------------------------------------------------------------------
                        199,377     148,702      50,675          34
- -------------------------------------------------------------------

Ship operating expenses are the direct costs associated with running a vessel
and include crew costs, vessel supplies, repairs and maintenance, drydockings,
lubricating oils and insurance. Overall, ship operating expenses have increased
in 2006 compared with 2005 due to fleet changes and increased drydockings.

Major movements between 2006 and 2005 are as follows:

     o    An increase in drydockings during the year from 10 vessels in 2005 to
          19 vessels in 2006. This resulted in an operating expense increase of
          $27.8 million.
     o    Costs associated with the newly acquired Aframax vessel Front Puffin
          were $2.1 million before we started the conversion of this vessel to
          an FPSO vessel.
     o    Increased commercial management fees of $3.4 million in relation to
          certain charters beginning in 2006.
     o    General increase of $15.9 million due to vessels acquired and
          delivered from bareboat during 2006.
     o    Vessel sales did not result in a significant decline in ship operating
          expenses due to vessels sold during the year being primarily bareboat
          vessels.

Charterhire expenses

                        Year ended December 31,         Change
(in thousands of $)         2006        2005         $           %
- ---------------------------------------------------------------------
Charterhire expenses      24,923      11,711      13,212         113
- ---------------------------------------------------------------------

Number of vessels chartered in and accounted
for as operating leases:                     2006                     2005
- ----------------------------------------------------------------------------
      VLCC                                      1                        -
      Suezmax                                   1                        1
- ----------------------------------------------------------------------------
                                                2                        1
- ----------------------------------------------------------------------------

The increase in charterhire expense in 2006 is due to two vessels under
operating lease in 2006 compared to one vessel under operating lease in 2005.

Administrative expenses

                          Year ended December 31,        Change
(in thousands of $)          2006        2005          $           %
- -----------------------------------------------------------------------
Administrative expenses      32,214      21,061      11,153          53

The increase in administrative expenses in 2006 compared to 2005 is primarily
due to the following items:

     o    $6.0 million due to increased salary costs as the result of an
          increase in total employees and performance related bonuses,
     o    $3.4 million due to an increase in professional fees in relation to
          corporate transactions and Sarbanes-Oxley section 404 compliance,
     o    $0.3 million due to increased rent costs, and
     o    $0.7 million due to increased travel costs.

Interest income

                        Year ended December 31,      Change
(in thousands of $)       2006       2005           $         %
- --------------------   ---------   ---------   ---------   ---------
Interest income           47,733      40,867       6,866          17

Interest income has increased primarily as a result of an increase in interest
earned on bank deposits due to a combination of increased interest rates and an
increase in average cash balances held.

Interest expense

                        Year ended December 31,     Change
(in thousands of $)       2006        2005          $          %
- --------------------   ---------   ---------   ---------   ---------
Interest expense         206,144     206,058          86           -

Interest expense increased in 2006 compared to 2005 due to rising LIBOR rates on
a relatively stable average debt balance. This was partially offset by
favourable movements in Ship Finance's interest rate swaps and lower
amortization of deferred charges. In 2005, we had high amortization of deferred
charges due to write offs as a result of repayment of debt on vessels sold
during the year and the repurchase of Ship Finance 8.5% Senior Notes.

Equity earnings of unconsolidated subsidiaries and associated companies



                                           Year ended December 31,         Change
(in thousands of $)                           2006        2005           $          %
- ----------------------------------------   ---------   ---------   ---------    ---------
                                                                    
Share of results of associated companies       1,118       3,379      (2,261)         (67)


As of December 31, 2006, we account for seven investees (2005: seven) under the
equity method. There was an overall decrease in share of results in associated
companies because of decreased earnings from Tobago, as, after the sale of this
vessel to Ship Finance, we began consolidation of this vessel. Also, we began
consolidation of CalPetro Tankers (Bahamas III) Limited in 2006, which resulted
in a further decrease. These decreases were partially offset by earnings from
the new investee, Front Shadow.

Foreign currency exchange gains

                                  Year ended December 31,        Change
(in thousands of $)                  2006        2005         $           %
- -------------------------------   ---------   ---------   ---------    --------
Foreign currency exchange gains       1,056      18,829     (17,773)        (94)

Our foreign currency exchange gains are principally due to forward currency
exchange contracts which are denominated in Yen. As of December 31, 2005 we were
party to five Yen denominated forward currency exchange contracts with a
notional principal of (Y) 8.7 billion. In the year ended December 31, 2005, we
recorded realized gains of $16.7 million in relation to these forward currency
exchange contracts. The gains were due to the weakening of the Yen against the
US Dollar. All of our Yen denominated forward currency exchange contracts
expired during the fourth quarter of 2006. The gain on these contracts during
2006 was much lower than 2005 due to less movement in the Yen against the US
dollar.

Other



                                                       Year ended December 31,            Change
(in thousands of $)                                       2006         2005           $            %
- ----------------------------------------------------   ---------    ---------    ---------    ---------
                                                                                  
Mark to market adjustments for financial
derivatives                                               (2,735)      16,068      (18,803)        (117)
Gains and losses from freight forward agreements          (8,162)      (1,569)      (6,593)        (420)
Dividends received                                        13,317        1,540       11,777          765
Realized gain on sale of securities                        9,782       28,035      (18,253)         (65)
Other financial items, net                                (3,700)       1,755       (5,455)        (311)


The unfavourable movement in market to market adjustments relates primarily to
interest rate swaps held by Ship Finance and is due to new interest rate swaps
fixing interest at a higher rate in 2006.

Dividend income in 2006 was primarily dividends received on the shares of
General Maritime Corporation, or General Maritime, that we held.

The 2005 gain on sale of securities represents the gain on sale of Golden Ocean
and General Maritime shares described below. The 2006 gain on sale of securities
represents the gain on sale of the remainder of our holding in General Maritime
shares.

Minority interest

Minority interest represents minority investors' interests in the net income of
Ship Finance. As of December 31, 2006 minority investors owned 88.9% (2005:
83.83%) of the shares of Ship Finance.

Year ended December 31, 2005 compared with the year ended December 31, 2004

Total operating revenues and voyage expenses and commission

                            Year ended December 31,         Change
(in thousands of $)           2005        2004           $          %
- -------------------------   ---------   ---------   ---------    ---------
Voyage charter revenues     1,152,240   1,554,519    (402,279)         (26)
Time charter revenues         205,837     108,246      97,591           90
Bareboat charter revenues     142,562     176,381     (33,819)         (19)
Other income                    3,877       3,777         100            3
- -------------------------   ---------   ---------   ---------    ---------
Total operating revenues    1,504,516   1,842,923    (338,407)         (18)
- -------------------------   ---------   ---------   ---------    ---------

Total operating revenues decreased by 18% in 2005 compared with 2004 which
primarily reflects weaker earnings in the spot market. The decrease in voyage
charter revenues primarily reflects the strategic change in the employment of
five VLCCs from the spot market to time charters along with a general downward
trend in the market compared to the unusually high market in 2004. An analysis
of our pool revenues included in voyage revenues is as follows:

(in thousands of $)                           2005                        2004
- -------------------------------------------------------------------------------
Pool earnings allocated on gross basis     128,726                      78,430
Pool earnings allocated on net basis        25,015                     117,179
- -------------------------------------------------------------------------------
Total pool earnings                        153,741                     195,609
- -------------------------------------------------------------------------------

The increase in time charter revenues mainly reflects the change in employment
of five of our VLCCs to time charters during 2005. These time charters provide
us with a guaranteed minimum charter rate along with a 50:50 profit sharing of
average earnings above agreed thresholds.

Bareboat charter revenues in 2004 include $17.0 million in relation to two VLCCs
which were employed in the spot market part way through 2004. In 2004, we placed
four wholly owned VLCCs on bareboat charters which provide for a flat bareboat
rate along with a profit share based on market rates. Total earnings for these
vessels were $79.0 million in 2005 compared to $96.1 million in 2004 with the
decrease reflecting a decrease in market rates compared to 2004.

Ship operating expenses

                       Year ended December 31,          Change
(in thousands of $)       2005        2004         $           %
- --------------------   ---------   ---------   ---------   ---------
Suezmax OBO               17,658      15,350       2,308          15
Suezmax                   53,935      43,523      10,412          24
VLCC                      75,931      71,512       4,419           6
Containerships             1,178           -       1,178         100
- --------------------   ---------   ---------   ---------   ---------
                         148,702     130,385      18,317          14
- --------------------   ---------   ---------   ---------   ---------

Ship operating expenses have increased primarily as a result of fleet changes
and drydockings in the year. Major movements are as follows:

     o    An increase in drydockings during the year from seven vessels in 2004
          to ten in 2005
     o    Inclusion of a full year's operating costs for five Suezmaxes
          purchased during 2004 resulting in an increase in costs totalling
          $10.9 million
     o    Increase of $4.7 million due to acquisition of four VLCCs during 2005
     o    Increase of $1.2 million due to acquisition of two containerships
          during 2005
     o    Reduction of costs totalling $2.1 million due to sale of the vessel
          Golden Fountain late in 2004
     o    Reduction of costs of $4.7 million due to the sale of five Suezmaxes
          during the year

Charterhire expenses

                        Year ended December 31,     Change
(in thousands of $)       2005        2004         $           %
- --------------------   ---------   ---------   ---------   ---------
Charterhire expenses      11,711      39,302     (27,591)        (70)
- --------------------   ---------   ---------   ---------   ---------

Number of vessels chartered in and accounted
for as operating leases:       2005                     2004
- ----------------------------------------------------------------
      VLCC                       -                        3
      Suezmax                    1                        1
- ----------------------------------------------------------------
                                 1                        4
- ----------------------------------------------------------------

Charterhire expenses have decreased primarily as a result of our purchase in the
first quarter of the year of three VLCCs which were previously chartered in and
accounted for as operating leases.

Administrative expenses

                           Year ended December 31,        Change
(in thousands of $)          2005        2004          $           %
- -----------------------   ---------   ---------   ---------    ---------
Administrative expenses      21,061      25,596      (4,535)         (18)

The decrease in administrative expenses in 2005 is mainly attributable to 2004
including charges relating to employee stock options of $5.5 million which have
not been incurred in 2005 as our employee stock option plans terminated in June
2004.

Depreciation

                        Year ended December 31,     Change
(in thousands of $)       2005        2004          $          %
- --------------------   ---------   ---------   ---------   ---------
Depreciation             198,359     180,497      17,862          10

The increase in depreciation is primarily attributable to:

     o    Reduction of $5.9 million due to sale of five vessels in the year
     o    Additional depreciation of $15.6 million due to purchase of nine
          vessels in the year
     o    Increase of $8.9 million due to full year's depreciation for vessels
          purchased during 2004

In 2004, Golden Fountain was fully consolidated under FIN 46 and $3.3 million in
depreciation was included in the charge for that year. As discussed in Note 17
of the financial statements included herein, the vessel Golden Fountain was sold
late 2004 and as such, we have not recorded any depreciation in 2005.

Interest income

                       Year ended December 31,       Change
(in thousands of $)       2005        2004        $           %
- --------------------   ---------   ---------   ---------   ---------
Interest income           40,867      31,403       9,464          30

Interest income has increased primarily as a result of an increase in interest
earned on bank deposits due to a combination of increased interest rates and an
increase in average cash balances held.

Interest expense

                       Year ended December 31,         Change
(in thousands of $)         2005        2004   $           %
- --------------------   ---------   ---------   ---------   ---------
Interest expense         206,058     194,378      11,680           6

Interest expense has increased primarily due to:

     o    Increase in loan interest of $25.2 million due to combination of
          increase in LIBOR and a larger debt balance
     o    Decrease in swap interest of $10.7 million due to the increase in
          LIBOR
     o    Decrease in interest on Ship Finance 8.5% Senior Notes of $5.6 million
          as a result of the repurchase of $73.2 million of the Notes
     o    Increase in amortization of deferred charges of $6.6 million primarily
          due to write offs as a result of repayment of debt on vessels sold
          during the year and the repurchase of Ship Finance 8.5% Senior Notes

Equity earnings of unconsolidated subsidiaries and associated companies



                                           Year ended December 31,        Change
(in thousands of $)                           2005        2004          $          %
- ----------------------------------------   ---------   ---------   ---------    ---------
                                                                    
Share of results of associated companies       3,379      10,425      (7,046)         (68)


As of December 31, 2005, we account for seven investees under the equity method
(2004: six investees). One of those investees, Golden Fountain Corporation, sold
its vessel in December 2004 and was effectively dormant in 2005. Our share of
results of associated companies has decreased primarily due to an overall
reduction in investee earnings for the year.

Foreign currency exchange gains and losses



                                           Year ended December 31,         Change
(in thousands of $)                           2005        2004         $           %
- ----------------------------------------   ---------   ---------    ---------   ---------
                                                                    
Foreign currency exchange gains (losses)      18,829      (4,932)      23,761         482


Our foreign currency exchange gains are principally due to forward currency
exchange contracts which are denominated in Yen. As of December 31, 2005 and
2004, we were party to five Yen denominated forward currency exchange contracts
with a notional principal of (Y) 8.7 billion and (Y) 14.6 billion respectively.
In the year ended December 31, 2005, we recorded realized gains of $16.7 million
in relation to these forward currency exchange contracts compared to realised
losses of $8.4 million in 2004. The gains recorded can be attributed to the
weakening of the Yen against the US Dollar from 103.1 at December 31, 2004 to
117.9 at December 31, 2005.

Other



                                                       Year ended December 31,           Change
(in thousands of $)                                       2005         2004          $            %
- ----------------------------------------------------   ---------    ---------    ---------    ---------
                                                                                  
Mark to market adjustments for financial derivatives      16,068        9,000        7,068           79
Gains and losses from freight forward agreements          (1,569)     (14,844)      13,275           89
Dividends received                                         1,540           21        1,519            -
Realized gain on sale of securities                       28,035        7,151       20,884            -
Other financial items, net                                 1,755        1,981         (226)         (11)


The increase in mark to market adjustments for interest rate swaps is due to the
increase in the forward rate curve. As of December 31, 2005, we were party to
interest rate swaps with a total notional principal of $618.3 million compared
to a total notional principal of $631.4 million in 2004.

The freight forward agreements are primarily speculative and are based on the
Baltic Capesize Index. Lower losses are due to favourable movements in 2005.

Gain on sale of securities relates to the sale of General Maritime and Golden
Ocean shares in 2005 and General Martime and Knightsbridge Tankers shares in
2004.

Minority interest

Minority interest represents minority investors' interests in the net income of
Ship Finance. As of December 31, 2005, minority investors owned 83.83% of the
shares of Ship Finance.

Discontinued operations

As discussed in Item 4A above, the financial results of certain dry bulk
interests transferred to Golden Ocean have been reported under discontinued
operations for 2005 and 2004. Of the $117.6 million reported as discontinued
operations in 2004, $99.5 million relates to a gain on disposal due to
accounting for the non pro-rata distribution of Golden Ocean shares at fair
value. This gain comprises of $84.6 million from the distribution of shares and
$14.9 million from the sale of shares on behalf of our US shareholders who were
excluded from the distribution. The fair value of the spin off was determined by
reference to the average quoted share price of NOK 3.71 (US$ 0.60) which
represents the average share price of Golden Ocean on the Oslo stock exchange in
the first five days of trading.

The $84.6 million gain on the distribution of shares and cash has been
calculated as the difference between the fair value of the shares distributed of
$102.3 million and their book value of $17.7 million. The $14.9 million gain on
the sale of shares is calculated as the difference between the sale proceeds of
$18.0 million and the book value of the shares of $3.1 million.

As at December 31, 2004, the Company held 23,918,832 Golden Ocean shares
representing 10.7% of the shares outstanding which have been classified as
marketable securities. These shares were subsequently sold in February 2005.

In 2005, we disposed of our last remaining dry bulk carrier which has been
accounted for as discontinued operations as we do not plan on having any
continued involvement in dry bulk operations. In 2005, discontinued operations
also includes a portion of the gain on sale of shares of Golden Ocean in
February 2005 representing the difference between the cost of the shares and the
fair value of the shares on the date of the spin off of Golden Ocean.

Recent accounting pronouncements

In March 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 156 Accounting for Servicing of
Financial Assets - an amendment to FAS 140 ("FAS 156"). FAS 156 requires that
all separately recognized servicing rights be initially measured at fair value
if practicable. The statement also permits an entity to choose between two
measurement methods for each class of separately recognized servicing assets and
liabilities. FAS 156 is effective for fiscal years beginning after September 15,
2006. The adoption of FAS 156 on January 1, 2007 did not have an impact on the
Company's financial statements.

In June 2006, the FASB issued Interpretation No. 48 Accounting for Uncertainty
in Income Taxes - an interpretation of FAS 109 ("FIN 48"). FIN 48 clarifies the
application of FAS 109 by defining the criterion that an individual tax position
must meet for any part of the benefit of that position to be recognized in an
entity's financial statements and also provides guidance on measurement,
de-recognition, classification, interest and penalties and disclosure. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The adoption of
FIN 48 on January 1, 2007 did not have an impact on the Company's financial
statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157 Fair Value Measurements ("FAS 157"). FAS 157 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements. FAS
157 applies under most other accounting pronouncements that require or permit
fair value measurements and does not require any new fair value measurements.
FAS 157 is effective for fiscal years beginning after November 15, 2007. The
Company has not yet determined the effect of adoption of FAS 157 on its
financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 158 Employers' Accounting for Defined Benefit Pension and Other Post
Retirement Plans - an amendment of FAS 87, 88, 106, and 132R ("FAS 158"). FAS
158 requires that the funded status of defined benefit post retirement plans be
recognized in the statement of financial position and changes in the funded
status be reflected in comprehensive income. FAS 158 also requires the benefit
obligations to be measured as of the same date of the financial statements and
requires additional disclosures related to the effects of delayed recognition of
gains or losses, prior service costs or credits and transition assets or
obligation on net periodic benefit cost. FAS 158 is effective for fiscal years
ending after December 15, 2006 for employers without publicly traded securities.
The adoption of FAS 158 on January 1, 2007 did not have an impact on the
Company's financial statements.

In September 2006, the United States Securities and Exchange Commission ("SEC")
issued SAB No. 108 Considering the Effects of Prior Year Misstatements When
Quantifying Misstatements in Current Year Financial Statements, which provides
interpretative guidance on how registrants should quantify financial statement
misstatements. Under SAB 108 registrants are required to consider both a
"rollover" method, which focuses primarily on the income statement impact of
misstatements, and the "iron curtain" method, which focuses primarily on the
balance sheet impact of misstatements. The effects of prior year uncorrected
errors include the potential accumulation of improper amounts that may result in
material misstatement on the balance sheet or the reversal of prior period
errors in the current period that result in a material misstatement of the
current period income statement amounts. Adjustments to current or prior period
financial statements would be required in the event that after application of
various approaches for assessing materiality of a misstatement in a current
period financial statements and consideration of all relevant quantitative and
qualitative factors, a misstatement is determined to be material. We adopted the
provisions of SAB 108 as of December 31, 2006 and this did not have a material
effect on the Company's results of operations or financial position.

Liquidity and Capital Resources

Liquidity

We operate in a capital intensive industry and have historically financed our
purchase of tankers and other capital expenditures through a combination of cash
generated from operations, equity capital and borrowings from commercial banks.
Our ability to generate adequate cash flows on a short and medium term basis
depends substantially on the trading performance of our vessels in the market.
Market rates for charters of our vessels have been volatile historically.
Periodic adjustments to the supply of and demand for oil tankers causes the
industry to be cyclical in nature. We expect continued volatility in market
rates for our vessels in the foreseeable future with a consequent effect on our
short and medium term liquidity.

Our funding and treasury activities are conducted within corporate policies to
maximize investment returns while maintaining appropriate liquidity for our
requirements. Cash and cash equivalents are held primarily in U.S. dollars with
some balances held in British Pound and Norwegian Kroner.

Our short-term liquidity requirements relate to servicing our debt, payment of
operating costs, lease payments for our chartered in fleet, funding working
capital requirements and maintaining cash reserves against fluctuations in
operating cash flows. Sources of short-term liquidity include cash balances,
restricted cash balances, short-term investments and receipts from our
customers. Revenues from time charters and bareboat charters are generally
received monthly or fortnightly in advance while revenues from voyage charters
are received upon completion of the voyage.

At December 31, 2006 we estimated cash breakeven average daily TCE rates of
approximately $22,400 for our Suezmax tankers and approximately $29,700 for our
VLCCs. These are the daily rates our vessels must earn to cover payment of
budgeted operating costs (including corporate overheads), estimated interest and
scheduled loan principal repayments. These rates do not take into account loan
bullet repayments at maturity, which we expect to refinance with new loans.

Our long-term liquidity requirements include funding the equity portion of
investments in new or replacement vessels, repayment of long-term debt balances
including Ship Finance's $449.1 million 8.5% Senior Notes due 2013 and funding
any payments we may be required to make due to lessor put options on certain
vessels we charter in. During 2006, Ship Finance bought back and cancelled 8.5%
Senior Notes with a principal amount of $8.0 million. Sources of funding our
long-term liquidity requirements include new loans or equity issues, vessel
sales and sale and leaseback arrangements.

As of December 31, 2006, 2005 and 2004, we had cash and cash equivalents of
$197.1 million, $92.8 million and $96.9 million, respectively. As of December
31, 2006, 2005 and 2004, we had restricted cash balances of $677.5 million,
$636.8 million and $592.6 million, respectively. Our restricted cash balances
contribute to our total short and medium term liquidity as they are used to fund
payment of certain loans and lease payments which would otherwise be paid out of
our cash balances. $269.1 million of our restricted cash as of December 31, 2006
serves to support our obligations to make charterhire payments to Ship Finance,
and is subject to adjustment based on the number of charters that we are a party
to. We are entitled to use these funds only (1) to make charterhire payments
(including profit sharing payments) to Ship Finance and (2) for reasonable
working capital purposes to meet short term voyage expenses.

We currently have four VLCC and eight Suezmax vessels under construction. We
paid $68.9 million in newbuilding instalments in 2006 in respect of these
newbuilding contracts and have paid $27.9 million so far in 2007. The remaining
instalments of approximately $885 million will be financed through a combination
of bank loans, other financing sources and existing liquidity. In addition to
the newbuilding commitment, we also have commitments with respect to the
delivery of three heavy lift vessels to Sealift. The remaining heavy lift
conversion commitments as of the end of June are $118.8 million and are likely
to be financed from the proceeds from the sale of the vessels to Sealift.

We consolidated the assets and liabilities of ITC effective December 31, 2003,
with the exception of certain subsidiaries which have been accounted for using
the equity method. We acquired ITC in May 2004. At December 31, 2006 ITC's
assets include $390.9 million (2005: $328.9 million) of restricted cash deposits
which is held for the benefit of the holders of the Notes issued on behalf of
ITC subsidiaries. This restricted cash also includes deposits which can only be
used to meet liabilities under the lease agreements.

During the year ended December 31, 2006 we paid total cash dividends of $654.5
million. In the first quarter of 2007, we declared a cash dividend of $2.05 per
share for the fourth quarter of 2006 representing a total cash payment of $153.4
million.

Borrowing activities

In August 2004, we entered into a $65 million secured term loan facility with a
syndicate of banks. The facility bore interest at LIBOR plus a margin of 1.00%.
The facility was repaid in March 2006.

In October 2004, we entered into a $20 million secured term loan facility. The
proceeds were used to finance the acquisition of a 1992 built Suezmax tanker.
The facility bore interest at LIBOR plus a margin of 0.75%. The loan was repaid
in full in February 2007.

In January 2005, we entered into a $20 million secured term loan facility. The
proceeds were used to finance the acquisition of a 1988 built Suezmax tanker.
The facility bears interest at LIBOR plus a margin of 0.80%. The facility must
be repaid by January 31, 2010. The facility contains a minimum value covenant
and covenants that require the Company to maintain a minimum level of free cash
and positive working capital.

In December 2005, we entered into a $69.0 million loan facility with DnB NOR
Bank ASA. The facility bore interest at LIBOR plus 120 basis points secured by
certain marketable securities and cash deposits. The facility was repaid in full
in August 2006.

In June 2006, we entered into an $80 million secured term loan facility. The
proceeds were used to finance the acquisition of a 2006 built VLCC tanker. The
facility bears interest at LIBOR plus a margin of 0.50%. The facility was due
June 26, 2007, and has now been refinanced on the same terms and conditions with
maturity in June 2008. The facility contains a minimum value covenant and
covenants that require the Company to maintain a minimum level of free cash and
positive working capital.

In September 2006, we entered into a $24 million secured term loan facility. The
proceeds were used to finance the acquisition of a 1990 built Aframax tanker.
The facility bore interest at LIBOR plus a margin of 0.90%. The facility was
repaid in April 2007.

In 2006, Ship Finance repurchased and cancelled 8.5%, senior notes with a total
principal amount of $8.0 million. In February 2006, Ship Finance entered into a
total return bond swap line with a bank in which the bank buys their senior
notes, and they compensate the bank for its funding cost plus a margin. Through
this arrangement, Ship Finance is able to realize profits, but guarantee against
losses for the bank. During 2006 the bank acquired senior notes with a total
principal amount of $52.0 million under this bond swap line. As at December 31,
2006, Ship Finance had $449.1 million outstanding on its issue in 2003 of $580.0
million 8.5% Senior Notes due 2013.

In February 2005, Ship Finance refinanced their existing $1,058.0 million
secured credit facility with a new $1,131.4 million secured credit facility.
This facility bears interest at LIBOR plus a margin of 0.70% per annum, is
repayable over a term of six years and has similar security terms to the repaid
facility. In September 2006, Ship Finance signed an agreement whereby the
existing debt facility which had been partially repaid, was increased by $219.7
million to the original outstanding amount of $1,131.4 million. The increase is
available on a revolving basis. At December 31, 2006, the outstanding amount on
this facility was $953.3 million. This facility contains a minimum value
covenant, which requires that the aggregate value of Ship Finance vessels
secured as collateral exceed 140% of the outstanding amount of the facility. The
new facility also contains covenants that require Ship Finance to maintain
certain minimum levels of free cash, working capital and equity ratios.

In June 2005, Ship Finance entered into a combined $350.0 million senior and
junior secured term loan facility with a syndicate of banks. At December 31,
2006, the outstanding amount on this facility was $316.1 million. The proceeds
of the facility were used to partly fund the acquisition of five VLCCs. The
facility bears interest at LIBOR plus a margin of 0.65% per annum for the senior
loan and LIBOR plus a margin of 1.00% per annum for the junior loan. The
facility is repayable over a term of seven years has similar security terms as
the $1,131.4 million facility. This facility contains a minimum value covenant,
which requires that the aggregate value of Ship Finance vessels exceed 140% of
the outstanding amount of the senior loan and, for as long as any amount is
outstanding under the junior loan, 125% of the total outstanding loan. The
facility also contains covenants that require Ship Finance to maintain certain
minimum levels of free cash, working capital and equity ratios.

In April 2006, five vessel owning subsidiaries of Ship Finance entered into a
$210 million secured term loan facility with a syndicate of banks. The facility
is non recourse to Ship Finance, as the holding company does not guarantee this
debt. The proceeds of the facility were used to partly fund the acquisition of
five newbuilding container vessels in connection with Ship Finance's long-term
bareboat charters to Horizon Lines. At December 31, 2006, the outstanding amount
under this facility was $41.6 million relating to the first vessel, which was
delivered during the fourth quarter 2006. The second vessel was delivered during
the first quarter of 2007, and the remaining three vessels were delivered during
the second quarter of 2007. The facility bears interest at LIBOR plus a margin
of 1.40% per annum, is repayable over a term of 12 years and is secured by the
vessel owning subsidiaries' assets. The facility contains a minimum value
covenant, which requires that the aggregate value of Ship Finance vessels exceed
120% of the outstanding loan if there is a default under any of the charters.
The vessel owning subsidiaries have entered into 12 year interest rate swaps
with a combined notional principal amount of $207.9 million at rates of
approximately 5.65% per annum.

In June 2006, Ship Finance's subsidiary, Rig Finance, entered into a $165
million secured term loan facility with a syndicate of banks. The proceeds of
the facility were used to partly fund the acquisition of a newbuilding jack-up
drilling rig. At December 31, 2006, the outstanding amount under this facility
was $155.1 million. The facility bears interest of LIBOR plus a margin of 1.15%
per annum as long as the rig is employed under an initial sub-charter to a third
party, but in no event longer than the first 36 months, and LIBOR plus a margin
of 1.20% per annum thereafter. The facility contains a minimum value covenant,
which requires that the value of the rig exceed 120% of the outstanding loan
during the period up to six months prior to expiry of the initial sub-charter to
the third party, and 140 % thereafter. The facility is repayable over six years
and is secured by the rig owning subsidiary's assets. The lenders have limited
recourse to Ship Finance as the holding company only guarantees $10 million of
this debt. The facility contains covenants that require Ship Finance to maintain
certain minimum levels of free cash, working capital and equity ratios.

In June 2006, Ship Finance entered into a $25 million secured revolving credit
facility. The proceeds of the facility were used to partly fund a VLCC acquired
in January 2006. The facility was repaid in full in December 2006, when the
vessel was sold to an unrelated third party.

In September 2006, Ship Finance's subsidiary Front Shadow entered into a $22.7
million secured term loan facility. The proceeds of the facility were used to
partly fund the acquisition of a 1997 built Panamax dry bulk carrier. At
December 31, 2006, the outstanding amount under this facility was $22.7 million.
Front Shadow is accounted for using the equity method. The facility bears
interest of LIBOR plus a margin of 0.59% per annum. The facility contains a
minimum value covenant, which requires that the value of the vessel exceed 110%
of the outstanding loan during the first four years, and 125% thereafter. The
facility is repayable over ten years and is secured by the vessel owning
subsidiary's assets. The lenders have limited recourse to Ship Finance as the
holding company guarantees $2.1 million of this debt.

We were in compliance with all loan covenants at December 31, 2006.

Acquisitions and Disposals

Ship Finance
- ------------

In 2004, we distributed 48.2% of the common shares of Ship Finance to our
ordinary shareholders. On January 28, 2005 and February 22, 2005 our Board
approved further spin-offs of the shares in Ship Finance. On February 18, 2005,
each of our shareholders received one share of Ship Finance for every four
shares of ours held and on March 24, 2005 each of our shareholders received one
share of Ship Finance for every ten shares of ours held. Following these
transactions our shareholding in Ship Finance was approximately 16.2% at
December 31, 2005.

On February 17, 2006, our Board approved a further spin-off of the shares in
Ship Finance. On March 20, 2006, each of our shareholders received one share of
Ship Finance for every twenty shares of ours held. Following this transaction
our shareholding in Ship Finance was approximately 11.1% at December 31, 2006.

On February 27, 2007, our Board approved a final spin-off of our remaining
shares in Ship Finance. On March 22, 2007, each of our shareholders received
three shares of Ship Finance for every twenty-eight shares of ours held. All of
these share distributions have had no effect on our liquidity.

Golden Ocean
- ------------

In the fourth quarter of 2004, the Company completed the non pro-rata spin off
of its subsidiary Golden Ocean. In connection with the spin off, total cash of
$32.1 million was paid to non qualifying U.S. shareholders who received a cash
equivalent of $1.80 ($0.60 per Golden Ocean share) per Frontline share held. The
spin off resulted in the recognition of a gain of $99.5 million. We retained
10.7% of the shares of Golden Ocean as at December 31, 2004. These shares were
subsequently sold in February 2005 for proceeds of NOK 100.5 million, equivalent
to approximately $16.5 million.

In 2005, Golden Ocean exercised its options to acquire from us the shares in two
single purpose companies each owing a newbuilding contract for a Panamax vessel.
These options were at a price equal to our costs, including instalments paid to
date, plus our funding expenses. These options were exercised at a total price
of $16.8 million.

Independent Tankers Corporation
- -------------------------------

On July 1, 2003, we purchased a call option for $10.0 million to acquire all of
the shares of ITC from Hemen for a total consideration of $4.0 million plus 4%
interest per year. On May 27, 2004 we exercised this purchase option and paid
$14.1 million.

Chevron redelivered the Suezmax vessel Front Voyager to us in April 2006 and
pursuant to the terms of the charter paid us a termination fee in the amount of
$5.05 million.

General Maritime
- ----------------

As at January 1, 2005 we held a total of 1,584,700 shares in General Maritime
Corporation, or Genmar. During 2005 we acquired a total of 5,209,000 Genmar
shares and sold 2,933,700 Genmar shares and as at December 31, 2005 held
3,860,000 Genmar shares which was equivalent to 9.98% of their total shares
outstanding.

In August 2006, we sold our entire holding of 3,860,000 shares in Genmar for $40
per share.

Tsakos Shipping and Trading SA
- ------------------------------

In March 2007, we sold our entire holding of 32,000 shares in Tsakos for
approximately $1.5 million.

Sealift
- -------

In January 2007, we subscribed for 30 million shares issued by Sealift in a
private placement at a cost of $60 million. In May 2007, Sealift completed the
combination of its businesses with the Dockwise group of companies. As part of
the transaction, Sealift completed another private placement of 19.9 million
shares and Frontline subscribed for five million of these additional shares.
Sealift also issued 94.1 million shares to the former Dockwise shareholders.
After completion of this transaction Frontline owns 17.1% of Sealift.

Sea Production
- --------------

In February 2007, we subscribed for approximately 28% of the equity issued in a
private placement by Sea Production at a cost of $51 million. In June 2007, we
sold our entire holding of 25,500,000 shares in Sea Production for a net price
of NOK 15.75 per share, equivalent to approximately $67 million.

Equity

In the first quarter of 2004, a Special General Meeting of our shareholders
approved the compulsory repurchase of all registered shareholdings of 49 or less
of our ordinary shares. Consequently, on April 6, 2004, we compulsorily
repurchased and cancelled 20,197 ordinary shares at the closing market price of
the ordinary shares on April 5, 2004 which was $31.22 per ordinary share. Total
cash used to repurchase these shares was $0.6 million.

In 2004, we issued a total of 900,000 ordinary shares in two private placements
to institutional investors. In July 2004, we issued 600,000 ordinary shares at a
purchase price of NOK 246 per share, which was the equivalent of $35.84 per
share at the time of the sale. In October 2004, we issued 300,000 ordinary
shares at a purchase price of NOK 352 per share, which was the equivalent of
$55.33 per share at the time of sale. Total proceeds from these issues were
$37.2 million.

In July 2004, Ship Finance issued 1,600,000 common shares to an institutional
investor at $15.75 per share. Total proceeds from this issue were $25.2 million.

In November and December 2004, Ship Finance repurchased and cancelled a total of
625,000 shares at an average cost of $23.61 per share. Total cash used to
repurchase these shares was $14.8 million.

During 2005, Ship Finance repurchased and cancelled a further 1,757,100 common
shares. The shares were repurchased at an average price of $18.81 for a total
amount of $33.1 million.

In January 2006, Ship Finance repurchased and cancelled a further 400,000 common
shares. The shares were repurchased at an average price of $18.03 for a total
amount of $7.2 million, which resulted in an increase in Frontline's
shareholding from 16.2% to 16.3%.

Derivative Activities

Ship Finance uses financial instruments to reduce the risk associated with
fluctuations in interest rates. Ship Finance has a portfolio of interest rate
swaps that swap floating rate interest to fixed rate, which from a financial
perspective hedge interest rate exposure. We do not currently hold or issue
instruments for speculative or trading purposes. As at December 31, 2006 Ship
Finance's interest rate swap arrangements effectively fix interest rate exposure
on $738.7 million of floating rate debt. These interest rate swap agreements
expire between August 2008 and May 2019.

Tabular disclosure of contractual obligations

At December 31 2006, we had the following contractual obligations and
commitments:



                                                  Payment due by period

                               Less than 1 year   1 - 3 years   3 - 5 years   After 5 years     Total
- ----------------------------   ----------------   -----------   -----------   -------------   ---------
                                                                               
(In thousands of $)
Senior notes (8.5%)                           -             -             -         449,080     449,080
Serial notes (6.5% to 6.68%)             13,700        15,900         1,200               -      30,800
Term notes (7.84% to 8.04%)               1,340        13,365        27,750         323,745     366,200
Term notes (8.52%)                          570         1,290         1,520           9,364      12,744
Other long-term debt                    265,799       294,523       733,387         310,761   1,604,470
Operating lease obligations               7,950        15,683        12,211           7,430      43,274
Capital lease obligations               127,253       240,545       367,736         288,683   1,024,217
Newbuilding commitments                 235,435       403,595       125,520               -     764,550
- ----------------------------   ----------------   -----------   -----------   -------------   ---------
Total                                   652,047       984,901     1,269,324       1,389,063   4,295,335
- ----------------------------   ----------------   -----------   -----------   -------------   ---------


The newbuilding commitments as per December 31, 2006 consists of four VLCC's and
four Suezmax vessels. We have since declared options for further four Suezmax
vessels.

At December 31 2006, we leased nine vessels that were sold by us at various
times during the period from December 1999 to December 2003, and leased back on
charters for periods of eight years with lessors' options to extend the charters
for periods that range up to five years. One of these vessels is accounted for
as an operating lease and eight as capital leases. We have fixed price purchase
options at certain specified dates and the lessors have options to put these
nine vessels to us at the end of each lease term.

Additionally, our subsidiary ITC leases four VLCCs on 24 year charters which
began on delivery of the vessels in 1999 and 2000. These leases are classified
as capital leases.

Off balance sheet financing

Charter hire payments to third parties for certain contracted-in vessels are
accounted for as operating leases. We are also committed to make rental payments
under operating leases for office premises. The future minimum rental payments
under our non-cancellable operating leases are disclosed above in "Tabular
disclosure of contractual obligations".

Forward-looking information discussed in this Item 5 includes assumptions,
expectations, projections, intentions and beliefs about future events. These
statements are intended as "forward-looking statements." We caution that
assumptions, expectations, projections, intentions and beliefs about future
events may and often do vary from actual results and the differences can be
material. Please see "Cautionary Statement Regarding Forward-Looking Statements"
in this Report.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

Certain biographical information about each of our directors and executive
officers is set forth below.

Name                 Age    Position

John Fredriksen       62    Chairman, Chief Executive Officer, President and
                            Director
Tor Olav Troim        44    Vice-President and Director
Kate Blankenship      42    Director and Audit Committee Chairman
Frixos Savvides       55    Director and Audit Committee member
Bjorn Sjaastad        49    Chief Executive Officer of Frontline Management AS
Inger M. Klemp        44    Chief Financial Officer of Frontline Management AS

John Fredriksen has been the Chairman of the Board, Chief Executive Officer,
President and a director of the Company since November 3, 1997. He was
previously the Chairman and Chief Executive Officer of Old Frontline. Mr.
Fredriksen has served for over nine years as a director of SeaTankers Management
Co. Ltd, or SeaTankers, a ship operating company and an affiliate of the
Company's principal shareholder. Mr. Fredriksen indirectly controls Hemen. Mr.
Fredriksen is a director of and indirectly controls Golar LNG Limited, a Bermuda
company listed on the Oslo Stock Exchange and the NASDAQ National Market and has
been a director of Golden Ocean, a Bermuda company on the Oslo Stock Exchange,
since November 2004. Mr. Fredriksen has served as a director and the chairman of
Seadrill Limited, a Bermuda company listed on the Oslo Stock Exchange, since May
2005.

Tor Olav Troim has been Vice-President and a director of the Company since
November 3, 1997. He previously served as Deputy Chairman of Frontline from July
4, 1997, and was a director of Old Frontline from July 1, 1996. Until April
2000, Mr. Troim was the Chief Executive Officer of Frontline Management AS, a
company which supports the Company in the implementation of decisions made by
the Board of Directors. Mr. Troim graduated as M.Sc Naval Architect from the
University of Trondheim, Norway in 1985. His careers include Portfolio Manager
Equity in Storebrand ASA (1987-1990) and Chief Executive Officer for the
Norwegian Oil Company DNO AS (1992-1995). Since 1995, Mr. Troim has been a
director of SeaTankers Management in Cyprus. In this capacity, he has acted as
Chief Executive Officer for the public companies Knightsbridge Tankers Limited
and Golar LNG Limited (NASDAQ). Mr. Troim was also Chief Executive Officer of
Seadrill Ltd. until the recent takeover and integration of Smedvig ASA. Mr Troim
is currently Vice Chairman of these three companies and in addition is a
director and Chairman of Ship Finance International Limited (NYSE) and a member
of the Boards in the public companies Golden Ocean Group Limited (OSE), Aktiv
Kapital ASA (OSE) and Marine Harvest ASA (OSE).

Kate Blankenship has been a director since August, 2003. Mrs. Blankenship joined
the Company in 1994 and served as the Company's Chief Accounting Officer and
Company Secretary until October 2005. Mrs. Blankenship has been Chief Financial
Officer of Knightsbridge Tankers Ltd since April 2000 and Secretary of
Knightsbridge from December 2000 to March 2007. Mrs. Blankenship has been
a Director of Ship Finance since October 2003. Mrs. Blankenship has served as a
director of Golar LNG Limited since July 2003 and Golden Ocean since November
2004. Mrs. Blankenship has served as a director of Seadrill Limited since May
2005. She is a member of the Institute of Chartered Accountants in England and
Wales.

Frixos Savvides a Chartered Accountant, is a Fellow of the Institute of
Chartered Accountants of England and Wales. He was the founder of the audit firm
PKF Savvides and Partners in Cyprus and held the position of Managing Partner
until 1999 when he became Minister of Health of the Republic of Cyprus. He held
this office until 2003. Mr. Savvides is currently a senior independent business
consultant, and holds several Board positions including his recent appointment
as Vice Chairman of Cyprus Airways. Frixos Savvides was appointed to the Board
of Directors of Frontline July 31, 2005.

Bjorn Sjaastad has served as Chief Executive Officer of Frontline Management AS
since October 2006. From 2004 to 2006 Mr. Sjaastad ran his own consultancy
business. From 1990 to 2004, Mr. Sjaastad was the Chief Executive Officer of
Odfjell ASA, a Norwegian based, stock listed, international chemical tanker
operator. From 1981 to 1989 Mr. Sjaastad served as a lending officer of DnB NOR
ASA (previously Bergen Bank AS), heading up the banks shipping and offshore
department in Bergen. Mr. Sjaastad has, over the years, been a member of the
boards of a range of companies and has also been the President of the Norwegian
Shipowners Association. Please see Item 8.A. "Consolidated Statements and Other
Financial Items - Legal Proceedings" for a description of proceedings involving
Mr. Sjaastad not involving us.

Inger M. Klemp has served as Chief Financial Officer of Frontline Management AS
since June 1, 2006. Mrs. Klemp has served as Vice President Finance from August
2001 until she was promoted in May 2006. Mrs. Klemp graduated as MSc in Business
and Economics from the Norwegian School of Management (BI) in 1986. Mrs. Klemp
served as Assistant Director Finance in Color Group ASA from 1998 to 2001 and as
Group Financial Manager in Color Line ASA from 1992 to 1998, a Norwegian based
cruise operator which was stock listed up to October 1999. From 1989 to 1992
Mrs. Klemp served as Assistant Vice President in Nordea Bank Norge ASA handling
structuring and syndication of loan facilities in the international banking
market. From 1986 to 1989, Mrs. Klemp served as a lending officer of Fokus Bank
ASA.

B. COMPENSATION

During the year ended December 31, 2006, we paid to our directors and executive
officers (six persons) aggregate cash compensation of $1,648,012 and an
aggregate amount of $135,585 for pension and retirement benefits.

C. BOARD PRACTICES

In accordance with our Bye-laws the number of Directors shall be such number not
less than two as our shareholders by Ordinary Resolution may from time to time
determine and each Director shall hold office until the next annual general
meeting following his election or until his successor is elected. We currently
have four Directors.

We currently have an audit committee, which is responsible for overseeing the
quality and integrity of our financial statements and its accounting, auditing
and financial reporting practices, our compliance with legal and regulatory
requirements, the independent auditor's qualifications, independence and
performance and our internal audit function. Our audit committee consists of two
members, Mr. Savvides and Mrs Blankenship.

In lieu of a compensation committee comprised of independent directors, our
Board of Directors is responsible for establishing the executive officers'
compensation and benefits. In lieu of a nomination committee comprised of
independent directors, our Board of Directors is responsible for identifying and
recommending potential candidates to become board members and recommending
directors for appointment to board committees.

Our officers are elected by the Board of Directors as soon as possible following
each Annual General Meeting and shall hold office for such period and on such
terms as the Board may determine.

There are no service contracts between us and any of our Directors providing for
benefits upon termination of their employment or service.

As a foreign private issuer we are exempt from certain requirements of the New
York Stock Exchange that are applicable to U.S. listed companies. For a listing
and further discussion of how our corporate governance practices differ from
those required of U.S. companies listed on the New York Stock Exchange, please
visit the corporate governance section of our website at www.frontline.bm.

D. EMPLOYEES

As of December 31, 2006, Frontline and its subsidiaries employed approximately
48 people in their respective offices in Bermuda, London, Oslo and Singapore. We
contract with independent ship managers to manage and operate our vessels.

E. SHARE OWNERSHIP

The beneficial interests of our Directors and officers in the Ordinary Shares of
Frontline as of June 13, 2007, were as follows:

                                               % of
                      Ordinary Shares of       Ordinary Shares
Director or Officer   $2.50 each               Outstanding
- -------------------   ----------------------   -------------------
John Fredriksen*                  26,079,053                 34.85%
Tor Olav Troim                       194,994   **
Kate Blankenship                       2,000   **
Frixos Savvides                            -   **
Inger M. Klemp                        16,000   **
Bjorn Sjaastad                             -   **

*Includes Ordinary Shares held by Hemen Holding Ltd. and other companies
indirectly controlled by Mr. John Fredriksen.
** Less than one per cent

As of May 31, 2007, Bjorn Sjaastad holds 100,000 options to acquire ordinary
shares in the Company. The options were granted under the Frontline Ltd Share
Option Scheme, which was approved by the board on November 16, 2006. The options
begin to vest in November 2007 and expire in November 2011. The exercise price
of the options is NOK 238.50 and is reduced by the amount of dividends paid.
None of our other Directors and officers or employees holds any options to
acquire Frontline's Ordinary Shares. In the past we maintained a Bermuda
Employee Share Option Plan and a United Kingdom Employee Share Option Plan,
however, these plans expired at the end of 2004.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

Frontline is indirectly controlled by another corporation (see below). The
following table presents certain information regarding the current ownership of
our Ordinary Shares with respect to (i) each person who we know to own more than
five percent of our outstanding Ordinary Shares; and (ii) all directors and
officers as a group as of June 13, 2007.

                                                             Ordinary Shares
Owner                                                      Amount           %

Hemen Holding Ltd. and associated companies (1)           26,079,053      34.85%
All Directors and Officers as a group (six persons) (2)   26,292,047      35.14%

(1)  Hemen is a Cyprus holding company indirectly controlled by Mr. John
     Fredriksen, who is our Chairman and Chief Executive Officer.
(2)  Includes Ordinary Shares held by Hemen and associated companies indirectly
     controlled by Mr. John Fredriksen.

In June 2007 and June 2006, Hemen and associated companies held 34.85% of the
Company's Ordinary Shares.

As at May 15, 2007, 45,005,708 of our Ordinary Shares were held by 288 holders
of record in the United States.

Our major shareholders have the same voting rights as our other shareholders. No
corporation or foreign government owns more than 50% of our outstanding Ordinary
Shares. We are not aware of any arrangements, the operation of which may at a
subsequent date result in a change in control of Frontline.

B. RELATED PARTY TRANSACTIONS

In June 2006, Rig Finance, a subsidiary of Ship Finance, purchased the jack up
rig SeaDrill 3 from SeaDrill Invest I Ltd, or SeaDrill Invest, an affiliated
company, for $210 million. The rig was immediately chartered back to SeaDrill
Invest for a period of 15 years. The charter party is fully guaranteed by
Seadrill Limited, the ultimate parent company of SeaDrill Invest. SeaDrill
Invest has been granted fixed price purchase options after 3, 5, 7, 10, 12 and
15 years.
..
In June 2006, Front Shadow Inc. ("Front Shadow") a subsidiary of Ship Finance,
entered into an agreement to acquire a Panamax vessel, Rain Shadow, for $28.4
million from Golden Ocean. The vessel was chartered back to Golden Ocean for a
period of 10 years. As part of the agreement, Golden Ocean has provided an
interest free and non-amortizing seller credit of $2.6 million. Golden Ocean has
been granted fixed purchase options after 3, 5, 7 and 10 years. At the end of
the charter, the Front Shadow also has an option to sell the vessel back to
Golden Ocean at an agreed fixed price of $10.4 million. Front Shadow is equity
accounted by Ship Finance following the application of FIN 46(R).

A summary of amounts earned and balances with related parties is as follows:

 Net amounts earned from (paid to)  related parties     Year ended December 31,
(in thousands of $)                                    2006      2005      2004
- --------------------------------------------------   ------    ------    ------
Seatankers Ltd                                          432       265        49
Golar LNG Limited                                       180       255       495
Golden Ocean Group Limited                              597       362         8
Northern Offshore Ltd                                     -         -        25
Norse Energy Group ASA (formerly Northern Oil ASA)        -         6        92
Aktiv Kapital First Investment Ltd                        -        10         -
Bryggegata AS                                        (1,021)     (692)        -
Individual related to John Frediksen                     12         -         -
Seadrill Limited                                        545       (24)        -
CalPetro Tankers (Bahamas I) Limited                     40        38        37
CalPetro Tankers (Bahamas II) Limited                    40        38        37
CalPetro Tankers (Bahamas III) Limited                    -        38        37
CalPetro Tankers (IOM) Limited                           40        38        37

Balances with related
parties (receivable/(payable))           As of December 31,
(in thousands of $)                        2006      2005
- --------------------------------------   ------    ------
Seatankers Ltd                              275     1,397
Golar LNG Limited                          (553)      644
Northern Offshore Ltd                        49        48
Golden Ocean Group Limited                  942    (2,182)
Seadrill Limited                             30        55
CalPetro Tankers (Bahamas I) Limited         10        10
CalPetro Tankers (Bahamas II) Limited        10        10
CalPetro Tankers (Bahamas III) Limited        -        10
CalPetro Tankers (IOM) Limited               10        10

Golar, Northern Offshore, Norse Energy Group, Aktiv Kapital, Seadrill,
Bryggegata AS, Golden Ocean, Crystal Sea Marine and Seatankers are each subject
to the significant influence or control of John Fredriksen.

C. INTERESTS OF EXPERTS AND COUNSEL

Not Applicable

ITEM 8. FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See Item 18.

Legal Proceedings

We are a party, as plaintiff or defendant, to several lawsuits in various
jurisdictions for demurrage, damages, off-hire and other claims and commercial
disputes arising from the operation of its vessels, in the ordinary course of
business or in connection with its acquisition activities. We believe that the
resolution of such claims will not have a material adverse effect on the
Company's operations or financial condition.

In his capacity as President and Chief Executive Officer of Odfjell ASA, an
operator of chemical tankers, Mr. Sjaastad entered into an agreement with the US
Department of Justice in September 2003 pursuant to which he pled guilty to one
count of violating the Sherman Act. This plea was part of a global agreement
with the US Department of Justice involving Odfjell ASA and Odfjell Seachem AS.
The matter did not involve Frontline Ltd or its affiliates.

Dividend Policy

Since May 2003, our policy has been to pay regular, targeted dividends. In
February 2005, we increased the targeted minimum quarterly dividend to $0.625
per share, equivalent to $2.50 per share per annum. We have paid the following
cash dividends in 2004, 2005 and 2006.

Payment Date                  Amount per Share
- ------------                  ----------------

2004
March 29, 2004                      $4.50
June 16, 2004                       $5.00
September 13, 2004                  $1.60
December 17, 2004                   $2.50

2005
March 18, 2005                      $3.50
June 24, 2005                       $3.10
September 20, 2005                  $2.00
December 13, 2005                   $1.50

2006
March 20, 2006                      $1.50
June 26, 2006                       $1.50
September 18, 2006                  $1.50
December 21, 2006                   $2.50

On February 27, 2007 the Board declared a cash dividend of $2.05 per share for
the fourth quarter of 2006 that was paid on March 22, 2007. On May 30, 2007 the
Board declared a cash dividend of $1.50 per share for the first quarter of 2007
that was paid June 22, 2007.

The timing and amount of dividends, if any, is at the discretion of our Board of
Directors and will depend upon our results of operations, financial condition,
cash requirements, restrictions in financing arrangements and other relevant
factors.

B. SIGNIFICANT CHANGES

During 2004, we distributed approximately 48.3% of our shares in Ship Finance to
our shareholders and at December 31, 2004 held 50.8% of Ship Finance. See Item
4. "Information on the Company--History and Development of the Company--Spin-Off
of Ship Finance." In February and March 2005, we have spun off a further 35% of
our shares in Ship Finance to our shareholders and at December 31 2005 held
16.2% of Ship Finance. In February 2006, a further 5% interest in Ship Finance
was spun off and we held approximately 11.1% of the shares in Ship Finance as at
December 31, 2006. These shares were distributed to shareholders on March 22,
2007 following which we hold a minimal number of shares in Ship Finance. As a
result of this spin-off, we no longer consolidate Ship Finance as of March 31,
2007. The most significant impacts on the financial statements of the
deconsolidation of Ship Finance are as follows:

     o    At December 31, 2006 Ship Finance owned vessels with a book value of
          $2.2 billion in the Frontline consolidated financial statements, of
          which $1.9 billion were on charter to Frontline. The vessels chartered
          in by Frontline will be presented in the balance sheet as vessels and
          equipment under capital lease rather than vessels and equipment after
          deconsolidation. Frontline will also record a corresponding obligation
          under capital lease of approximately $2.2 billion in the balance sheet
          and finance lease interest expense in the income statement when it
          adopts the lease accounting presentation for these vessels. The
          increase in obligation under capital lease is offset by a debt
          reduction of $1.9 billion for debt relating to Ship Finance.

     o    Minority interests of $534 million relating to Ship Finance at
          December 31, 2006 will no longer be presented in our accounts.

     o    Net working capital of approximately $68 million at December 31, 2006
          relating to Ship Finance will no longer be presented in our accounts.

ITEM 9. THE OFFER AND LISTING

The Company's Ordinary Shares are traded on the New York Stock Exchange
("NYSE"), the Oslo Stock Exchange ("OSE") and on the London Stock Exchange
("LSE") under the symbol "FRO".

The New York Stock Exchange is the Company's "primary listing". As an overseas
company with a secondary listing on the LSE, the Company is not required to
comply with certain listing rules applicable to companies with a primary listing
on the LSE. The listing on the OSE is also a secondary listing. The Company's
Ordinary Shares have been thinly traded on the London Stock Exchange since 1999.

The following table sets forth, for the five most recent fiscal years, the high
and low prices for the Ordinary Shares on the NYSE and OSE.

                                           NYSE                 OSE
                                       High     Low       High         Low
- -----------------------------------   ------   ------   ---------   ---------
Fiscal year ended December 31
2006                                  $44.65   $28.80   NOK280.00   NOK184.00
2005                                  $57.97   $35.89   NOK355.00   NOK230.00
2004                                  $62.33   $24.36   NOK367.81   NOK158.06
2003                                  $27.69    $8.93   NOK185.00   NOK61.00
2002                                  $13.05    $3.19   NOK108.50   NOK25.90

The following table sets forth, for each full financial quarter for the two most
recent fiscal years, the high and low prices of the Ordinary Shares on the NYSE
and the OSE.

                                           NYSE                 OSE
                                       High     Low       High         Low
- -----------------------------------   ------   ------   ---------   ---------
Fiscal year ended December 31, 2006
First quarter                         $41.29   $32.70   NOK270.50   NOK218.00
Second quarter                        $38.25   $28.80   NOK237.50   NOK184.00
Third quarter                         $44.65   $36.32   NOK280.00   NOK228.50
Fourth quarter                        $39.76   $31.63   NOK254.50   NOK196.75

                                           NYSE                 OSE
                                       High     Low       High         Low
- -----------------------------------   ------   ------   ---------   ---------
Fiscal year ended December 31, 2005
First quarter                         $57.97   $40.65   NOK355.00   NOK254.00
Second quarter                        $51.25   $36.10   NOK326.50   NOK232.50
Third quarter                         $47.10   $40.63   NOK305.50   NOK261.50
Fourth quarter                        $44.70   $35.89   NOK300.00   NOK230.00

The following table sets forth, for the most recent six months, the high and low
prices for the Ordinary Shares on the NYSE and OSE.

                                           NYSE                 OSE
                                       High     Low       High         Low
- -----------------------------------   ------   ------   ---------   ---------
May 2007                              $46.95   $37.78   NOK281.00   NOK232.00
April 2007                            $38.50   $34.26   NOK226.00   NOK207.50
March 2007                            $35.80   $29.35   NOK219.50   NOK185.25
February 2007                         $36.55   $33.17   NOK209.00   NOK222.25
January 2007                          $33.28   $30.00   NOK211.00   NOK192.25
December 2006                         $36.08   $31.63   NOK218.50   NOK196.75

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

Not Applicable

B. MEMORANDUM AND ARTICLES OF ASSOCIATION

The Memorandum of Association of the Company has previously been filed as
Exhibit 3.1 to the Company's Registration Statement on Form F-1, (Registration
No. 33-70158) filed with the Securities and Exchange Commission on October 13,
1993, and is hereby incorporated by reference into this Annual Report.

The Amended and Restated Bye-Laws of the Company as adopted on April 5, 2004,
have previously been filed as Exhibit 1.4 to the Company's Annual Report on Form
20-F for the fiscal year ended December 31 2003, filed with the Securities and
Exchange Commission on June 30, 2004. At the 2006 Annual General Meeting of the
Company the shareholders voted to amend the Company's Bye-Law 110. The purpose
of this amendment was to provide for a change to the requirements for the form
and signatories to the seal of the Company. These amended Bye-Laws of the
Company as adopted by shareholders on December 1, 2006 are filed as Exhibit 1.2
to this Annual Report.

The purposes and powers of the Company are set forth in Items 6(1) and 7(a)
through (h) of our Memorandum of Association and in the Second Schedule of the
Bermuda Companies Act of 1981 which is attached as an exhibit to our Memorandum
of Association. These purposes include exploring, drilling, moving, transporting
and refining petroleum and hydro-carbon products, including oil and oil
products; the acquisition, ownership, chartering, selling, management and
operation of ships and aircraft; the entering into of any guarantee, contract,
indemnity or suretyship and to assure, support, secure, with or without the
consideration or benefit, the performance of any obligations of any person or
persons; and the borrowing and raising of money in any currency or currencies to
secure or discharge any debt or obligation in any manner.

The Company's Bye-laws provide that its board of directors shall convene and the
Company shall hold annual general meetings in accordance with the requirements
of the Bermuda Companies Act of 1981 at such times and places (other than
Norway) as the Board shall decide. The board of directors may call special
meetings at its discretion or as required by the Bermuda Companies Act of 1981.

Bermuda law permits the Bye-laws of a Bermuda company to contain a provision
eliminating personal liability of a director or officer to the company for any
loss arising or liability attaching to him by virtue of any rule of law in
respect of any negligence default, breach of duty or breach of trust of which
the officer or person may be guilty. Bermuda law also grants companies the power
generally to indemnify directors and officers of the company if any such person
was or is a party or threatened to be made a party to a threatened, pending or
completed action, suit or proceeding by reason of the fact that he or she is or
was a director and officer of the company or was serving in a similar capacity
for another entity at the company's request.

Special rights attaching to any class of our shares may be altered or abrogated
with the consent in writing of not less than 75% of the issued and shares of
that class or with the sanction of a resolution passed at a separate general
meeting of the holders of such shares voting in person or by proxy.

The Company's Bye-laws do not prohibit a director from being a party to, or
otherwise having an interest in, any transaction or arrangement with the Company
or in which the Company is otherwise interested. The Company's Bye-laws provide
that a director who has an interest in any transaction or arrangement with the
Company and who has complied with the provisions of the Companies Acts and with
its Bye-Laws with regard to disclosure of such interest shall be taken into
account in ascertaining whether a quorum is present, and will be entitled to
vote in respect of any transaction or arrangement in which he is so interested.
The Company's Bye-laws provide its board of directors the authority to exercise
all of the powers of the Company to borrow money and to mortgage or charge all
or any part of our property and assets as collateral security for any debt,
liability or obligation. The Company's directors are not required to retire
because of their age, and the directors are not required to be holders of the
Company's ordinary shares. Directors serve for one year terms, and shall serve
until re-elected or until their successors are appointed at the next annual
general meeting.

The Company's Bye-laws provide that no director, alternate director, officer,
person or member of a committee, if any, resident representative, or his heirs,
executors or administrators, which we refer to collectively as an indemnitee, is
liable for the acts, receipts, neglects, or defaults of any other such person or
any person involved in our formation, or for any loss or expense incurred by us
through the insufficiency or deficiency of title to any property acquired by us,
or for the insufficiency of deficiency of any security in or upon which any of
our monies shall be invested, or for any loss or damage arising from the
bankruptcy, insolvency, or tortuous act of any person with whom any monies,
securities, or effects shall be deposited, or for any loss occasioned by any
error of judgment, omission, default, or oversight on his part, or for any other
loss, damage or misfortune whatever which shall happen in relation to the
execution of his duties, or supposed duties, to us or otherwise in relation
thereto. Each indemnitee will be indemnified and held harmless out of our funds
to the fullest extent permitted by Bermuda law against all liabilities, loss,
damage or expense (including but not limited to liabilities under contract, tort
and statute or any applicable foreign law or regulation and all reasonable legal
and other costs and expenses properly payable) incurred or suffered by him as
such director, alternate director, officer, person or committee member or
resident representative (or in his reasonable belief that he is acting as any of
the above). In addition, each indemnitee shall be indemnified against all
liabilities incurred in defending any proceedings, whether civil or criminal, in
which judgment is given in such indemnitee's favor, or in which he is acquitted.
The Company is authorised to purchase insurance to cover any liability it may
incur under the indemnification provisions of its Bye-laws.

There are no pre-emptive, redemption, conversion or sinking fund rights attached
to our ordinary shares. Holders of ordinary shares are entitled to one vote per
share on all matters submitted to a vote of holders of ordinary shares. Unless a
different majority is required by law or by our bye-laws, resolutions to be
approved by holders of ordinary shares require approval by a simple majority of
votes cast at a meeting at which a quorum is present.

In the event of our liquidation, dissolution or winding up, the holders of
ordinary shares are entitled to share in our assets, if any, remaining after the
payment of all of our debts and liabilities, subject to any liquidation
preference on any outstanding preference shares.

The Company's Bye-laws provide that its board of directors may, from time to
time, declare and pay dividends out of contributed surplus. Each ordinary share
is entitled to dividends if and when dividends are declared by the board of
directors, subject to any preferred dividend right of the holders of any
preference shares.

There are no limitations on the right of non-Bermudians or non-residents of
Bermuda to hold or vote our ordinary shares.

The Company's Bye-laws provide that any person, other than its registrar, who
acquires or disposes of an interest in shares which triggers a notice
requirement of the Oslo Stock Exchange must notify the Company's registrar
immediately of such acquisition or disposal and the resulting interest of that
person in shares.

The Company's Bye-laws laws require the Company to provide notice to the Oslo
Stock Exchange if a person resident for tax purposes in Norway (or such other
jurisdiction as the Board may nominate from time to time) is found to hold 50%
or more of the Company's aggregate issued share capital, or holds shares with
50% or more of the outstanding voting power, other than the Company's registrar.
The Company's Bye-laws also require it to comply with requirements that the Oslo
Stock Exchange may impose from time to time relating to notification of the Oslo
Stock Exchange in the event of specified changes in the ownership of the
Company's ordinary shares.

The Company has in place a Shareholders Rights Plan that would have the effect
of delaying, deferring, preventing a change in control of the Company. The
Shareholders Rights Plan has been filed as part of the Form 8-A filed with the
Securities and Exchange Commission on December 9, 1996, and is hereby
incorporated by reference into this Annual Report.

C. MATERIAL CONTRACTS

Ship Finance

Charter Ancillary Agreement
- ---------------------------
Frontline has entered into charter ancillary agreements with Ship Finance, its
vessel owning subsidiaries that own the vessels and our wholly owned and
consolidated subsidiaries Frontline Shipping Limited ("Frontline Shipping") and
Frontline Shipping II Limited ("Frontline Shipping II"), which remain in effect
until the last long term charter with Ship Finance terminates in accordance with
its terms. Throughout this section Frontline Shipping and Frontline Shipping II
are collectively referred to as ("the Charterers"). Frontline has guaranteed the
Charterers' obligations under the charters, except for the Charterers'
obligations to pay charterhire. Frontline has guaranteed the Charterers'
obligations under the charter ancillary agreements.

Charter Terms
- -------------
The long term time charters to us extend for various periods depending on the
age of the vessels, ranging from approximately six to 20 years. Two of the
vessels that Ship Finance acquired are on current long term time charters at
December 31, 2006. With certain exceptions, the daily base charter rates, which
are payable by Frontline Shipping monthly in advance for a maximum of 360 days
per year (361 days per leap year), are as follows:

Year                               VLCC    Suezmax
- ----------------------------     -------   -------

2003 to 2006................     $25,575   $21,100
2007 to 2010................     $25,175   $20,700
2011 and beyond.............     $24,175   $19,700

The daily base charter rates for vessels that reach their 18th delivery date
anniversary, in the case of non-double hull vessels, or their 20th delivery date
anniversary, in the case of double hull vessels, will decline to $18,262 per day
for VLCCs and $15,348 for Suezmax tankers after such dates, respectively.

In addition, the base charter rate for Ship Finance's non-double hull vessels
will decline to $7,500 per day on each vessels anniversary date in 2010. At
which time we will have the option to terminate the charters for those vessels.

The daily base charterhire for our vessels that are chartered to Frontline
Shipping II, which is also payable monthly in advance for a maximum of 360 days
per year (361 days per leap year), is as follows:

Vessel           2005 to 2006   2007 to 2010   2011 to 2018   2019 and beyond
- --------------   ------------   ------------   ------------   ---------------

Front Champion        $31,340        $31,140        $30,640           $28,464
Front Century         $31,501        $31,301        $30,801           $28,625
Golden Victory        $33,793        $33,793        $33,793           $33,793
Front Energy          $30,014        $30,014        $30,014           $30,014
Front Force           $29,853        $29,853        $29,853           $29,853

Under the charters, Ship Finance is required to keep the vessels seaworthy, and
to crew and maintain them. We perform those duties for Ship Finance under the
management agreements. If a structural change or new equipment is required due
to changes in classification society or regulatory requirements, we may make
them, at our expense, without Ship Finance's consent, but those changes or
improvements will become Ship Finance's property. We are not obligated to pay
Ship Finance charterhire for off hire days in excess of five off hire days per
year per vessel calculated on a fleet-wide basis, which include days a vessel is
unable to be in service due to, among other things, repairs or drydockings.
However, under the management agreements, we will reimburse Ship Finance for any
loss of charter revenue in excess of five off hire days per vessel, calculated
on a fleet-wide basis.

The terms of the charters do not provide us with an option to terminate the
charter before the end of its term, other than with respect to non-double hull
vessels on each vessels anniversary date in 2010. Ship Finance may terminate any
or all of the charters in the event of an event of default under a charter
ancillary agreement. The charters may also terminate in the event of (1) a
requisition for title of a vessel or (2) the total loss or constructive total
loss of a vessel. In addition, each charter provides that Ship Finance may not
sell the related vessel without our consent.

Charter Service Reserve
- -----------------------

We made initial capital contributions to Frontline Shipping and Frontline
Shipping II in the amount of $250 million and $21 million in cash respectively.
Due to sales and acquisitions, the current capitalization in the Charterers is
$197.0 million and $35.0 million respectively. These amounts serve to support
our obligations to make charterhire payments to Ship Finance, and are subject to
adjustment based on the number of charters that we are a party to. The
Charterers are entitled to use the charter service reserve only (1) to make
charter payments to Ship Finance and (2) for reasonable working capital to meet
short term voyage expenses. The Charterers are required to provide Ship Finance
with monthly certifications of the balances of and activity in the charter
service reserve.

Material Covenant
- -----------------

Pursuant to the terms of the charter ancillary agreement, the Charterers have
agreed not to pay dividends or other distributions to its shareholders or loan,
repay or make any other payment in respect their indebtedness or of any of their
affiliates (other than Ship Finance or its wholly owned subsidiaries), unless
(1) the Charterers are then in compliance with its obligations under the charter
ancillary agreements, (2) after giving effect to the dividend or other
distribution, (A) they remain in compliance with such obligations, (B) the
balance of the charter service reserves equal at least $197 million in the case
of Frontline Shipping and $35 million in the case of Frontline Shipping II
(which threshold will be reduced by $5.3 million and $7.0 million in the case of
Frontline Shipping and Frontline Shipping II, respectively, upon the termination
of other than by reason of a default by Frontline Shipping or Frontline Shipping
II which we refer to as the "Minimum Reserve", and (C) they certify to Ship
Finance that they reasonably believe that the charter service reserves will be
equal to or greater than the Minimum Reserve level for at least 30 days after
the date of that dividend or distribution, taking into consideration their
reasonably expected payment obligations during such 30-day period, (3) any
charter payments deferred pursuant to the deferral provisions described below
have been fully paid to Ship Finance and (4) any profit sharing payments
deferred pursuant to the profit sharing payments provisions described below have
been fully paid. In addition, the Charterers have agreed to certain other
restrictive covenants, including restrictions on their ability to, without the
consent of Ship Finance:

     o    amend its organisational documents in a manner that would adversely
          affect Ship Finance;

     o    violate its organisational documents;

     o    engage in businesses other than the operation and chartering of Ship
          Finance vessels; (not applicable for Frontline Shipping II)

     o    incur debt, other than in the ordinary course of business;

     o    sell all or substantially all of its assets or the assets of any of
          its subsidiaries or enter into any merger, consolidation or business
          combination transaction;

     o    enter into transactions with affiliates, other than on an arm's-length
          basis;

     o    permit the incurrence of any liens on any of its assets, other than
          liens incurred in the ordinary course of business;

     o    issue any capital stock to any person or entity other than Frontline;
          and

     o    make any investments in, provide loans or advances to, or grant
          guarantees for the benefit of any person or entity other than in the
          ordinary course of business.

In addition, we have agreed that we will cause the Charterers at all times to
remain our wholly owned subsidiaries.

Deferral of Charter Payments
- ----------------------------

For any period during which the cash and cash equivalents held by Frontline
Shipping is less than $75 million, Frontline Shipping is entitled to defer from
the payments payable to Ship Finance under each charter up to $4,600 per day for
each of our vessels that is a VLCC and up to $3,400 per day for each of our
vessels that is a Suezmax, in each case without interest. However, no such
deferral with respect to a particular charter may be outstanding for more than
one year at any given time. Frontline Shipping will be required to immediately
use all revenues that it receives that are in excess of the daily charter rates
payable to Ship Finance to pay any deferred amounts at such time as the cash and
cash equivalents held by Frontline Shipping are greater than $75 million, unless
Frontline Shipping reasonably believes that the cash and cash equivalents held
by it will not exceed $75 million for at least 30 days after the date of the
payment. In addition, Frontline Shipping will not be required to make any
payment of deferred charter amounts until the payment would be at least $2
million.

Profit Sharing Payments
- -----------------------

Under the terms of the charter ancillary agreement, beginning with the final
11-month period in 2004 and for each calendar year after that, the Charterers
have agreed to pay Ship Finance a profit sharing payment equal to 20% of the
charter revenues for the applicable period, calculated annually on a TCE basis,
realized by them for the Ship Finance fleet in excess of the daily base
charterhire. After 2010, all of Ship Finance's non-double hull vessels will be
excluded from the annual profit sharing payment calculation. For purposes of
calculating bareboat revenues on a TCE basis, expenses are assumed to equal
$6,500 per day. Each Charterer has agreed to use its commercial best efforts to
charter the Ship Finance vessels on market terms and not to give preferential
treatment to the marketing of any other vessels owned or managed by us or our
affiliates.

Frontline Shipping and Frontline Shipping II are entitled to defer, without
interest, any profit sharing payment to the extent that, after giving effect to
the payment, the charter service reserve would be less than the Minimum Reserve.
Frontline Shipping and Frontline Shipping II are required to immediately use all
revenues that it receives that are in excess of the daily charter rates payable
to Ship Finance to pay any deferred profit sharing amounts at such time as the
charter service reserve exceeds the minimum reserve, unless Frontline Shipping
and Frontline Shipping II reasonably believe that the charter service reserve
will not exceed the minimum reserve level for at least 30 days after the date of
the payment. In addition, Frontline Shipping and Frontline Shipping II will not
be required to make any payment of deferred profit sharing amounts until the
payment would be at least $2 million.

Collateral Arrangements
- -----------------------

The charter ancillary agreements provides that the obligations of the Charterers
to Ship Finance under the charters and the charter ancillary agreements are
secured by a lien over all of the assets of the Charterers and a pledge of the
equity interests in the Charterers.

Default
- -------

An event of default shall be deemed to occur under the charter ancillary
agreement if:

     o    the relevant Charterer materially breaches any of its obligations
          under any of the charters, including the failure to make charterhire
          payments when due, subject to Frontline Shipping's deferral rights
          explained above,

     o    the relevant Charterer or Frontline materially breaches any of its
          obligations under the charter ancillary agreement or the Frontline
          performance guarantee,

     o    Frontline Management materially breaches any of its obligations under
          any of the management agreements or

     o    Frontline Shipping and Frontline Shipping II fails at any time to hold
          at least $55 million or $7.5 million in cash and cash equivalents,
          respectively.

On the occurrence of any event of default under the charter ancillary agreements
that continues for 30 days after notice, Ship Finance may elect to:

     o    terminate any or all of the charters with the relevant Charterer,

     o    foreclose on any or all of our security interests described above with
          respect to the relevant charterer and/or

     o    pursue any other available rights or remedies.

Vessel Management Agreements
- ----------------------------

Ship Finance's vessel owning subsidiaries entered into fixed rate management
agreements with Frontline Management. Under the management agreements, Frontline
Management is responsible for all technical management of the vessels, including
crewing, maintenance, repair, certain capital expenditures, drydocking, vessel
taxes and other vessel operating expenses. In addition, if a structural change
or new equipment is required due to changes in classification society or
regulatory requirements, Frontline Management will be responsible for making
them, unless the Charterer does so under the charters. Frontline Management
outsources many of these services to third party providers.

Frontline Management is also obligated under the management agreements to
maintain insurance for each of Ship Finance's vessels, including marine hull and
machinery insurance, protection and indemnity insurance (including pollution
risks and crew insurances) and war risk insurance. Frontline Management will
also reimburse Ship Finance for all lost charter revenue caused by our vessels
being off hire for more than five days per year on a fleet-wide basis or failing
to achieve the performance standards set forth in the charters. Under the
management agreements, Ship Finance pays Frontline Management a fixed fee of
$6,500 per day per vessel for all of the above services, for as long as the
relevant charter is in place. If Frontline Shipping exercises its right under a
charter to bareboat charter the related vessel to a third party, the related
management agreement provides that Ship Finance's obligation to pay the $6,500
fixed fee to Frontline Management will be suspended for so long as the vessel is
bareboat chartered. Both Ship Finance and Frontline Management have the right to
terminate any of the management agreements if the relevant charter has been
terminated and in addition Ship Finance has the right to terminate any of the
management agreements upon 90 days prior written notice to Frontline Management.

Frontline has guaranteed to Ship Finance Frontline Management's performance
under these management agreements.

Administrative Services Agreement
- ---------------------------------

Ship Finance and its vessel owning subsidiaries entered into an administrative
services agreement with Frontline Management in 2004 under which Frontline
Management provides administrative support services such as the maintenance of
Ship Finance's corporate books and records, payroll services, the preparation of
tax returns and financial statements, assistance with corporate and regulatory
compliance matters not related to the vessels, legal and accounting services,
assistance in complying with United States and other relevant securities laws,
obtaining non-vessel related insurance, if any, cash management and bookkeeping
services, development and monitoring of internal audit controls, disclosure
controls and information technology, furnishing any reports or financial
information that might be requested by Ship Finance and other non-vessel related
administrative services. Under this agreement Frontline Management also provides
Ship Finance with office space in Bermuda. Ship Finance and its vessel owning
subsidiaries pay Frontline Management a fixed fee of $20,000 each per year for
its services under the agreement, and reimburse Frontline Management for
reasonable third party costs, including directors fees and expenses, shareholder
communications and public relations, registrars, audit, legal fees and listing
costs, if Frontline Management advances them on their behalf. These agreements
were terminated at the end of December 2006 and are in the process of being
renegotiated since we are now providing less administrative services to Ship
Finance.

Frontline guaranteed to Ship Finance Frontline Management's performance under
this administrative services agreement.

Golden Ocean

Agency Agreement
- ----------------

We have entered into an agency agreement with Golden Ocean pursuant to which
Golden Ocean will provide various management services to us relevant to the
operation of our OBO carrier fleet from time to time. The arrangement commenced
on January 1, 2005.

Golden Ocean shall receive a fixed fee of $1,000 per month per vessel in
relation to the eight OBO carriers which at present is part of the agreement and
any subsequent OBO carriers which becomes part of our OBO carrier fleet, until
the month in which such OBO carrier is first fixed on a dry charter by Golden
Ocean. With effect from such month, Golden Ocean shall, for such OBO carrier,
receive a fixing commission of 0.625% of the gross freight earned by such OBO
carrier under such and all subsequent dry charters as long as the agreement is
in effect. The fixed fee of $1,000 per month per vessel terminates when the
fixing commission of 0.625% of gross freight revenue enters into effect for a
vessel. The fees and the commission are subject to annual review and may, on
this basis, be adjusted upwards only. Each party may terminate the agreement
with six months' prior notice.

Sealift

Purchase of Vessels and Option Agreements
- -----------------------------------------

During January 2007, we agreed with Ship Finance that we should acquire five
single purpose companies from them, each being the owner of one single hull
Suezmax tanker vessel. All of the five vessels were subject to long term
charters to our subsidiaries, Frontline Shipping Ltd. and Frontline Shipping II
Ltd. Four of the vessels were furthermore parties to conversion contracts with
Cosco Shipyard Group Co. Ltd. ("Cosco") setting out the terms and conditions
subject to which Cosco would convert their respective vessels to specially
designed heavy lift vessels. In addition to the acquisition of the five
companies we agreed with Ship Finance that we would acquire their rights and
obligations under an option agreement with Cosco pursuant to which Ship Finance
had a right to conclude conversion contracts for a further two vessels (the
"Option Agreement").

Purchase Agreement with Sealift
- -------------------------------

In January 2007, we also agreed with Sealift that they would purchase six single
purpose companies from us, each being the owner of one single hull Suezmax
tanker vessel together with our rights and obligations under the Option
Agreement. Five of the companies to be sold were the same companies we had
agreed to purchase from Ship Finance while the sixth was an existing subsidiary
owning one single hull Suezmax tanker vessel. The long term charters with
Frontline Shipping Ltd. and Frontline Shipping II Ltd. were agreed to be
replaced with bareboat charters with our subsidiary Key Chartering Inc.,
covering the period until each vessel was delivered to Cosco for conversion. The
terms of the agreement included an obligation on us to take responsibility for
the completion of the conversion of the four vessels subject to the conversion
contracts with Cosco. This responsibility would include both the financing and
payment of the work to be performed by Cosco and the supervision thereof
throughout the conversion period.

Sealift's Financing
- -------------------

Completion of the purchase agreement between Sealift and us was subject to
Sealift being able to obtain the required financing. This was done by way of the
taking up by Sealift of a senior bank loan of $240 million, a bond issue by
Sealift of $110 million and a private placement of shares in Sealift raising in
total $180 million. We agreed to subscribe for one third of the shares in
Sealift issued at a cost of $60 million. The transaction between Sealift and
ourselves closed in March, 2007, whereafter we became a minority shareholder in
Sealift.

Subsequent Events
- -----------------

Sealift subsequently made an agreement to purchase all of the shares in Delphi
Acquisition Holding (which was the owner of Dockwise Transport B.V., an
established operator in the heavy lift market). This was financed by another
share issue which diluted our ownership share in Sealift to 17.1%.

Sea Production

On February 14, 2007 our subsidiary Frontline Floating Production Ltd. ("FFP")
entered into an agreement for the sale and purchase of assets with Sea
Production whereby FFP agreed to sell to Sea Production; (i) 70% of its shares
in Puffin Ltd., the company indirectly holding the ownership of the vessel
"Front Puffin" under conversion to an FPSO, (ii) our outstanding intercompany
loans relating to the purchase and conversion of "Front Puffin", and (iii) all
the shares of Sea Production Management AS, a Norwegian subsidiary where the
floating production organization and expertise are employed. Also on February
14, 2007 Sea Production entered into a share purchase agreement with KSI
Production Ltd. to acquire the remaining 30% of the shares of Puffin Ltd.

On February 15, 2007 Sea Production entered into two share purchase agreements
with Greenwich Holdings Limited to acquire all the shares of Langford Shipping
Company Limited and Melrose Shipping Company Limited respectively. Langford
Shipping Company owned the Aframax tanker "Sea Cat", and Melrose Shipping
Company the vessel "Sea Jaguar", also an Aframax tanker. Also on February 15
2007, Sea Production entered into a share purchase agreement with Seadrill Ltd.
to acquire all the shares of Wisdom Shipping (S) Pte. Ltd., the owner of the
FPSO "Crystal Ocean".

Sea Production financed these acquisitions and the future conversion costs of
Front Puffin through a $180 million equity issue, a $130 million bond issue and
a $105 million bank facility. We agreed to subscribe for 28.33% of the shares in
Sea Production in the equity offering at an aggregate cost of $51 million. The
acquisition of the shares and assets, the equity issue and the bond issue where
completed simultaneously on February 15, 2007. We have subsequently sold all our
shares in Sea Production in market transactions and have currently no financial
interest in the company.

D. EXCHANGE CONTROLS

The Company is classified by the Bermuda Monetary Authority as a non-resident of
Bermuda for exchange control purposes.

The transfer of Ordinary Shares between persons regarded as resident outside
Bermuda for exchange control purposes may be effected without specific consent
under the Exchange Control Act of 1972 and regulations there under and the
issuance of Ordinary Shares to persons regarded as resident outside Bermuda for
exchange control purposes may be effected without specific consent under the
Exchange Control Act of 1972 and regulations there under. Issues and transfers
of Ordinary Shares involving any person regarded as resident in Bermuda for
exchange control purposes require specific prior approval under the Exchange
Control Act of 1972.

The owners of Ordinary Shares who are ordinarily resident outside Bermuda are
not subject to any restrictions on their rights to hold or vote their shares.
Because the Company has been designated as a non-resident for Bermuda exchange
control purposes, there are no restrictions on its ability to transfer funds in
and out of Bermuda or to pay dividends to U.S. residents who are holders of
Ordinary Shares, other than in respect of local Bermuda currency.

E. TAXATION

Bermuda currently imposes no tax (including a tax in the nature of an income,
estate duty, inheritance, capital transfer or withholding tax) on profits,
income, capital gains or appreciations derived by, or dividends or other
distributions paid to U.S. Shareholders of Ordinary Shares. Bermuda has
undertaken not to impose any such Bermuda taxes on U.S. Shareholders of Ordinary
Shares prior to the year 2016 except in so far as such tax applies to persons
ordinarily resident in Bermuda.

United States Taxation

The following discussion is based upon the provisions of the U.S. Internal
Revenue Code of 1986, as amended (the "Code"), existing and proposed U.S.
Treasury Department regulations, administrative rulings, pronouncements and
judicial decisions, all as of the date of this Annual Report. Unless otherwise
noted, references to the "Company" include the Company's Subsidiaries. This
discussion assumes that we do not have an office or other fixed place of
business in the United States.

Taxation of the Company's Shipping Income: In General

The Company anticipates that it will derive substantially all of its gross
income from the use and operation of vessels in international commerce and that
this income will principally consist of freights from the transportation of
cargoes, hire or lease from time or voyage charters and the performance of
services directly related thereto, which the Company refers to as "shipping
income."

Shipping income that is attributable to transportation that begins or ends, but
that does not both begin and end, in the United States will be considered to be
50% derived from sources within the United States. Shipping income attributable
to transportation that both begins and ends in the United States will be
considered to be 100% derived from sources within the United States. The Company
does not engage in transportation that gives rise to 100% U.S. source income.

Shipping income attributable to transportation exclusively between non-U.S.
ports will be considered to be 100% derived from sources outside the United
States. Shipping income derived from sources outside the United States will not
be subject to U.S. federal income tax.

Based upon the Company's anticipated shipping operations, the Company's vessels
will operate in various parts of the world, including to or from U.S. ports.
Unless exempt from U.S. taxation under Section 883 of the Code, the Company will
be subject to U.S. federal income taxation, in the manner discussed below, to
the extent its shipping income is considered derived from sources within the
United States.

Application of Code Section 883

Under the relevant provisions of Section 883 of the Code ("Section 883"), the
Company will be exempt from U.S. taxation on its U.S. source shipping income if:

     (i)  It is organised in a qualified foreign country which is one that
          grants an equivalent exemption from tax to corporations organised in
          the United States in respect of the shipping income for which
          exemption is being claimed under Section 883 (a "qualified foreign
          country") and which the Company refers to as the "country of
          organisation requirement"; and

     (ii) It can satisfy any one of the following two (2) stock ownership
          requirements for more than half the days during the taxable year:

          o    the Company's stock is "primarily and regularly" traded on an
               established securities market located in the United States or a
               qualified foreign country, which the Company refers to as the
               "Publicly-Traded Test"; or

          o    more than 50% of the Company's stock, in terms of value, is
               beneficially owned by any combination of one or more individuals
               who are residents of a qualified foreign country or foreign
               corporations that satisfy the country of organisation requirement
               and the Publicly-Traded Test, which the Company refers to as the
               "50% Ownership Test."

The U.S. Treasury Department has recognized Bermuda, the country of
incorporation of the Company and certain of its subsidiaries, as a qualified
foreign country. In addition, the U.S. Treasury Department has recognized
Liberia, Panama, the Isle of Man, Singapore and Cyprus, the countries of
incorporation of certain of the Company's subsidiaries, as qualified foreign
countries. Accordingly, the Company and its vessel owning subsidiaries satisfy
the country of organisation requirement.

Therefore, the Company's eligibility to qualify for exemption under Section 883
is wholly dependent upon being able to satisfy one of the stock ownership
requirements.

For the 2006 tax year, the Company satisfied the Publicly-Traded Test since, on
more than half the days of the taxable year, the Company's stock was primarily
and regularly traded on the New York Stock Exchange.

Taxation in Absence of Internal Revenue Code Section 883 Exemption

To the extent the benefits of Section 883 are unavailable with respect to any
item of U.S. source income, the Company's U.S. source shipping income, would be
subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without
the benefit of deductions. Since under the sourcing rules described above, no
more than 50% of the Company's shipping income would be treated as being derived
from U.S. sources, the maximum effective rate of U.S. federal income tax on the
Company's shipping income would never exceed 2% under the 4% gross basis tax
regime.

Gain on Sale of Vessels.

Regardless of whether we qualify for exemption under Section 883, we will not be
subject to United States federal income taxation with respect to gain realised
on a sale of a vessel, provided the sale is considered to occur outside of the
United States under United States federal income tax principles. In general, a
sale of a vessel will be considered to occur outside of the United States for
this purpose if title to the vessel, and risk of loss with respect to the
vessel, pass to the buyer outside of the United States. It is expected that any
sale of a vessel by us will be considered to occur outside of the United States.

Taxation of U.S. Holders

The following is a discussion of the material United States federal income tax
considerations relevant to an investment decision by a U.S. Holder, as defined
below, with respect to the common stock. This discussion does not purport to
deal with the tax consequences of owning common stock to all categories of
investors, some of which may be subject to special rules. You are encouraged to
consult your own tax advisors concerning the overall tax consequences arising in
your own particular situation under United States federal, state, local or
foreign law of the ownership of common stock.

As used herein, the term "U.S. Holder" means a beneficial owner of our common
stock that (i) is a U.S. citizen or resident, a U.S. corporation or other U.S.
entity taxable as a corporation, an estate, the income of which is subject to
U.S. federal income taxation regardless of its source, or a trust if a court
within the United States is able to exercise primary jurisdiction over the
administration of the trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust and (ii) owns the our common
stock as a capital asset, generally, for investment purposes.

If a partnership holds our common stock, the tax treatment of a partner will
generally depend upon the status of the partner and upon the activities of the
partnership. If you are a partner in a partnership holding our common stock, you
are encouraged consult your own tax advisor on this issue.

Distributions

Subject to the discussion of passive foreign investment companies below, any
distributions made by us with respect to our common stock to a U.S. Holder will
generally constitute dividends, which may be taxable as ordinary income or
"qualified dividend income" as described in more detail below, to the extent of
our current or accumulated earnings and profits, as determined under United
States federal income tax principles. Distributions in excess of our earnings
and profits will be treated first as a non-taxable return of capital to the
extent of the U.S. Holder's tax basis in his common stock on a dollar-for-dollar
basis and thereafter as capital gain. Because we are not a United States
corporation, U.S. Holders that are corporations will not be entitled to claim a
dividends received deduction with respect to any distributions they receive from
us.

Dividends paid on our common stock to a U.S. Holder who is an individual, trust
or estate (a "U.S. Individual Holder") will generally be treated as "qualified
dividend income" that is taxable to such U.S. Individual Holders at preferential
tax rates (through 2008) provided that (1) the common stock is readily tradable
on an established securities market in the United States (such as the New York
Stock Exchange); (2) we are not a passive foreign investment company for the
taxable year during which the dividend is paid or the immediately preceding
taxable year (which we do not believe we are, have been or will be); and (3) the
U.S. Individual Holder has owned the common stock for more than 60 days in the
121-day period beginning 60 days before the date on which the common stock
becomes ex-dividend.

Legislation has been recently introduced in the U.S. Congress which, if enacted
in its present form, would preclude our dividends from qualifying for such
preferential rates prospectively from the date of the enactment. There is no
assurance that any dividends paid on our common stock will be eligible for these
preferential rates in the hands of a U.S. Individual Holder. Any dividends paid
by the Company which are not eligible for these preferential rates will be taxed
as ordinary income to a U.S. Individual Holder.

Sale, Exchange or other Disposition of Common Stock

Assuming we do not constitute a passive foreign investment company for any
taxable year, a U.S. Holder generally will recognize taxable gain or loss upon a
sale, exchange or other disposition of our common stock in an amount equal to
the difference between the amount realised by the U.S. Holder from such sale,
exchange or other disposition and the U.S. Holder's tax basis in such stock.
Such gain or loss will be treated as long-term capital gain or loss if the U.S.
Holder's holding period is greater than one year at the time of the sale,
exchange or other disposition. A U.S. Holder's ability to deduct capital losses
is subject to certain limitations.

Passive Foreign Investment Company Status and Significant Tax Consequences

Special United States federal income tax rules apply to a U.S. Holder that holds
stock in a foreign corporation classified as a passive foreign investment
company, or a PFIC, for United States federal income tax purposes. In general,
we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable
year in which such holder held our common stock, either

     o    at least 75% of our gross income for such taxable year consists of
          passive income (e.g., dividends, interest, capital gains and rents
          derived other than in the active conduct of a rental business), or

     o    at least 50% of the average value of the assets held by the
          corporation during such taxable year produce, or are held for the
          production of, passive income.

For purposes of determining whether we are a PFIC, we will be treated as earning
and owning our proportionate share of the income and assets, respectively, of
any of our subsidiary corporations in which we own at least 25% of the value of
the subsidiary's stock. Income earned, or deemed earned, by us in connection
with the performance of services would not constitute passive income. By
contrast, rental income would generally constitute "passive income" unless we
were treated under specific rules as deriving our rental income in the active
conduct of a trade or business.

Based on our current operations and future projections, we do not believe that
we are, nor do we expect to become, a PFIC with respect to any taxable year.
Although there is no legal authority directly on point, our belief is based
principally on the position that, for purposes of determining whether we are a
PFIC, the gross income we derive or are deemed to derive from the time
chartering and voyage chartering activities of our wholly-owned subsidiaries
should constitute services income, rather than rental income. Correspondingly,
we believe that such income does not constitute passive income, and the assets
that we or our wholly-owned subsidiaries own and operate in connection with the
production of such income, in particular, the vessels, do not constitute passive
assets for purposes of determining whether we are a PFIC. We believe there is
substantial legal authority supporting our position consisting of case law and
Internal Revenue Service pronouncements concerning the characterization of
income derived from time charters and voyage charters as services income for
other tax purposes. However, in the absence of any legal authority specifically
relating to the statutory provisions governing passive foreign investment
companies, the Internal Revenue Service or a court could disagree with our
position. In addition, although we intend to conduct our affairs in a manner to
avoid being classified as a PFIC with respect to any taxable year, we cannot
assure you that the nature of our operations will not change in the future.

As discussed more fully below, if we were to be treated as a PFIC for any
taxable year, a U.S. Holder would be subject to different taxation rules
depending on whether the U.S. Holder makes an election to treat us as a
"Qualified Electing Fund," which election we refer to as a "QEF election." As an
alternative to making a QEF election, a U.S. Holder should be able to make a
"mark-to-market" election with respect to our common stock, as discussed below.

Taxation of U.S. Holders Making a Timely QEF Election

If a U.S. Holder makes a timely QEF election, which U.S. Holder we refer to as
an "Electing Holder," the Electing Holder must report each year for United
States federal income tax purposes his pro rata share of our ordinary earnings
and our net capital gain, if any, for our taxable year that ends with or within
the taxable year of the Electing Holder, regardless of whether or not
distributions were received from us by the Electing Holder. The Electing
Holder's adjusted tax basis in the common stock will be increased to reflect
taxed but undistributed earnings and profits. Distributions of earnings and
profits that had been previously taxed will result in a corresponding reduction
in the adjusted tax basis in the common stock and will not be taxed again once
distributed. An Electing Holder would generally recognize capital gain or loss
on the sale, exchange or other disposition of our common stock.

Taxation of U.S. Holders Making a "Mark-to-Market" Election

Alternatively, if we were to be treated as a PFIC for any taxable year and, as
we anticipate, our stock is treated as "marketable stock," a U.S. Holder would
be allowed to make a "mark-to-market" election with respect to our common stock.
If that election is made, the U.S. Holder generally would include as ordinary
income in each taxable year the excess, if any, of the fair market value of the
common stock at the end of the taxable year over such holder's adjusted tax
basis in the common stock. The U.S. Holder would also be permitted an ordinary
loss in respect of the excess, if any, of the U.S. Holder's adjusted tax basis
in the common stock over its fair market value at the end of the taxable year,
but only to the extent of the net amount previously included in income as a
result of the mark-to-market election. A U.S. Holder's tax basis in his common
stock would be adjusted to reflect any such income or loss amount. Gain realised
on the sale, exchange or other disposition of our common stock would be treated
as ordinary income, and any loss realised on the sale, exchange or other
disposition of the common stock would be treated as ordinary loss to the extent
that such loss does not exceed the net mark-to-market gains previously included
by the U.S. Holder.

Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election

Finally, if we were to be treated as a PFIC for any taxable year, a U.S. Holder
who does not make either a QEF election or a "mark-to-market" election for that
year, whom we refer to as a "Non-Electing Holder," would be subject to special
rules with respect to (1) any excess distribution (i.e., the portion of any
distributions received by the Non-Electing Holder on our common stock in a
taxable year in excess of 125% of the average annual distributions received by
the Non-Electing Holder in the three preceding taxable years, or, if shorter,
the Non-Electing Holder's holding period for the common stock), and (2) any gain
realised on the sale, exchange or other disposition of our common stock. Under
these special rules:

     o    the excess distribution or gain would be allocated rateably over the
          Non-Electing Holders' aggregate holding period for the common stock;

     o    the amount allocated to the current taxable year and any taxable years
          before the Company became a PFIC would be taxed as ordinary income;
          and

     o    the amount allocated to each of the other taxable years would be
          subject to tax at the highest rate of tax in effect for the applicable
          class of taxpayer for that year, and an interest charge for the deemed
          deferral benefit would be imposed with respect to the resulting tax
          attributable to each such other taxable year.

These penalties would not apply to a pension or profit sharing trust or other
tax-exempt organization that did not borrow funds or otherwise utilize leverage
in connection with its acquisition of our common stock. If a Non-Electing Holder
who is an individual dies while owning our common stock, such holder's successor
generally would not receive a step-up in tax basis with respect to such stock.

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the
United States to you will be subject to information reporting requirements. Such
payments will also be subject to "backup withholding" if you are a non-corporate
U.S. Holder and you:

     o    fail to provide an accurate taxpayer identification number;

     o    are notified by the Internal Revenue Service that you have failed to
          report all interest or dividends required to be shown on your federal
          income tax returns; or

     o    in certain circumstances, fail to comply with applicable certification
          requirements.

If you sell your ordinary shares to or through a U.S. office or broker, the
payment of the proceeds is subject to both U.S. backup withholding and
information reporting unless you establish an exemption. If you sell your
ordinary shares through a non-U.S. office of a non-U.S. broker and the sales
proceeds are paid to you outside the United States then information reporting
and backup withholding generally will not apply to that payment. However, U.S.
information reporting requirements, but not backup withholding, will apply to a
payment of sales proceeds, including a payment made to you outside the United
States, if you sell your common stock through a non-U.S. office of a broker that
is a U.S. person or has some other contacts with the United States.

Backup withholding is not an additional tax. Rather, you generally may obtain a
refund of any amounts withheld under backup withholding rules that exceed your
income tax liability by filing a refund claim with the U.S. Internal Revenue
Service.

Bermuda Taxation

Bermuda currently imposes no tax (including a tax in the nature of an income,
estate duty, inheritance, capital transfer or withholding tax) on profits,
income, capital gains or appreciations derived by, or dividends or other
distributions paid to U.S. Shareholders of Common Shares. Bermuda has undertaken
not to impose any such Bermuda taxes on U.S. Shareholders of Common Shares prior
to the year 2016 except in so far as such tax applies to persons ordinarily
resident in Bermuda.

Liberian Taxation

The Republic of Liberia enacted a new income tax act effective as of January 1,
2001 (the "New Act"). In contrast to the income tax law previously in effect
since 1977 (the "Prior Law"), which the New Act repealed in its entirety, the
New Act does not distinguish between the taxation of a non-resident Liberian
corporation, such as our Liberian subsidiaries, which conduct no business in
Liberia and were wholly exempted from tax under the Prior Law, and the taxation
of ordinary resident Liberian corporations.

In 2004, the Liberian Ministry of Finance issued regulations pursuant to which a
non-resident domestic corporation engaged in international shipping, such as our
Liberian subsidiaries, will not be subject to tax under the New Act retroactive
to January 1, 2001 (the "New Regulations"). In addition, the Liberian Ministry
of Justice issued an opinion that the New Regulations were a valid exercise of
the regulatory authority of the Ministry of Finance. Therefore, assuming that
the New Regulations are valid, our Liberian subsidiaries will be wholly exempt
from Liberian income tax as under the Prior Law.

If our Liberian subsidiaries were subject to Liberian income tax under the New
Act, our Liberian subsidiaries would be subject to tax at a rate of 35% on their
worldwide income. As a result, their, and subsequently our, net income and cash
flow would be materially reduced by the amount of the applicable tax. In
addition, we, as shareholder of the Liberian subsidiaries, would be subject to
Liberian withholding tax on dividends paid by the Liberian subsidiaries at rates
ranging from 15% to 20%.

F. DIVIDENDS AND PAYING AGENTS

Not Applicable

G. STATEMENT BY EXPERTS

Not Applicable

H. DOCUMENTS ON DISPLAY

We are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended. In accordance with these requirements, we file reports and
other information with the Securities and Exchange Commission. These materials,
including this annual report and the accompanying exhibits, may be inspected and
copied at the public reference facilities maintained by the Commission 100 F
Street, N.E., Room 1580 Washington, D.C. 20549. You may obtain information on
the operation of the public reference room by calling 1 (800) SEC-0330, and you
may obtain copies at prescribed rates from the public reference facilities
maintained by the Commission at its principal office in Washington, D.C. 20549.
The SEC maintains a website (http://www.sec.gov.) that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the SEC. In addition, documents referred to in this annual
report may be inspected at our principal executive offices at Par-la-Ville
Place, 14 Par-la-Ville Road, Hamilton, Bermuda HM 08.

I. SUBSIDIARY INFORMATION

Not Applicable

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including interest rates, spot market
rates for vessels and foreign currency fluctuations. We use interest rate swaps
to manage interest rate risk. We may enter into forward freight agreements and
futures for trading purposes in order to manage our exposure to the risk of
movements in the spot market for certain trade routes and, to some extent, for
speculative purposes but currently we have not entered into any such agreements.
We may also enter into other derivative instruments from time to time for
speculative purposes but currently we have not entered into any such agreement.

Our exposure to interest rate risk relates primarily to our debt and related
interest rate swaps. The majority of this exposure derives from our floating
rate debt, which totalled $1,602.9 million at December 31, 2006 (2005: $1,450.6
million). Ship Finance has entered into interest rate swap agreements to manage
its exposure to interest rate changes by swapping floating interest rates with
fixed interest rates. At December 31, 2006, Ship Finance had 18 swaps with a
total notional principal of $738.7 million (2005 - 15 swaps with notional
principal of $618.3 million). The swap agreements mature between August 2008 and
May 2019, and Ship Finance estimate that they would receive $9.1 million to
terminate these agreements as of December 31, 2006 (2005 - receive $18.3
million). Our net exposure to interest rate fluctuations is $864.2 million at
December 31, 2006 (2005: $832.3 million). Our net exposure is based on our total
floating rate debt less the notional principal of our floating to fixed interest
rate swaps. A one per cent change in interest rates would increase or decrease
interest expense by $8.6 million per year as of December 31, 2006 (2005: $8.3
million). All of the interest rate swap agreements relate to Ship Finance.

The fair market value of our fixed rate debt was $877.2 million as of December
31, 2006 (2005: $874.3 million). If interest rates were to increase or decrease
by one per cent with all other variables remaining constant, we estimate that
the market value of our fixed rate debt would decrease or increase by
approximately $48.4 million and $52.5 million respectively (2005: decrease by
$56.8 million and increase by $62.5 million).

We are exposed to market risk in relation to our forward freight agreements and
futures contracts, if we have any. Fluctuations in underlying freight market
indices upon which our forward agreements are based have a consequent effect on
our cash flows and consolidated statements of operations. As at December 31,
2006, the nominal principal amount of our forward freight contracts, futures
contracts and options contracts was $nil (2005: $12.0 million). We use a Value
at Risk approach to estimate the risk in the freight derivatives position. Given
a 95% confidence level and one day holding period, the VaR on the open position
as per December 31, 2006 was $nil (2005: $1.1 million).

The majority of our transactions, assets and liabilities are denominated in U.S.
dollars, our functional currency. Certain of our subsidiaries report in
Sterling or Norwegian kroner and risks of two kinds arise as a result: a
transaction risk, that is, the risk that currency fluctuations will have an
effect on the value of our cash flows; and a translation risk, which is the
impact of currency fluctuations in the translation of foreign operations and
foreign assets and liabilities into U.S. dollars in our consolidated financial
statements. At December 31, 2006 we had (Y)nil receivable in relation to long
term Yen denominated charter contracts (2005 - (Y)35.7 billion).

At December 31, 2005 we had five Yen denominated forward currency contracts
entered into for speculative purposes, with a notional principal of (Y)8.8
billion (equivalent to approximately $74.2 million). These contracts were all
terminated during 2006, so as per December 31, 2006 we had no Yen denominated
forward currency contracts.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable



                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

None

ITEM 15. CONTROLS AND PROCEDURES

a) Disclosure Controls and Procedures

Management assessed the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Rule 13a-15(e) of the
Securities Exchange Act of 1934, as of the end of the period covered by this
annual report as of December 31, 2006. Based upon that evaluation, the Principal
Executive Officer and Principal Financial Officer concluded that the Company's
disclosure controls and procedures are effective as of the evaluation date.

b) Management's annual report on internal controls over financial reporting

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) promulgated under
the Securities Exchange Act of 1934.

Internal control over financial reporting is defined in Rule 13a-15(f) or
15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process
designed by, or under the supervision of, the Company's principal executive and
principal financial officers and effected by the Company's board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

     o    Pertain to the maintenance of records that, in reasonable detail,
          accurately and fairly reflect the transactions and dispositions of the
          assets of the Company;

     o    Provide reasonable assurance that transactions are recorded as
          necessary to permit preparation of financial statements in accordance
          with generally accepted accounting principles, and that our receipts
          and expenditures are being made only in accordance with authorizations
          of Company's management and directors; and

     o    Provide reasonable assurance regarding prevention or timely detection
          of unauthorized acquisition, use or disposition of our assets that
          could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree or compliance
with the policies or procedures may deteriorate.

Management conducted the evaluation of the effectiveness of the internal
controls over financial reporting using the control criteria framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
published in its report entitled Internal Control-Integrated Framework.

Our management with the participation of our Principal Executive Officer and
Principal Financial Officer assessed the effectiveness of the design and
operation of the Company's internal controls over financial reporting pursuant
to Rule 13a-15 of the Securities Exchange Act of 1934, as of December 31, 2006.
Based upon that evaluation, the Principal Executive Officer and Principal
Financial Officer concluded that the Company's internal controls over financial
reporting are effective as of December 31, 2006.

Management's assessment of the effectiveness of the Company's internal control
over financial reporting as of December 31, 2006 has been audited by
PricewaterhouseCoopers AS, an independent registered public accounting firm, as
stated in their report.

c) Changes in internal control over financial reporting

There were no changes in our internal controls over financial reporting that
occurred during the period covered by this annual report that have materially
effected or are reasonably likely to materially affect, the Company's internal
control over financial reporting

ITEM 16. RESERVED

ITEM 16 A. AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has determined that the Company's Audit Committee has one
Audit Committee Financial Expert. Mr. Frixos Savvides is an independent Director
and is the Audit Committee Financial Expert.

ITEM 16 B. CODE OF ETHICS

We have adopted a Code of Ethics that applies to all entities controlled by us
and all employees, directors, officers and agents of the Company. The Code of
Ethics has previously been filed as Exhibit 14.1 to the Company's Annual Report
on Form 20-F for the fiscal year ended December 31 2003, filed with the
Securities and Exchange Commission on June 30, 2004, and is hereby incorporated
by reference

We have posted a copy of our Code of Ethics on our website at www.frontline.bm.
We will provide any person, free of charge, a copy of its Code of Ethics upon
written request to our registered office.

ITEM 16 C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our principal accountant for 2006 and 2005 was PricewaterhouseCoopers AS. The
following table sets forth for the two most recent fiscal years the fees paid or
accrued for audit and services provided by PricewaterhouseCoopers AS.

(in thousands of $)
                              2006          2005

Audit Fees (a)               2,934         2,315
Audit-Related Fees (b)           -             -
Tax Fees (c)                     -             4
All Other Fees (d)               -             -
Total                        2,934         2,319

(a) Audit Fees
Audit fees represent professional services rendered for the audit of our annual
financial statements and services provided by the principal accountant in
connection with statutory and regulatory filings or engagements.

(b) Audit-Related Fees

Audit-related fees consisted of assurance and related services rendered by the
principal accountant related to the performance of the audit or review of our
financial statements which have not been reported under Audit Fees above.

(c) Tax Fees

Tax fees represent fees for professional services rendered by the principal
accountant for tax compliance, tax advice and tax planning.

(d) All Other Fees

All other fees include services other than audit fees, audit-related fees and
tax fees set forth above.

Our Board of Directors has adopted pre-approval policies and procedures in
compliance with paragraph (c) (7)(i) of Rule 2-01 of Regulation S-X that require
the Board to approve the appointment of the independent auditor of the Company
before such auditor is engaged and approve each of the audit and non-audit
related services to be provided by such auditor under such engagement by the
Company. All services provided by the principal auditor in 2006 were approved by
the Board pursuant to the pre-approval policy.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable



                                    PART III

ITEM 17. FINANCIAL STATEMENTS

Not Applicable

ITEM 18. FINANCIAL STATEMENTS

The following financial statements listed below and set forth on pages F-1
through F-38 are filed as part of this annual report:

Consolidated Financial Statements of Frontline Ltd

Index to Consolidated Financial Statements of Frontline Ltd                  F-1
Report of Independent Registered Public Accounting Firm                      F-2
Report of Independent Registered Public Accounting Firm                      F-3
Consolidated Statements of Operations for the years ended
December 31, 2006, 2005 and 2004                                             F-4
Consolidated Balance Sheets as of December 31, 2006 and 2005                 F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 2006, 2005 and 2004                                             F-6
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31,
2006, 2005 and 2004                                                          F-8
Notes to Consolidated Financial Statements                                   F-9

ITEM 19. EXHIBITS

Number               Description of Exhibit

1.1*      Memorandum of Association of the Company, incorporated by reference to
          Exhibit 3.1 of the Company's Registration Statement on Form F-1,
          Registration No. 33-70158 filed on October 12, 1993 (the "Original
          Registration Statement").

1.2       Amended and Restated Bye-Laws of the Company as adopted by
          shareholders on December 1, 2006.

2.1*      Form of Ordinary Share Certificate, incorporated by reference to
          Exhibit 4.1 of the Original Registration Statement.

2.2*      Form of Deposit Agreement dated as of November 24, 1993, among
          Frontline Ltd. (F/K/A London & Overseas Freighters Limited), The Bank
          of New York as Depositary, and all Holders from time to time of
          American Depositary Receipts issued there under, including form of
          ADR, incorporated by reference to Exhibit 4.2 of the Original
          Registration Statement.

2.3*      Form of Deposit Agreement dated as of November 24, 1993, as amended
          and restated as of May 29, 2001, among Frontline Ltd. (F/K/A London &
          Overseas Freighters Limited), The Bank of New York as Depositary, and
          all Holders from time to time of American Depositary Receipts issued
          there under, including form of ADR, incorporated by reference to
          Exhibit 2 of the Company's Annual Report on Form 20-F, filed on June
          13, 2001 for the fiscal year ended December 31, 2000.

2.4*      Amendment No. 1 to the Rights Agreement incorporated by reference to
          Exhibit 4.3 of the Amalgamation Registration Statement.

2.5*      The Subregistrar Agreement related to the registration of certain
          securities issued by Frontline Ltd. in the Norwegian Registry of
          Securities between Frontline Ltd. and Christiania Bank og Kreditkasse
          ASA together with the Form of Warrant Certificate and Conditions
          attaching thereto, incorporated by reference to Exhibit 1.1 of the
          Company's Annual Report on Form 20-F for the fiscal year ended
          December 31, 1998.

4.1*      Form of United Kingdom Share Option Plan, incorporated by reference to
          Exhibit 10.1 of the Original Registration Statement.

4.2*      Form of Bermuda Share Option Plan, incorporated by reference to
          Exhibit 10.2 of the Original Registration Statement.

4.3*      The Subordinated Convertible Loan Facility Agreement USD 89,000,000
          dated July 13, 1999, between Frontline Ltd. as Borrower and Metrogas
          Holdings Inc. as Lender, incorporated by reference to Exhibit 2.1 of
          the Company's Annual Report on Form 20-F for the fiscal year ended
          December 31, 1998.

4.4*      Master Agreement, dated September 22, 1999, among Frontline AB and
          Frontline Ltd (collectively "FL"), Acol Tankers Ltd. ("Tankers"), ICB
          Shipping AB ("ICB"), and Ola Lorentzon (the "Agent"), incorporated by
          reference to Exhibit 3.1 of the Company's Annual Report on Form 20-F
          for the fiscal year ended December 31, 1999.

4.5*      Fleet Purchase Agreement between Frontline Ltd and Ship Finance
          International Limited dated December 11, 2003 incorporated by
          reference to Exhibit 10.1 of the Company's Annual Report on Form 20-F
          for the fiscal year ended December 31, 2004.

4.6*      Charter Ancillary Agreement between Frontline Ltd and Ship Finance
          International Limited dated January 1, 2004 incorporated by reference
          to Exhibit 10.2 of the Company's Annual Report on Form 20-F for the
          fiscal year ended December 31, 2004.

4.7*      Addendum to Charter Ancillary Agreement between Frontline Ltd and Ship
          Finance International Limited dated June 15, 2004 incorporated by
          reference to Exhibit 10.3 of the Company's Annual Report on From 20-F
          for the fiscal year ended December 31, 2004.

4.8*      Form of Performance Guarantee issued by the Company incorporated by
          reference to Exhibit 10.4 of the Company's Annual Report on From 20-F
          for the fiscal year ended December 31, 2004.

4.9*      Form of Time Charter incorporated by reference to Exhibit 10.5 of the
          Company's Annual Report on Form 20-F for the fiscal year ended
          December 31, 2004.

4.10*     Form of Vessel Management Agreements incorporated by reference to
          Exhibit 10.6 of the Company's Annual Report on Form 20-F for the
          fiscal year ended December 31, 2004.

4.11*      Administrative Services Agreement incorporated by reference to
          Exhibit 10.7 of the Company's Annual Report on Form 20-F for the
          fiscal year ended December 31, 2004.

4.12*     Contribution Agreement between Frontline Ltd and Golden Ocean Group
          Limited dated November 29, 2004 incorporated by reference to Exhibit
          10.8 of the Company's Annual Report on From 20-F for the fiscal year
          ended December 31, 2004.

4.13      Merger Agreement, Dockwise and Sealift dated April 27, 2007.

4.14      Shareholder's Agreement Relating to Sealift Ltd dated April 27, 2007.

4.15      Second Supplemental Purchase Agreement dated April 27, 2007.

4.16      Frontline Ltd Share Option Scheme dated November 16, 2006

8.1       Subsidiaries of the Company.

11.1*     Code of Ethics, incorporated by reference to Exhibit 14.1 of the
          Company's Annual Report on Form 20-F for the fiscal year ended
          December 31, 2003.

12.1      Certification of the Principal Executive Officer.

12.2      Certification of the Principal Executive Officer.

12.3      Certification of the Principal Financial Officer.

13.1      Certifications under Section 906 of the Sarbanes-Oxley act of 2002 of
          the Principal Executive Officer.

13.2      Certifications under Section 906 of the Sarbanes-Oxley act of 2002 of
          the Principal Executive Officer.

13.3      Certifications under Section 906 of the Sarbanes-Oxley act of 2002 of
          the Principal Financial Officer.

* Incorporated herein by reference.

                                   SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorised.

                                                        Frontline Ltd.
                                              --------------------------------
                                                         (Registrant)

Date       July 2,  2007                   By /s/ Inger M. Klemp
    ---------------------------------         -------------------------------
                                              Chief Financial Officer


Index to Consolidated Financial Statements of Frontline Ltd

Report of Independent Registered Public Accounting Firm                      F-2
Report of Independent Registered Public Accounting Firm                      F-4
Consolidated Statements of Operations for the years ended
December 31, 2006, 2005 and 2004                                             F-5
Consolidated Balance Sheets as of December 31, 2006 and 2005                 F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 2006, 2005 and 2004                                             F-7
Consolidated Statements of Changes in Stockholders' Equity for
the years ended December 31, 2006, 2005 and 2004                             F-8
Notes to Consolidated Financial Statements                                   F-9



Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Frontline Ltd

We have completed an integrated audit of Frontline Ltd's 2006 consolidated
financial statements and of its internal control over financial reporting as of
December 31, 2006 and audits of its 2005 and 2004 consolidated financial
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Our opinions, based on our audits and the
report of other auditors, are presented below.

Consolidated financial statements

In our opinion, based on our audits and the report of other auditors, the
accompanying consolidated balance sheets and the related consolidated statements
of operation, of cash flows and of the changes in stockholders' equity present
fairly, in all material respects, the financial position of Frontline Ltd and
its subsidiaries at December 31, 2006 and December 31, 2005, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2006 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
combined financial statements of Independent Tankers Corporation, Buckingham
Shipping PLC, Caernarforn Shipping PLC, Holyrood Shipping PLC, Sandringham
Shipping Plc, Golden State Petro (IOM I-A) PLC, Golden State Petro (IOM I-B) PLC
and, from April 1, 2006, CalPetro Tankers (Bahamas III) Limited, wholly-owned
subsidiaries, which statements reflect total assets of $797.4 million and $747.0
million (as restated) as of December 31, 2006 and December 31, 2005,
respectively, and total revenues of $58.1 million, $56.2 million (as restated)
and $56.2 million (as restated) for each of the years ended December 31, 2006,
2005 and 2004, respectively. Those statements were audited by other auditors
whose report thereon has been furnished to us, and our opinion expressed herein,
insofar as it relates to the amounts included for Independent Tankers
Corporation, Buckingham Shipping PLC, Caernarforn Shipping PLC, Holyrood
Shipping PLC, Sandringham Shipping Plc, Golden State Petro (IOM I-A) PLC, Golden
State Petro (IOM I-B) PLC and, from April 1, 2006, CalPetro Tankers (Bahamas
III) Limited, is based solely on the report of the other auditors. We conducted
our audits of these statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit of financial
statements includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits and the report of
other auditors provide a reasonable basis for our opinion.

As discussed in Note 3, the Company has restated its consolidated financial
statements as of December 31, 2005 and for the years ended December 31, 2005 and
2004.

Internal control over financial reporting
- -----------------------------------------

Also, in our opinion, based on our audit, management's assessment, included in
Management's Report on Internal Control Over Financial Reporting appearing under
item 15(b) of Frontline Ltd's 2006 Annual Report on Form 20-F, that the Company
maintained effective internal control over financial reporting as of December
31, 2006 based on criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), is fairly stated, in all material respects, based on those
criteria. Furthermore, in our opinion, based on our audit, the Company
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2006, based on criteria established in Internal
Control - Integrated Framework issued by the COSO. The Company's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express opinions on management's assessment
and on the effectiveness of the Company's internal control over financial
reporting based on our audit. We conducted our audit of internal control over
financial reporting in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. An audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial reporting,
evaluating management's assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other
procedures as we consider necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.


PricewaterhouseCoopers AS
Oslo, Norway
July 2, 2007


Report of Independent Registered Public Accounting Firm
- -------------------------------------------------------

To the Board of Directors
Independent Tankers Corporation

We have audited the accompanying combined balance sheets of Independent Tankers
Corporation ("ITC") (a Cayman Islands Company and wholly owned subsidiary of
Frontline Ltd.), Buckingham Shipping PLC, Caernarforn Shipping PLC, Holyrood
Shipping PLC, Sandringham Shipping Plc, Golden State Petro (IOM I-A) PLC, Golden
State Petro (IOM I-B) PLC and CalPetro Tankers (Bahamas III) Limited
(collectively the "Company") as of December 31, 2006 and 2005 and the related
combined statements of operations, and cash flows and changes in stockholders'
equity for each of the three years in the period ended December 31, 2006. These
combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Independent Tankers
Corporation and Affiliates as of December 31, 2006 and 2005 and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2006, in conformity with accounting principles generally
accepted in the United States of America.

As discussed in Note 2, ITC has restated its financial statements as of December
31, 2005 and for the years ended December 31, 2005 and 2004 due to an error in
the initial application of FIN 46R. ITC incorrectly believed it was the primary
beneficiary for the Windsor Petroleum Group, the Golden State Group and the
CalPetro Group of entities. During 2006, management revisited their analysis and
determined that ITC was not the primary beneficiary of any of the entities, but
that Frontline Ltd. was the primary beneficiary for the Windsor Petroleum Group
and the Golden State Group, but not the CalPetro Group. Accordingly, the
consolidated financial statements of ITC have been restated to present financial
statements of ITC combined with the Windsor Petroleum Group and the Golden State
Group of entities. The effect of the restatement was to decrease total assets to
$747 million from $860 million as of December 31, 2005 and there was no effect
on total revenues for the years ended December 31, 2005 and 2004.

/s/ Grant Thornton LLP


New York, New York
July 2, 2007



Frontline Ltd.
Consolidated Statements of Operations for the years ended December 31, 2006,
2005 and 2004 (in thousands of $, except per share data)

                                                                         2006          2005          2004
                                                                                 (restated)    (restated)
                                                                                       
Operating revenues
   Time charter revenues                                              364,956       205,837       108,246
   Bareboat charter revenues                                           89,655       142,562       176,381
   Voyage charter revenues                                          1,114,531     1,152,240     1,554,519
   Finance lease interest income                                        9,411            --            --
   Other income                                                         5,310         3,877         3,777
- ----------------------------------------------------------------------------------------------------------
   Total operating revenues                                         1,583,863     1,504,516     1,842,923
- ----------------------------------------------------------------------------------------------------------
Gain on sale of assets                                                 95,655        76,081        19,574
Operating expenses
   Voyage expenses and commission                                     396,576       337,221       361,609
   Ship operating expenses                                            199,377       148,702       130,385
   Charterhire expenses                                                24,923        11,711        39,302
   Administrative expenses                                             32,214        21,061        25,596
   Depreciation and amortisation                                      203,849       198,359       180,497
- ----------------------------------------------------------------------------------------------------------
   Total operating expenses                                           856,939       717,054       737,389
- ----------------------------------------------------------------------------------------------------------
Net operating income                                                  822,579       863,543     1,125,108
- ----------------------------------------------------------------------------------------------------------
Other income (expenses)
   Interest income                                                     47,733        40,867        31,403
   Interest expense                                                  (206,144)     (206,058)     (194,378)
   Equity earnings of unconsolidated subsidiaries and
   associated companies                                                 1,118         3,379        10,425
   Foreign currency exchange gain (loss)                                1,056        18,829        (4,932)
   Mark to market of derivatives                                      (10,897)       14,499        (5,843)
   Gain on sale of securities                                           9,782        28,035         7,151
   Dividends received                                                  13,317         1,540            21
   Other financial items, net                                          (3,700)        1,755         1,981
- ----------------------------------------------------------------------------------------------------------
   Net other expenses                                                (147,735)      (97,154)     (154,172)
- ----------------------------------------------------------------------------------------------------------
Net income from continuing operations before income
taxes, minority interest                                              674,844       766,389       970,936
   Minority interest                                                 (158,682)     (169,459)      (64,995)
   Income tax (expense) benefit                                          (162)           19          (178)
   Gain on issuance of shares by associate                                 --         1,105            --
- ----------------------------------------------------------------------------------------------------------
Net income from continuing operations                                 516,000       598,054       905,763
   Discontinued operations                                                 --         8,785       117,619
- ----------------------------------------------------------------------------------------------------------
Net income                                                            516,000       606,839     1,023,382
==========================================================================================================

Earnings per share:
Basic and diluted earnings per share from continuing operations         $6.90         $7.99        $12.21

Basic and diluted earnings per share for discontinued operations           --         $0.12         $1.58

Basic and diluted earnings per share                                    $6.90         $8.11        $13.79

Weighted average shares outstanding, basic and diluted                 74,825        74,825        74,192

Cash dividends per share declared                                       $7.00        $10.10        $13.60
==========================================================================================================


See accompanying Notes that are an integral part of these Consolidated Financial
Statements



Frontline Ltd.
Consolidated Balance Sheets as of December 31, 2006 and 2005
(in thousands of $)

                                                                 2006          2005
                                                                         (restated)
                                                                    
ASSETS
Current Assets
   Cash and cash equivalents                                  197,181        92,782
   Restricted cash                                            677,533       636,790
   Marketable securities                                        1,469       144,156
   Trade accounts receivable                                   59,728        72,719
   Other receivables                                           39,018        20,024
   Inventories                                                 43,791        44,984
   Voyages in progress                                         43,412        94,479
   Prepaid expenses and accrued income                         11,900         7,043
   Net investment in finance lease, current portion            23,608            --
   Derivative instruments receivable amounts, short term        2,931         5,132
   Other current assets                                        11,571           568
- ------------------------------------------------------------------------------------
Total current assets                                        1,112,142     1,118,677
Newbuildings                                                  166,851        15,927
Vessels and equipment, net                                  2,446,278     2,584,847
Vessels and equipment under capital lease, net                626,374       672,608
Investment in unconsolidated subsidiaries and
associated companies                                           17,825        15,783
Net investment in finance lease, long term portion            175,141            --
Deferred charges                                               16,937        18,011
Derivative instruments receivable amounts, long term           17,807        19,563
Other long-term assets                                         10,582         9,401
- ------------------------------------------------------------------------------------
Total assets                                                4,589,937     4,454,817
====================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Short-term debt and current portion of long-term debt      281,409       228,135
   Current portion of obligations under capital leases         28,857        25,142
   Trade accounts payable                                      17,573         9,382
   Accrued expenses                                            90,316        84,847
   Deferred charter revenue                                    15,783         7,071
   Derivative instruments liabilities, short term                  --           214
   Other current liabilities                                    9,978        83,856
- ------------------------------------------------------------------------------------
Total current liabilities                                     443,916       438,647
Long-term liabilities
   Long-term debt                                           2,181,885     2,101,061
   Obligations under capital leases                           723,073       706,279
   Deferred gains on sales of vessels                          21,732        18,102
   Derivative instruments liabilities, long term                8,743         3,307
   Other long-term liabilities                                    906         1,505
- ------------------------------------------------------------------------------------
Total liabilities                                           2,936,339     3,268,901
Commitments and contingencies
Minority interest                                             541,122       470,750

Stockholders' equity
   Share capital (74,825,169 shares outstanding,
   par value $2.50)                                           187,063       187,063
   Contributed surplus                                        485,922       534,787
   Accumulated other comprehensive loss                        (4,425)       (6,684)
   Retained earnings                                               --            --
Total stockholders' equity                                    668,560       715,166
- ------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                  4,589,937     4,454,817
====================================================================================


See accompanying Notes that are an integral part of these Consolidated Financial
Statements



Frontline Ltd.
Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004
(in thousands of $)

                                                                     2006          2005          2004
                                                                             (restated)    (restated)
                                                                                    
Net income                                                        516,000       606,839     1,023,382
Adjustments to reconcile net income to net cash
provided by operating activities:
   Depreciation and amortisation                                  203,849       198,875       183,711
   Amortisation of deferred charges                                 3,346        16,705        10,116
   Gain from sale of assets (including marketable
   securities)                                                   (105,439)     (109,657)     (126,197)
   Equity earnings of unconsolidated subsidiaries and
   associated companies                                            (1,118)       (3,380)      (10,424)
   Unrealised foreign exchange loss                                    75        (2,222)          390
   Adjustment of derivatives to market value                        9,348       (12,335)      (15,675)
   Minority interest                                              158,682       169,459        64,995
   Other, net                                                      (5,326)       (3,030)       (3,337)
Changes in operating assets and liabilities, net of
effect of acquisitions:
   Trade accounts receivable                                       12,991        64,981       (93,497)
   Other receivables                                              (13,464)       (6,493)        1,222
   Inventories                                                      1,193       (12,967)       (5,966)
   Voyages in progress                                             51,067        54,421       (88,619)
   Prepaid expenses and accrued income                             (4,231)        2,144        (3,953)
   Trade accounts payable                                           8,191         1,114         1,353
   Accrued expenses                                                 4,777         7,126        12,274
   Deferred charter revenue                                         8,179         2,689          (927)
   Other, net                                                     (16,564)        5,781       (43,008)
- ------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                         831,556       980,050       905,840
- ------------------------------------------------------------------------------------------------------
Investing activities
   Maturity (placement) of restricted cash                         13,730       (44,183)      301,743
   Additions to newbuildings, vessels and equipment              (569,819)     (558,163)     (126,947)
   Proceeds from sale of vessels and equipment                    275,190       250,339        59,787
   Insurance proceeds from loss of vessels and equipment           12,173            --            --
   Acquisition of subsidiaries and businesses, net of cash             --            --       (18,858)
   Investments in associated companies                             (3,431)       (2,610)      (37,424)
   Dividends received from associated companies                     1,318        20,911         3,800
   Purchase of minority interest                                   (7,198)      (33,083)      (14,713)
   Proceeds from sale of investments in associated companies           --            --        11,181
   Receipts from finance leases and loans receivable               12,562         7,051         2,227
   Purchases of other assets                                      (71,067)     (168,038)      (90,571)
   Proceeds from sale of other assets                             154,409       152,752        75,473
   Proceeds from issuance of shares in subsidiary                   7,800            --        24,696
   Proceeds from sale of newbuilding contracts                      9,769        16,800            --
- ------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities              (164,564)     (358,224)      190,394
- ------------------------------------------------------------------------------------------------------
Financing activities
   Proceeds from long-term debt                                   539,748     1,660,503     1,724,014
   Repayments of long-term debt                                  (420,925)   (1,347,217)   (1,797,964)
   Payment of obligations under capital leases                    (24,706)      (22,230)      (20,310)
   Debt fees paid                                                  (2,230)       (7,405)      (16,359)
   Cash dividends paid                                           (654,480)     (909,574)   (1,038,315)
   Repurchase of shares and warrants                                   --            --          (631)
   Proceeds from issuance of equity                                    --            --        38,210
                                                                 ----------    ----------   ----------
Net cash used in financing activities                            (562,593)     (625,923)   (1,111,355)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents              104,399        (4,097)      (15,121)
- ------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year                     92,782        96,879       112,000
Cash and cash equivalents at end of year                          197,181        92,782        96,879
======================================================================================================
Supplemental disclosure of cash flow information:
Interest paid                                                     207,610       225,053       177,342
Income taxes paid                                                      62            46           114


See accompanying Notes that are an integral part of these Consolidated Financial
Statements



Frontline Ltd.
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 2006, 2005 and 2004 (in thousands of $, except number of shares)

                                                                 2006           2005           2004
                                                                                
NUMBER OF SHARES OUTSTANDING
   Balance at beginning of year                            74,825,169     74,825,169     73,647,930
   Shares issued                                                   --             --      1,197,436
   Shares bought back                                              --             --        (20,197)
- ----------------------------------------------------------------------------------------------------
   Balance at end of year                                  74,825,169     74,825,169     74,825,169
- ----------------------------------------------------------------------------------------------------

SHARE CAPITAL
   Balance at beginning of year                               187,063        187,063        184,120
   Shares issued                                                   --             --          2,994
   Shares bought back and cancelled                                --             --            (51)
- ----------------------------------------------------------------------------------------------------
   Balance at end of year                                     187,063        187,063        187,063
- ----------------------------------------------------------------------------------------------------

CONTRIBUTED SURPLUS
   Balance at beginning of year                               534,787        568,127        513,859
   Shares issued                                                   --             --         42,802
   Shares bought back and warrants exercised or expired            --             --           (581)
   Excess of cash proceeds over book value on issue of
   shares by subsidiary                                            --             --          9,050
   Contribution from related party                                 --         85,364             --
   Cash dividends                                             (35,634)      (203,643)            --
   Minority interest in deemed equity contributions
   and deemed dividends                                       (13,231)        84,939          2,997
- ----------------------------------------------------------------------------------------------------
   Balance at end of year                                     485,922        534,787        568,127
- ----------------------------------------------------------------------------------------------------

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
   Balance at beginning of year                                (6,684)         5,414         (6,953)
   Other comprehensive income (loss)                            2,259        (12,098)        12,367
- ----------------------------------------------------------------------------------------------------
   Balance at end of year                                      (4,425)        (6,684)         5,414
- ----------------------------------------------------------------------------------------------------

RETAINED EARNINGS
   Balance at beginning of year                                    --        157,364        564,391
   Net income                                                 516,000        606,839      1,023,382
   Cash dividends                                            (488,158)      (552,322)    (1,040,093)
   Stock dividends                                            (27,842)      (211,881)      (390,316)
- ----------------------------------------------------------------------------------------------------
   Balance at end of year                                          --             --        157,364
- ----------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                    668,560        715,166        917,968
===================================================================================================

COMPREHENSIVE INCOME (LOSS)
   Net income                                                 516,000        606,839      1,023,382
   Unrealised gains (loss) from marketable securities           1,721        (11,877)        10,441
   Unrealised gains from cash flow hedging derivative
   instruments                                                     --             --          2,471
   Foreign currency translation and other                         538           (221)          (545)
- ----------------------------------------------------------------------------------------------------
   Other comprehensive income                                   2,259        (12,098)        12,367

- ----------------------------------------------------------------------------------------------------
Comprehensive income                                          518,259        594,741      1,035,749
===================================================================================================


See accompanying Notes that are an integral part of these Consolidated Financial
Statements.


1.   GENERAL

     Frontline Ltd. (the "Company" or "Frontline") is a Bermuda based shipping
     company engaged primarily in the ownership and operation of oil tankers,
     including oil/bulk/ore ("OBO") carriers. The Company operates tankers of
     two sizes: very large crude carriers ("VLCCs") which are between 200,000
     and 320,000 deadweight tons ("dwt"), and Suezmaxes, which are vessels
     between 120,000 and 170,000 dwt. In addition, the Company owns and operates
     three containerships which range from 1,700 to 2,824 twenty-foot equivalent
     units ("TEU"). The Company operates primarily through subsidiaries and
     partnerships located in Bermuda, Isle of Man, Liberia, Norway, Panama,
     Singapore, Cayman Islands, Malta, the Bahamas and Cyprus. The Company is
     also involved in the charter, purchase and sale of vessels.

     The Company's ordinary shares are listed on the New York Stock Exchange,
     the Oslo Stock Exchange and the London Stock Exchange.

     In October 2003, the Company established Ship Finance International Limited
     ("Ship Finance") in Bermuda. Through transactions executed in January 2004,
     the Company transferred to Ship Finance ownership of 46 vessel-owning
     entities each owning one vessel and its corresponding financing, and one
     entity owning an option to acquire a VLCC. The Company then leased the
     vessels back on long-term charters. The assets and liabilities were
     transferred to, and recorded by Ship Finance, at the historical net book
     value of each asset at December 31, 2003. In May 2004 the Board of
     Frontline declared a share dividend of 25% of the issued share capital of
     Ship Finance to Frontline's shareholders. Frontline's shareholders received
     one share in Ship Finance for every four Frontline shares held. Further
     share dividends have been declared as follows:

     ---------------------------------------------------------------------------
                                                                     % of
                                                                     Frontline
                                                                     holding
     Declaration Date                   Distribution Date            distributed
     ---------------------------------------------------------------------------
     August 2004                        September 2004               10.0
     November 2004                      December 2004                13.2
     January 2005                       February 2005                25.0
     February 2005                      March 2005                   10.0
     February 2006                      March 2006                    5.1

     As of December 31, 2006, the Company's remaining shareholding in Ship
     Finance was 11.1%. The Company has accounted for the spin off of Ship
     Finance at historical cost. Ship Finance shares are traded on the New York
     Stock Exchange under the ticker symbol SFL. Under the provisions of FASB
     Interpretation No. 46 (revised December 2003) Consolidation of Variable
     Interest Entities, an Interpretation of ARB No. 51 ("FIN 46(R)") Ship
     Finance remains consolidated into Frontline.

     As of December 31, 2006, Ship Finance had total assets of $2,553.7 million
     and net assets of $600.5 million. A total of $2,427.1 million of the assets
     of Ship Finance, which have been recorded as owned vessels in the Company's
     consolidated financial statements, are pledged as security for Ship
     Finance's debt obligations. The Company has not guaranteed the obligations
     of Ship Finance.

     In November 2004, the Company established Golden Ocean Group Limited
     ("Golden Ocean") as a wholly owned subsidiary in Bermuda for the purpose of
     transferring, by way of contribution, certain dry bulk shipping interests.
     Three Frontline subsidiaries and cash equal to the difference between
     $22.45 million and the historical net book value of those subsidiaries was
     transferred to Golden Ocean on December 1, 2004. On the same date, the
     Board of Frontline resolved to distribute its shares in Golden Ocean to its
     shareholders in proportion to their ownership in Frontline. Frontline's
     shareholders received three shares in Golden Ocean for every Frontline
     share held. Certain of the Company's U.S. shareholders were excluded from
     the distribution and received a cash payment in lieu of shares equal to
     $0.60 per Golden Ocean share, which represented the average price per share
     of the Golden Ocean shares during their first five days of trading on the
     Oslo Stock Exchange where Golden Ocean was listed on December 15, 2004. The
     Company does not have any significant continuing involvement in these dry
     bulk operations and as a result, the financial results from the Company's
     dry bulk operations transferred to Golden Ocean have been reported under
     "discontinued operations" for 2004. The Company accounted for the spin off
     of Golden Ocean at fair value and recorded a gain of $99.5 million in the
     year ended December 31, 2004 which is included in the result from
     discontinued operations in the statement of operations.

     As discussed in Note 3, the Company began consolidating the variable
     interest entity CalPetro Tankers (Bahamas III) Limited ("Bahamas III") as
     of April 1, 2006. Bahamas III has total assets of $18.8 million and net
     assets of $2.6 million and its sole asset, which is recorded as an owned
     vessel in the Company's consolidated financial statements, is pledged as
     security for the debt obligations of Bahamas III. The Company has not
     guaranteed the obligations of Bahamas III.

2.   ACCOUNTING POLICIES

     Basis of accounting

     The consolidated financial statements are prepared in accordance with
     accounting principles generally accepted in the United States. The
     consolidated financial statements include the assets and liabilities of the
     Company and its subsidiaries and certain variable interest entities in
     which the Company is deemed to be the primary beneficiary. All intercompany
     balances and transactions have been eliminated on consolidation.

     A variable interest entity ("VIE") is a legal entity where either (a)
     equity interest holders as a group lack the characteristics of a
     controlling financial interest, including: decision making ability and an
     interest in the entity's residual risks and rewards or (b) the equity
     holders have not provided sufficient equity investment to permit the entity
     to finance its activities without additional subordinated financial
     support, or where (c) the voting rights of some investors are not
     proportional to their obligations to absorb the expected losses of the
     entity, their rights to receive the expected residual returns of the
     entity, or both and substantially all of the entity's activities either
     involve or are conducted on behalf of an investor that has
     disproportionately few voting rights. FIN 46(R) requires a variable
     interest entity to be consolidated if any of its interest holders are
     entitled to a majority of the entity's residual return or are exposed to a
     majority of its expected losses.

     Investments in companies over which the Company exercises significant
     influence but does not consolidate, are accounted for using the equity
     method. The Company records its investments in equity-method investees on
     the consolidated balance sheets as "Investments in associated companies"
     and its share of the investees' earnings or losses in the consolidated
     statements of operations as "Share in results from associated companies".
     The excess, if any, of purchase price over book value of the Company's
     investments in equity method investees is included in the accompanying
     consolidated balance sheets in "Investment in associated companies".

     Investments in which the Company has a majority shareholding but which it
     does not control, due to the participating rights of minority shareholders,
     are accounted for using the equity method.

     The preparation of financial statements in accordance with generally
     accepted accounting principles requires that management make estimates and
     assumptions affecting the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period. Actual results could differ from those
     estimates.

     Cash and cash equivalents

     For the purposes of the consolidated statements of cash flows, all demand
     and time deposits and highly liquid, low risk investments with original
     maturities of three months or less are considered equivalent to cash.

     Restricted cash

     Restricted cash consists of bank deposits which may only be used to settle
     certain pre-arranged loan or lease payments or minimum deposits which must
     be maintained in accordance with contractual arrangements.

     Marketable securities

     Marketable equity securities held by the Company are considered to be
     available-for-sale securities and as such are carried at fair value with
     resulting unrealised gains and losses, net of deferred taxes if any,
     recorded as a separate component of other comprehensive income in
     stockholders' equity.

     Inventories

     Inventories comprise principally of fuel and lubricating oils and are
     stated at the lower of cost and market value. Cost is determined on a
     first-in, first-out basis.

     Investment in finance leases

     Certain vessels are chartered under agreements that are classified as
     direct financing leases. The minimum payments under the charter agreements
     are recorded as the gross investment in the finance lease. The difference
     between the gross investment in the finance lease and the cost of the
     vessel is recorded as unearned income. Throughout the term of the charter
     agreement, the Company records as revenue interest income and unearned
     income. This unearned income is amortised to income over the life of the
     charter agreement to produce a constant periodic rate of return on the net
     investment in the finance lease.

     Vessels and equipment

     The cost of the vessels less estimated residual value is depreciated on a
     straight-line basis over the vessels' estimated remaining economic useful
     lives. The estimated economic useful life of the Company's double hull
     vessels is 25 years and for single hull vessels is either 25 years or the
     vessel's anniversary date in 2015, whichever comes first. Other equipment
     is depreciated over its estimated remaining useful life, which approximates
     five years.

     Vessels and equipment under capital lease

     The Company charters in certain vessels under agreements that are
     classified as capital leases. Depreciation of vessels under capital lease
     is included within depreciation and amortisation expense in the Statement
     of Operations. Vessels under capital lease are depreciated on a
     straight-line basis over the vessels' remaining economic useful lives or on
     a straight-line basis over the term of the lease. The method applied is
     determined by the criteria by which the lease has been assessed to be a
     capital lease.

     Newbuildings and vessel purchase options

     The carrying value of the vessels under construction ("Newbuildings")
     represents the accumulated costs to the balance sheet date which the
     Company has had to pay by way of purchase instalments and other capital
     expenditures together with capitalised loan interest and associated finance
     costs. No charge for depreciation is made until the vessel is put into
     operation.

     Vessel purchase options are capitalised at the time option contracts are
     acquired or entered into. The Company reviews expected future cash flows,
     which would result from the exercise of each option contract on a contract
     by contract basis to determine whether the carrying value of the option is
     recoverable. If the expected future cash flows are less than the carrying
     value of the option plus further costs to delivery, a provision is made to
     write down the carrying value of the option to the recoverable amount. The
     carrying value of each option payment is written off as and when the
     Company adopts a formal plan not to exercise the option. Purchase price
     payments are capitalised and the total of the option payment, if any, and
     purchase price payment is transferred to cost of vessels, upon exercise of
     the option and delivery of the vessel to the Company.

     Impairment of long-lived assets

     The carrying value of long-lived assets that are held and used by the
     Company are reviewed whenever events or changes in circumstances indicate
     that the carrying amount of an asset may no longer be appropriate. The
     Company assesses recoverability of the carrying value of the asset by
     estimating the future net cash flows expected to result from the asset,
     including eventual disposition. If the future net cash flows are less than
     the carrying value of the asset, an impairment loss is recorded equal to
     the difference between the asset's carrying value and fair value. In
     addition, long-lived assets to be disposed of are reported at the lower of
     carrying amount and fair value less estimated costs to sell.

     Deferred charges

     Loan costs, including debt arrangement fees, are capitalised and amortised
     on a straight-line basis over the term of the relevant loan. The straight
     line basis of amortisation approximates the effective interest method in
     the Company's statement of operations. Amortisation of loan costs is
     included in interest expense. If a loan is repaid early, any unamortised
     portion of the related deferred charges is charged against income in the
     period in which the loan is repaid.

     Discount on loans

     Discount on issue of certain of the Company's long-term debt, is being
     amortised over the respective periods to maturity of the debt.

     Trade accounts receivable

     Trade and other receivables are presented net of allowances for doubtful
     balances. If amounts become uncollectible, they are charged to the income
     statement when that determination is made.

     Revenue and expense recognition

     Revenues and expenses are recognised on the accruals basis. Revenues are
     generated from freight billings, time charter and bareboat charter hires.
     The operating results of voyages in progress are estimated and recorded
     pro-rata on a per day basis in the consolidated statements of operations.
     Probable losses on voyages are provided for in full at the time such losses
     can be estimated. Time charter and bareboat charter revenues are recorded
     over the term of the charter as a service is provided. The Company uses a
     discharge-to-discharge basis in determining percentage of completion for
     all spot voyages and voyages servicing contracts of affreightment whereby
     it recognises revenue rateably from when product is discharged (unloaded)
     at the end of one voyage to when it is discharged after the next voyage.
     The Company does not begin recognising revenue until a charter has been
     agreed to by a customer and the Company, even if the vessel has discharged
     its cargo and is sailing to the anticipated load port on its next voyage.
     Amounts receivable or payable arising from profit sharing arrangements are
     accrued based on amounts earned as of the reporting date.

     Revenues and voyage expenses of the vessels operating in pool arrangements
     are pooled and the resulting net pool revenues, calculated on a time
     charter equivalent basis, are allocated to the pool participants according
     to an agreed formula. Formulae used to allocate net pool revenues vary
     among different pools but generally allocate revenues to pool participants
     on the basis of the number of days a vessel operates in the pool with
     weighting adjustments made to reflect vessels' differing capacities and
     performance capabilities. The same revenue and expense principles stated
     above are applied in determining the pool's net pool revenues. Certain
     pools are responsible for paying voyage expenses and distribute net pool
     revenues to the participants. Certain pools require the participants to pay
     and account for voyage expenses, and distribute gross pool revenues to the
     participants such that the participants' resulting net pool revenues are
     equal to net pool revenues calculated according to the agreed formula. The
     Company accounts for gross pool revenues allocated by these pools as "pool
     revenues" which are included in voyage revenues in its statements of
     operations.

     Drydocking

     Normal vessel repair and maintenance costs are expensed when incurred. The
     Company recognises the cost of a drydocking at the time the drydocking
     takes place, that is, it applies the "expense as incurred" method.

     Derivatives

     The Company may enter into interest rate swap transactions to hedge a
     portion of its exposure to floating interest rates. These transactions
     involve the conversion of floating rates into fixed rates over the life of
     the transactions without an exchange of underlying principal. The fair
     values of the interest rate swap contracts are recognised as assets or
     liabilities with changes in fair values recognised in the consolidated
     statements of operations.

     The Company may enter into forward freight contracts and options in order
     to hedge exposure to the spot market for certain trade routes and in some
     cases, for speculative purposes. These transactions involve entering into a
     contract to swap theoretical market index based voyage revenues for a fixed
     daily rate. The fair values of the forward freight contracts are recognised
     as assets or liabilities with changes in fair values recognised in the
     consolidated statements of operations.

     The Company entered into Yen denominated forward currency contracts for
     speculative purposes. The fair values of forward currency contracts are
     recognised as assets or liabilities with changes in fair value recognised
     in the consolidated statements of operations. These contracts were all
     terminated during 2006 and there were no Yen denominated forward currency
     contracts outstanding at December 31, 2006.

     Financial Instruments

     In determining the fair value of its financial instruments, the Company
     uses a variety of methods and assumptions that are based on market
     conditions and risks existing at each balance sheet date. For the majority
     of financial instruments, including most derivatives and long-term debt,
     standard market conventions and techniques such as options pricing models
     are used to determine fair value. All methods of assessing fair value
     result in a general approximation of value, and such value may never
     actually be realised.

     Foreign currencies

     The Company's functional currency is the U.S. dollar as the majority of
     revenues are received in U.S. dollars and a majority of the Company's
     expenditures are made in U.S. dollars. The Company's reporting currency is
     also U.S. dollars. Most of the Company's subsidiaries have U.S. dollars as
     their functional currency. For subsidiaries that maintain their accounts in
     currencies other than U.S. dollars, the Company uses the current method of
     translation whereby the statements of operations are translated using the
     average exchange rate and the assets and liabilities are translated using
     the year end exchange rate. Foreign currency translation gains or losses
     are recorded as a separate component of other comprehensive income in
     stockholders' equity.

     Transactions in foreign currencies during the year are translated into U.S.
     dollars at the rates of exchange in effect at the date of the transaction.
     Foreign currency monetary assets and liabilities are translated using rates
     of exchange at the balance sheet date. Foreign currency non-monetary assets
     and liabilities are translated using historical rates of exchange. Foreign
     currency transaction gains or losses are included in the consolidated
     statements of operations.

     Stock-based compensation

     On January 1, 2006, the Company adopted SFAS 123(R) Share-Based Payment
     ("FAS 123R"). Under FAS 123R, the Company is required to expense the fair
     value of stock options issued to employees over the period the options
     vest.

     Earnings per share

     Basic earnings per share ("EPS") is computed based on the income available
     to common stockholders and the weighted average number of shares
     outstanding for basic EPS. Diluted EPS includes the effect of the assumed
     conversion of potentially dilutive instruments.

     Issuance of shares by a subsidiary/ associate

     The Company recognises a profit when its subsidiary or associate issues its
     stock to third parties at a price per share in excess of its carrying
     amount if such profit is realisable. If such profit is not realisable, it
     is recorded as an increase to contributed surplus.

3.   RESTATEMENT OF PRIOR YEARS

     As discussed in note 27, the Company acquired the Independent Tankers
     Corporation ("ITC Group") from a related party in 2004. The Company has
     restated its Consolidated Financial Statements as of December 31, 2005 and
     for the years ended December 31, 2005 and 2004 as a result of the
     correction of an error in its initial application of FIN 46R. The Company
     had incorrectly concluded that it was the primary beneficiary of the
     variable interest entities CalPetro Tankers (Bahamas I) Limited, CalPetro
     Tankers (Bahamas II) Limited, CalPetro Tankers (Bahamas III) Limited and
     CalPetro Tankers (IOM) Limited for the years ended December 31, 2004 and
     December 31, 2005 and as a result, these entities were fully consolidated.
     During 2006, the Company revisited this analysis and determined that it was
     not the primary beneficiary of these entities and therefore has accounted
     for these investments under the equity method.

     As discussed in Note 17, in April 2006, CalPetro Tankers (Bahamas III)
     Limited cancelled its bareboat contract with Chevron Transport Corporation
     ("Chevron"). Under FIN 46(R) this is considered a triggering event and the
     Company began to consolidate the variable interest entity into its accounts
     from that date.

     The tables below illustrate the effect of the restatement on the Company's
     prior year Consolidated Statements of Operations and Consolidated
     Statements of Cashflows for the years ended December 31, 2005 and 2004, and
     the Consolidated Balance Sheet as of December 31, 2005. As the
     consolidation and equity accounting models result in the same net income,
     there has been no change in opening equity or earnings per share data as a
     result of this restatement.

     
     
     ----------------------------------------------------------------------------------------------
     (in thousands of $)                                           2005    Adjustment          2005
                                                         (as previously                  (restated)
                                                              reported)
     ----------------------------------------------------------------------------------------------
                                                                                 
     Finance lease interest income                                9,584        (9,584)           --
     Other income                                                 3,610           267         3,877
     Administrative expenses                                     21,181          (120)       21,061
     Interest income                                             41,040          (173)       40,867
     Interest expense                                           215,995        (9,937)      206,058
     Equity earnings of unconsolidated subsidiaries and
     associated companies                                         3,691          (312)        3,379
     Other financial items, net                                   2,010          (255)        1,755
     Net income                                                 606,839            --       606,839
     Cash and cash equivalents                                  100,533        (7,751)       92,782
     Other receivables                                           20,053           (29)       20,024
     Prepaid expenses and accrued income                          9,328        (2,285)        7,043
     Net investment in finance lease, current portion            11,861       (11,861)           --
     Investment in unconsolidated subsidiaries and
     associated companies                                        10,169         5,614        15,783
     Net investment in finance lease, long term portion          96,057       (96,057)           --
     Deferred charges                                            18,664          (653)       18,011
     Total assets                                             4,567,839      (113,022)    4,454,817
     Short-term debt and current portion of long-term debt      240,191       (12,056)      228,135
     Accrued expenses                                            87,336        (2,489)       84,847
     Long-term debt                                           2,199,538       (98,477)    2,101,061
     Total liabilities                                        3,381,923      (113,022)    3,268,901
     Net cash provided by operating activities                  979,774           276       980,050
     Net cash used in investing activities                      344,737        13,487       358,224
     Net cash used in financing activities                      640,206       (14,283)      625,923
     Cash and cash equivalents at beginning of year             105,702        (8,823)       96,879
     Cash and cash equivalents at end of year                   100,533        (7,751)       92,782
     


     
     
     ---------------------------------------------------------------------------------------
     (in thousands of $)                                       2004   Adjustment        2004
                                                     (as previously               (restated)
                                                          reported)
     ---------------------------------------------------------------------------------------
                                                                          
     Finance lease interest income                           10,794     (10,794)          --
     Other income                                             3,630         147        3,777
     Administrative expenses                                 25,739        (143)      25,596
     Interest income                                         31,595        (192)      31,403
     Interest expense                                       205,458     (11,080)     194,378
     Equity earnings of unconsolidated subsidiaries and
     associated companies                                    10,553        (128)      10,425
     Other financial items, net                               2,237        (256)       1,981
     Net income                                           1,023,382          --    1,023,382
     Net cash provided by operating activities              905,987        (147)     905,840
     Net cash used in investing activities                  178,490      11,904      190,394
     Net cash used in financing activities                1,102,964       8,391    1,111,355
     Cash and cash equivalents at beginning of year         124,189     (12,189)     112,000
     Cash and cash equivalents at end of year               105,702      (8,823)      96,879

     

4.   RECENTLY ADOPTED ACCOUNTING STANDARDS

     Effective January 1, 2006, the Company adopted FAS No. 123R Share-Based
     Payment ("FAS 123R") using the modified prospective transition method.
     Under the modified prospective method the Company recognises compensation
     cost beginning with the effective date based on the requirements of FAS
     123R for all share-based payments granted after the effective date. Prior
     period results have not been restated.

     In 2006, the Company recorded compensation expense of $2.2 million in
     relation to share-based payments, which was calculated in accordance with
     FAS 123R. The compensation expense related to share-based payments granted
     under the Ship Finance International Limited share option scheme. In 2005
     the Company did not record any compensation expense as no options were
     granted or outstanding during 2005.

     Under the modified prospective method, the Company continued to account for
     2004 compensation expense in accordance with Accounting Principles Board
     Opinion No. 25 Accounting for Stock Issued to Employees ("APB 25"), where
     the compensation cost for stock options is recognised as an expense over
     the service period based on the excess, if any, of the quoted market price
     of the stock at the grant date of the award or other measurement date, over
     the exercise price to be paid to acquire the stock.

     In 2004, the Company recorded compensation expense of $4.2 million in
     connection with employee share options. Had the compensation costs for 2004
     been determined consistent with the fair value method required in FAS 123R,
     the Company's net income and earnings per share would have been increased
     to the following pro forma amounts in 2004:

     ---------------------------------------------------------------------------
     (in thousands, except per share data)                                 2004
     ---------------------------------------------------------------------------
     Net income (loss)
        As reported                                                   1,023,382
        Add: Compensation expenses as reported                            4,231
        Compensation expense determined under fair value
        based method for all awards                                     (2,756)
     ---------------------------------------------------------------------------
        Adjusted net income, fair value based method
        for all awards                                                1,024,857
     ---------------------------------------------------------------------------

     Basic earnings per share
        As reported                                                      $13.79
        FAS 123R adjusted                                                $13.81

     Diluted earnings per share
        As reported                                                      $13.79
        FAS 123R adjusted                                                $13.81

5.   RECENTLY ISSUED ACCOUNTING STANDARDS

     In March 2006, the Financial Accounting Standards Board ("FASB") issued
     Statement of Financial Accounting Standards No. 156 Accounting for
     Servicing of Financial Assets - an amendment to FAS 140 ("FAS 156"). FAS
     156 requires all separately recognised servicing rights be initially
     measured at fair value if practicable. The statement also permits an entity
     to choose between two measurement methods for each class of separately
     recognised servicing assets and liabilities. FAS 156 is effective for
     fiscal years beginning after September 15, 2006. The adoption of FAS 156 on
     January 1, 2007 did not have an impact on the Company's financial
     statements.

     In July 2006, the FASB issued Interpretation No. 48 Accounting for
     Uncertainty in Income Taxes - an interpretation of FAS 109 ("FIN 48"). FIN
     48 clarifies the application of FAS 109 by defining the criterion that an
     individual tax position must meet for any part of the benefit of that
     position to be recognised in an entity's financial statements and also
     provides guidance on measurement, de-recognition, classification, interest
     and penalties and disclosure. FIN 48 is effective for fiscal years
     beginning after December 15, 2006. The adoption of FIN 48 on January 1,
     2007 did not have an impact on the Company's financial statements.

     In September 2006, the FASB issued Statement of Financial Accounting
     Standards No. 157 Fair Value Measurements ("FAS 157"). FAS 157 defines fair
     value, establishes a framework for measuring fair value in generally
     accepted accounting principles and expands disclosures about fair value
     measurements. FAS 157 applies under most other accounting pronouncements
     that require or permit fair value measurements and does not require any new
     fair value measurements. FAS 157 is effective for fiscal years beginning
     after November 15, 2007. The Company has not yet determined the effect of
     adoption of FAS 157 on its financial statements.

     In September 2006, the FASB issued Statement of Financial Accounting
     Standards No. 158 Employers' Accounting for Defined Benefit Pension and
     Other Post Retirement Plans - an amendment of FAS 87, 88, 106, and 132R
     ("FAS 158"). FAS 158 requires that the funded status of defined benefit
     post retirement plans be recognised in the statement of financial position
     and changes in the funded status be reflected in comprehensive income. FAS
     158 also requires the benefit obligations to be measured as of the same
     date of the financial statements and requires additional disclosures
     related to the effects of delayed recognition of gains or losses, prior
     service costs or credits and transition assets or obligation on net
     periodic benefit cost. FAS 158 is effective for fiscal years ending after
     December 15, 2006 for employers with publicly traded securities. The
     adoption of FAS 158 on January 1, 2007 did not have an impact on the
     Company's financial statements.

     In September 2006, the SEC issued SAB No. 108 Considering the Effects of
     Prior Year Misstatements When Quantifying Misstatements in Current Year
     Financial Statements ("SAB 108"), which provides interpretative guidance on
     how registrants should quantify financial statement misstatements. Under
     SAB 108 registrants are required to consider both a "rollover" method,
     which focuses primarily on the income statement impact of misstatements,
     and the "iron curtain" method, which focuses primarily on the balance sheet
     impact of misstatements. The effects of prior year uncorrected errors
     include the potential accumulation of improper amounts that may result in
     material misstatement on the balance sheet or the reversal of prior period
     errors in the current period that result in a material misstatement of the
     current period income statement amounts. Adjustments to current or prior
     period financial statements would be required in the event that after
     application of various approaches for assessing materiality of a
     misstatement in a current period financial statements and consideration of
     all relevant quantitative and qualitative factors, a misstatement is
     determined to be material. The Company adopted the provisions of SAB 108 as
     of December 31, 2006. The adoption of SAB 108 did not have an effect on the
     Company's results of operations or financial position.

6.   SEGMENT INFORMATION

     The Company has two reportable segments: the tanker segment and the "all
     other" segment. The tanker segment derives its revenues from the
     transportation of crude oil with its fleet of VLCC and Suezmax vessels.
     Revenues and expenses not belonging to the tanker segment comprise
     primarily corporate head office administration expenses, operation of the
     company's OBO and containership fleets, and FPSO and Heavylift conversion
     projects and have been reported under the All Other segment.

     Segment results are evaluated based on income from vessel operations before
     general and administrative expenses, which is net of total operating
     revenues and voyage expenses. The accounting policies used in the
     reportable segments are the same as those followed in the preparation of
     the Company's consolidated financial statements.

     In the prior year the Company presented OBO and drybulk operations as
     separate segments. As of 2005, all drybulk operations are now discontinued
     and as such, segmental disclosure is no longer appropriate. The OBO segment
     is not a reportable segment as it does not meet the quantitative thresholds
     used to determine reportable segments - voluntary disclosure of this
     segment was given in prior years but has not been disclosed in the current
     year. Segment information for the years ended December 31, 2005 and 2004
     has been restated to reflect current year presentation.

     The Company's management does not evaluate performance by geographical
     region as this information is not meaningful.

     Information about the Company's reportable segments and a reconciliation to
     the consolidated totals as of and for each of the years ended December 31,
     2006, 2005 and 2004 is as follows:

     
     
     ----------------------------------------------------------------------------------
     (in thousands of $)                             Tankers    All Other         Total
     ----------------------------------------------------------------------------------
     2006
                                                                     
     Total operating revenues                      1,459,606      124,257     1,583,863
     Voyage expenses                                 392,328        4,248       396,576
     Ship operating expenses                         165,363       34,014       199,377
     Depreciation and amortisation                   178,542       25,307       203,849
     Interest income                                  25,533       22,200        47,733
     Interest expense                                186,744       19,400       206,144
     Share in results from associated companies          592          526         1,118
     Net income (loss)                               640,930     (124,930)      516,000
     Vessels and equipment, net                    2,071,685      374,593     2,446,278
     Vessels under capital lease                     626,374           --       626,374
     Investment in associated companies                5,881       11,944        17,825
     Total assets                                  3,365,617    1,224,320     4,589,937
     Expenditure for vessels                         213,867      355,952       569,819

     
     -------------------------------------------------------------------------------
     (in thousands of $)                            Tankers   All Other        Total
     -------------------------------------------------------------------------------
     2005
                                                                  
     Total operating revenues                     1,386,509     118,007    1,504,516
     Voyage expenses                                332,395       4,826      337,221
     Ship operating expenses                        129,865      18,837      148,702
     Depreciation and amortisation                  175,491      22,868      198,359
     Interest income                                 24,490      16,377       40,867
     Interest expense                               192,348      13,710      206,058
     Share in results from associated companies       2,888         491        3,379
     Net income (loss)                              654,773     (47,934)     606,839
     Discontinued operations                             --       8,785        8,785
     Vessels and equipment, net                   2,243,221     341,626    2,584,847
     Vessels under capital lease                    672,608          --      672,608
     Investment in associated companies               7,796       7,987       15,783
     Total assets                                 3,529,681     925,136    4,454,817
     Expenditure for vessels                        558,163          --      558,163


     ------------------------------------------------------------------------------
     (in thousands of $)                            Tankers   All Other       Total
     ------------------------------------------------------------------------------
     2004
                                                                 
     Total operating revenues                     1,754,878      88,045   1,842,923
     Voyage expenses                                358,863       2,746     361,609
     Ship operating expenses                        114,984      15,401     130,385
     Depreciation and amortisation                  159,478      21,019     180,497
     Interest income                                 21,950       9,453      31,403
     Interest expense                               179,223      15,155     194,378
     Share in results from associated companies       8,935       1,490      10,425
     Net income                                     942,329      81,053   1,023,382
     Discontinued operations                             --     117,619     117,619
     Vessels and equipment, net                   1,975,447     278,914   2,254,361
     Vessels under capital lease                    718,842          --     718,842
     Investment in associated companies              21,214       7,667      28,881
     Total assets                                 3,448,027     763,134   4,211,161
     Expenditure for vessels                        126,947          --     126,947
     

     All other is comprised of items as follows:

     
     
     ---------------------------------------------------------------------------------------
     (in thousands of $)                                    2006          2005          2004
     ---------------------------------------------------------------------------------------
                                                                            
     Other operating revenues
     Vessel operating revenue                            109,077       113,713        84,114
     Finance lease interest income                         9,410            --            --
     Other operating revenues                              5,770         4,294         3,931
     ---------------------------------------------------------------------------------------
     Total other operating revenues                      124,257       118,007        88,045
     ---------------------------------------------------------------------------------------
     Other net income
     Net income from vessels                              39,645        62,008       149,453
     Minority interest                                  (158,682)     (169,459)      (57,602)
     Net income (loss) attributable to corporate
     holding and management companies                     (5,893)       59,517       (10,798)
     ---------------------------------------------------------------------------------------
     Total other net income                             (124,930)      (47,934)       81,053
     ---------------------------------------------------------------------------------------
     Other assets
     Vessels, equipment and newbuildings                 470,470       339,007       277,651
     Cash and cash equivalents attributable to
     holding company                                     445,245       378,674       333,507
     Marketable securities held by corporate
     holding company                                       1,469       144,156        78,327
     Investment in finance leases attributable to
     other segments                                      198,749            --            --
     Other assets attributable to corporate holding
     and management companies                            108,387        63,299        73,649
     ---------------------------------------------------------------------------------------
     Total  other assets                               1,224,320       925,136       763,134
     ---------------------------------------------------------------------------------------
     

     During the year ended December 31, 2006, the Company reported total income
     from one customer which represented approximately 13% of consolidated
     operating revenues (2005: one customer, 2004: two customers). These
     revenues are reported under the tanker segment.

7.   TAXATION

     Bermuda

     Under current Bermuda law, the Company is not required to pay taxes in
     Bermuda on either income or capital gains. The Company has received written
     assurance from the Minister of Finance in Bermuda that, in the event of any
     such taxes being imposed, the Company will be exempted from taxation until
     the year 2016.

     United States

     The Company does not accrue U.S. income taxes as, in the opinion of U.S.
     counsel, the Company is not engaged in a U.S. trade or business and is
     exempted from a gross basis tax under Section 883 of the U.S. Internal
     Revenue Code.

     A reconciliation between the income tax expense resulting from applying the
     U.S. Federal statutory income tax rate and the reported income tax expense
     has not been presented herein as it would not provide additional useful
     information to users of the financial statements as the Company's net
     income is subject to neither Bermuda nor U.S. tax.

     Other Jurisdictions

     Certain of the Company's subsidiaries in Singapore, Norway and the United
     Kingdom are subject to taxation in their respective jurisdictions. The tax
     paid by subsidiaries of the Company that are subject to taxation is not
     material.

8.   EARNINGS PER SHARE

     The computation of basic EPS is based on the weighted average number of
     shares outstanding during the year. The computation of diluted EPS assumes
     the foregoing and the exercise of stock options using the treasury stock
     method.

     The components of the numerator for the calculation of basic EPS and
     diluted EPS for net income from continuing operations and net income are as
     follows:

     ---------------------------------------------------------------------------
     (in thousands of $)                          2006         2005         2004
     ---------------------------------------------------------------------------
     Net income from continuing operations     516,000      598,054      905,763
     Discontinued operations                        --        8,785      117,619
     ---------------------------------------------------------------------------
     Net income available to stockholders      516,000      606,839    1,023,382
     ===========================================================================

     The components of the denominator for the calculation of basic EPS and
     diluted EPS are as follows:

     ---------------------------------------------------------------------------
     (in thousands)                                       2006     2005     2004
     ---------------------------------------------------------------------------
     Basic and diluted earnings per share:
     Weighted average number of ordinary shares
     outstanding                                        74,825   74,825   74,192
     ===========================================================================

     All of the 100,000 stock options issued by Frontline during 2006 were
     anti-dilutive. In the years ended December 31, 2005 and 2004 no options
     were anti-dilutive.

9.   LEASES

     As of December 31, 2006 the Company leased in thirteen vessels on long-term
     time charters and bareboat charters from third parties. One of those leases
     is classified as an operating lease and twelve as capital leases. The
     Company's long-term leases of vessels generally contain optional renewal
     periods and purchase and put options.

     Rental expense

     Charter hire payments to third parties for certain contracted-in vessels
     are accounted for as operating leases. The Company is also committed to
     make rental payments under operating leases for office premises. The future
     minimum rental payments under the Company's non-cancellable operating
     leases are as follows:

     ---------------------------------------------------------------------------
     (in thousands of $)
     Year ending December 31,
     ---------------------------------------------------------------------------
     2007                                                                  7,950
     2008                                                                  7,863
     2009                                                                  7,820
     2010                                                                  6,105
     2011                                                                  6,106
     2012 and later                                                        7,430
     ---------------------------------------------------------------------------
     Total minimum lease payments                                         43,274
     ===========================================================================

     Total rental expense for operating leases was $24.9 million, $11.7 million
     and $39.3 million for the years ended December 31, 2006, 2005 and 2004,
     respectively.

     The following table discloses information about the terms of the Company's
     leases of vessels contracted in which are accounted for as operating
     leases:

     
     
     --------------------------------------------------------------------------------------
     Vessel Type               Expiry of     Extended     Extended   Company's     Lessor's
                               Mandatory        Lease        Lease    Purchase   Put Option
                                   Lease   Periods at   Periods at      Option     Exercise
                                  Period     Lessor's    Company's     Periods         Date
                                               Option       Option
     --------------------------------------------------------------------------------------
                                                                        
     Front Warrior (Suezmax)        2007    2008-2011    2010-2011  2007- 2011         2011
     

     A liability for put options on vessels leased under leases classified as
     operating leases is recorded at such time that market conditions make it
     likely that a put option will be exercised on the exercise date. A
     liability is recognised based on the amount, if any, by which the put
     option price exceeds the fair market value of the related vessel. At
     December 31, 2006 no such liability had arisen.

     Nine of the thirteen vessels leased by the Company are leased from special
     purpose lessor entities which were established and are owned by independent
     third parties who provide financing through debt and equity participation.
     Each entity owns one vessel, which is leased to the Company, and has no
     other activities. Prior to the adoption of FIN 46(R), these special purpose
     entities were not consolidated by Frontline. One of these leases is
     accounted for as operating leases and eight of these leases are accounted
     for as capital leases. The Company has determined that due to the existence
     of certain put and call options over the leased vessels, these entities are
     variable interest entities. The determination of the primary beneficiary of
     a variable interest entity requires knowledge of the participations in the
     equity of that entity by individual and related equity holders. Our lease
     agreements with the leasing entities do not give us any right to obtain
     this information and the Company has been unable to obtain this information
     by other means. Accordingly the Company is unable to determine the primary
     beneficiary of these leasing entities. At December 31, 2006, the original
     cost to the lessor of the assets under such arrangements was $618.5
     million. At December 31, 2006 and 2005, the Company's residual value
     guarantees associated with these leases, which represent the maximum
     exposure to loss, are $84.5 million.

     The following table discloses information about the Company's activity with
     these non-consolidated lessor entities in the three year period ended
     December 31, 2006:

     
     
     -----------------------------------------------------------------------------------------
                                                                Year ended December 31,
                                                                  2006     2005           2004
     -----------------------------------------------------------------------------------------
                                                                               
     Repayments of principal obligations under capital leases   25,142   22,205         19,686
     Interest expense for capital leases                        34,867   36,850         38,436
     Charterhire expense for operating leases                    5,402    5,211         31,839
     

     As of December 31, 2006 the Company leased out thirty four of its vessels
     to third parties on time and bareboat charters with initial periods ranging
     between three months and five and a half years. All of those leases are
     classified as operating leases.

     Rental income

     The minimum future revenues to be received on time and bareboat charters
     which are accounted for as operating leases and other contractually
     committed income as of December 31, 2006 are as follows:

     ---------------------------------------------------------------------------
     (in thousands of $)                                               Total

     ---------------------------------------------------------------------------
     2007                                                                301,335
     2008                                                                214,174
     2009                                                                128,151
     2010                                                                 42,156
     2011                                                                 4,879
     2012 and later                                                           --
     ---------------------------------------------------------------------------
     Total minimum lease revenues                                        690,695
     ===========================================================================

     The cost and accumulated depreciation of the vessels leased to third
     parties as of December 31, 2006 were approximately $2,167.4 million and
     $849.3 million, respectively, and as of December 31, 2005 were
     approximately $2,012.8 million and $729.0 million, respectively.

10.  MARKETABLE SECURITIES

     Marketable securities held by the Company are equity securities considered
     to be available-for-sale securities.

     ---------------------------------------------------------------------------
     (in thousands of $)                                    2006           2005
     ---------------------------------------------------------------------------
     Cost                                                  1,198        145,606
     Net unrealised gain (loss)                              271         (1,450)
     ---------------------------------------------------------------------------
     Fair value                                            1,469        144,156
     ===========================================================================

     The net unrealised gain (loss) on marketable securities, including a
     component of foreign currency translation, included in comprehensive income
     decreased by $1.7 million for the year ended December 31, 2006 (2005 -
     decrease in net unrealised gain of $11.9 million).

     
     
     ---------------------------------------------------------------------------------
     (in thousands of $)                                      2006      2005      2004
     ---------------------------------------------------------------------------------
                                                                       
     Proceeds from sale of available-for-sale securities   154,409   152,814    57,450
     Realised gain (including amounts classified in
     discontinued operations)                                9,782    28,035     7,151
     =================================================================================
     

     The cost of sale of available-for-sale marketable securities is calculated
     on an average cost basis.

11.  TRADE ACCOUNTS RECEIVABLE

     Trade accounts receivable are presented net of allowances for doubtful
     accounts relating to demurrage claims amounting to $3.0 million and $7.5
     million as of December 31, 2006 and 2005 respectively.

12.  OTHER RECEIVABLES

     ---------------------------------------------------------------------------
     (in thousands of $)                                       2006         2005
     ---------------------------------------------------------------------------
     Agent receivables                                        7,039        4,998
     Due from related parties                                 1,683        2,549
     Claims receivables                                       8,458        4,657
     Receivable from sale of assets                          13,372           --
     Other receivables                                        8,466        7,820
     ---------------------------------------------------------------------------
                                                             39,018       20,024
     ===========================================================================

     Other receivables are presented net of allowances for doubtful accounts
     amounting to $nil as of December 31, 2006 and 2005.

13.  OTHER CURRENT ASSETS

     ---------------------------------------------------------------------------
     (in thousands of $)                                       2006         2005
     ---------------------------------------------------------------------------
     Security deposits on newbuildings                       11,222           --
     Other                                                      349          568
     ---------------------------------------------------------------------------
     Other current assets                                    11,571          568
     ===========================================================================

     Security deposits on newbuildings relate to deposits paid plus related
     interest accrued by Ship Finance in relation to containership newbuildings.

14.  NEWBUILDINGS

     ---------------------------------------------------------------------------
     (in thousands of $)                                  2006              2005
     ---------------------------------------------------------------------------
     Newbuildings                                      166,851            15,927
     ===========================================================================

     The carrying value of newbuildings represents the accumulated costs to the
     balance sheet date, which the Company has paid by way of purchase
     instalments, and other capital expenditures together with capitalised loan
     interest. Interest capitalised in the cost of newbuildings amounted to $3.6
     million in 2006 (2005 and 2004: $nil). The two newbuilding contracts held
     in 2005 were completed and delivered in 2006. There were six newbuilding
     contracts representing costs of $71.0 million and two conversion projects
     representing costs of $95.9 million as at December 31, 2006. The conversion
     projects are for the conversion of an Aframax tanker into a Floating
     Production Storage Offshore ("FPSO") vessel and the conversion of a single
     hull Suezmax tanker into a heavy lift vessel.

     The cost for the conversion projects includes $55.3 million which has been
     transferred from vessels and equipment as the vessels are undergoing
     conversion and are considered to be newbuildings until conversion is
     complete.

15.  VESSELS AND EQUIPMENT, NET

     ---------------------------------------------------------------------------
     (in thousands of $)                                   2006            2005
     ---------------------------------------------------------------------------
     Cost                                             3,567,607       3,620,847
     Accumulated depreciation                        (1,121,329)     (1,036,000)
     ---------------------------------------------------------------------------
     Net book value at end of year                    2,446,278       2,584,847
     ===========================================================================

     Included in the above amounts as of December 31, 2006 and 2005 is equipment
     with a net book value of $3.5 million and $2.6 million, respectively.
     Depreciation expense for vessels and equipment was $157.6 million, $198.8
     million and $137.0 million for the years ended December 31, 2006, 2005 and
     2004, respectively, including amounts recorded in discontinued operations.

     In November 2005, the bareboat charterer of the Navix Astral declared their
     intent to exercise a purchase option with the vessel being delivered to her
     new owner in January 2006. An impairment loss of $1.9 million was included
     in the Statement of Operations for the year ended December 31, 2005 in
     respect of this vessel. The net sale proceeds were denominated in Yen and
     due to fluctuations in the value of the Yen, the actual realised loss on
     the sale of the Navix Astral was $0.8 million.

16.  VESSELS UNDER CAPITAL LEASE, NET

     ---------------------------------------------------------------------------
     (in thousands of $)                                    2006           2005
     ---------------------------------------------------------------------------
     Cost                                                835,746        835,746
     Accumulated depreciation                           (209,372)      (163,138)
     ---------------------------------------------------------------------------
     Net book value at end of year                       626,374        672,608
     ===========================================================================

     Depreciation expense for vessels under capital lease was $46.2 million,
     $46.2 million and $46.3 million for the years ended December 31, 2006, 2005
     and 2004, respectively.

     The outstanding obligations under capital leases are payable as follows:

     ---------------------------------------------------------------------------
     (in thousands of $)
     Year ending December 31,
     ---------------------------------------------------------------------------
     2007                                                               127,253
     2008                                                                82,976
     2009                                                               157,569
     2010                                                               227,345
     2011                                                               140,391
     2012 and later                                                     288,683
     ---------------------------------------------------------------------------
     Minimum lease payments                                           1,024,217
     Less: imputed interest                                            (272,287)
     ---------------------------------------------------------------------------
     Present value of obligations under capital leases                  751,930
     ===========================================================================

     As of December 31, 2006, the Company held twelve vessels under capital
     leases (2005 - twelve). These leases are for terms that range from eight to
     twenty four years. The Company has purchase options over eight of these
     vessels at certain specified dates and the lessor has options to put these
     vessels to the Company at the end of the lease term. Gains arising from the
     sale and leaseback transactions have been deferred and are being amortised
     over the lease terms.

     The following table discloses information about the terms of the Company's
     leases of vessels contracted in which are accounted for as capital leases:

     
     
     -----------------------------------------------------------------------------------------------
     Vessel Type                   Expiry of     Extended     Extended      Company's   Lessor's Put
                                   Mandatory        Lease        Lease       Purchase         Option
                                Lease Period   Periods at   Periods at         Option       Exercise
                                                 Lessor's    Company's        Periods           Date
                                                   Option       Option
     -----------------------------------------------------------------------------------------------
                                                                                 
     Front Crown (VLCC)                 2009    2010-2014    2013-2014   2009 to 2014           2014
     Front Chief (VLCC)                 2009    2010-2014    2013-2014   2009 to 2014           2014
     Front Commander (VLCC)             2009    2010-2014    2013-2014   2009 to 2014           2014
     Front Eagle (VLCC)                 2010    2011-2015    2014-2015   2010 to 2015           2015
     Front Melody (Suezmax)             2011    2012-2015    2014-2015   2011 to 2015           2015
     Front Symphony (Suezmax)           2011    2012-2015    2014-2015   2011 to 2015           2015
     Front Tina  (VLCC)                 2011    2012-2015    2014-2015   2011 to 2015           2015
     Front Commodore (VLCC)             2011    2012-2015    2014-2015   2011 to 2015           2015
     British Pioneer (VLCC)             2024         none     Note (2)       Note (1)           none
     British Progress (VLCC)            2025         none     Note (2)       Note (1)           none
     British Purpose (VLCC)             2025         none     Note (2)       Note (1)           none
     British Pride (VLCC)               2025         none     Note (2)       Note (1)           none
     

     Put options on vessels leased under leases classified as capital leases are
     recorded as part of the lease's minimum lease payments. Lease liabilities
     are amortised so that the remaining balance at the date the put option
     becomes exercisable is equal to the put option amount. An additional
     liability is recognised based on the amount, if any, by which the put
     option price exceeds the fair market value of the related vessel. As of
     December 31, 2006 no such additional liability had arisen.

     Note (1.) The Company does not have options to purchase the vessel but it
               has first refusal if the vessel's owner offers the vessel for
               sale.

     Note (2.) The Company has the right to terminate the lease at any time but
               only with permission of the charterer.

17.  EQUITY METHOD INVESTMENTS

     As of December 31, 2006, the Company has the following participation in
     investments that are recorded using the equity method:

     ---------------------------------------------------------------------------
                                                                  2006      2005
     ---------------------------------------------------------------------------
     International Maritime Exchange ASA                        24.49%    24.49%
     Front Tobago Shipping Corporation                          40.00%    40.00%
     Golden Fountain Corporation                                50.00%    50.00%
     Front Shadow Inc                                          100.00%       --
     CalPetro Tankers (Bahamas I) Limited                      100.00%   100.00%
     CalPetro Tankers (Bahamas II) Limited                     100.00%   100.00%
     CalPetro Tankers (Bahamas III) Limited                        --    100.00%
     CalPetro Tankers (IOM) Limited                            100.00%   100.00%

     Summarised balance sheet information of the Company's equity method
     investees is as follows:

     ---------------------------------------------------------------------------
     (in thousands of $)                                    2006            2005
     ---------------------------------------------------------------------------
     Current assets                                       71,320          45,772
     Non current assets                                  139,983         105,559
     Current liabilities                                  27,267          16,922
     Non current liabilities                              99,247          98,477

     Summarised statement of operations information of the Company's equity
     method investees is as follows:

     ---------------------------------------------------------------------------
     (in thousands of $)                            2006        2005        2004
     ---------------------------------------------------------------------------
     Net operating revenues                       28,876      27,377      52,486
     Net operating income                         10,461      27,545      44,427
     Net income                                    3,691      20,312      31,244

     Dividends totalling $1.3 million were received from equity method investees
     in the year ended December 31, 2006.

     As of December 31, 2003 the Company determined that it was the primary
     beneficiary of Golden Fountain Corporation under FIN 46(R) and therefore
     consolidated the entity at that date. Golden Fountain sold its vessel on
     December 17, 2004 which resulted in an accounting gain of $19.7 million.
     The sale of the vessel and subsequent extinguishment of debt was considered
     a triggering event and the Company assessed that it was no longer the
     primary beneficiary and resumed accounting for its investment in Golden
     Fountain Corporation using the equity method in 2005.

     In 2004, the Company's investment in International Maritime Exchange ASA
     ("IMAREX") increased to 26.56%. Accordingly, the Company changed its
     accounting treatment of the investment from a cost basis to the equity
     method. The Company's shareholding was subsequently reduced to 24.49% as a
     result of an issuance of shares by IMAREX which the Company did not
     participate in. The Company is recording its share of income from IMAREX
     one quarter in arrears. The closing share price for IMAREX as of December
     31, 2006 on the Oslo Stock Exchange was NOK 88.00 resulting in an aggregate
     value of the Company's investment based on the quoted market price of
     approximately $24.2 million.

     In December 2004, the vessel and all related balances in relation to the
     operation of Front Tobago were transferred from Front Tobago Inc to a new
     company Front Tobago Shipping Corporation. The Company's 40% investment in
     Front Tobago Inc was replaced with a 40% investment in Front Tobago
     Shipping Corporation.

     In December 2005, Front Tobago Shipping Corporation sold the vessel Front
     Tobago to the Company for approximately $35.6 million and subsequently
     realised a gain on sale of $9.6 million. The Company's share of income from
     associates in 2005 excluded its share of this gain on sale as it was
     applied against the cost of the Front Tobago.

     Front Shadow is a wholly owned subsidiary of Ship Finance and was
     incorporated during 2006 for the purpose of holding a single capital asset
     and leasing that asset to a related party. Front Shadow owns a Panamax
     vessel. Ship Finance has provided a guarantee in the amount of $2.1 million
     for the debt of Front Shadow. The net assets of Front Shadow are $0.3
     million million, therefore, Ship Finance's maximum exposure to loss for
     this entity is $2.4 million. The entity is being equity accounted for as it
     has been determined that it is a VIE and that Ship Finance is not the
     primary beneficiary under FIN 46(R).

     As discussed in note 3, the Company has determined that under FIN 46(R), it
     is not the primary beneficiary of the VIEs CalPetro Tankers (Bahamas I)
     Limited, CalPetro Tankers (Bahamas II) Limited and CalPetro Tankers (IOM)
     Limited and as such, these entities are being equity accounted for.

     As discussed in note 3, the Company has determined that under FIN 46(R), it
     is not the primary beneficiary of the VIEs CalPetro Tankers (Bahamas I)
     Limited, CalPetro Tankers (Bahamas II) Limited and CalPetro Tankers (IOM)
     Limited and as such, these entities are being equity accounted for. These
     companies were incorporated in 1994 for the purpose of acquiring three oil
     tankers from Chevron Transport Corporation ("Chevron") and concurrently
     charter these vessels back to Chevron on long term charter agreements. The
     companies were acquired by Independent Tankers Corporation which in turn is
     a wholly owned subsidiary of the Company. In April 2006, Chevron cancelled
     its bareboat contract with CalPetro Tankers (Bahamas III) Limited. Under
     FIN 46(R) this is considered a trigger event and the Company began
     consolidating the VIE into its accounts from that date. The Company does
     not guarantee the debt of these entities and the net assets of the three
     entities that are not consolidated total $4.1 million.

18.  INVESTMENT IN FINANCE LEASES

     Ship Finance's jack-up drilling rig is chartered on a long term fixed rate
     bareboat charter to Seadrill III Ltd. The terms of the charter provide the
     charterer with various call options throughout the charter period, which
     expires in 2021.

     The following schedule lists the components of the net investment in
     finance lease:

     ---------------------------------------------------------------------------
     (in thousands of $)                                            2006   2005
     ---------------------------------------------------------------------------
     Total minimum lease payments to be received                 297,277     --
     Estimated residual values of leased property
     (unguaranteed)                                               60,000     --
     Less: Unearned income                                      (158,528)    --
     ---------------------------------------------------------------------------
     Net investment in finance leases                            198,749     --
     ==========================================================================

     Lease payments under the charter agreement for each of the five succeeding
     years are as follows: $41.1 million in 2007, $41.2 million in 2008, $29.9
     million in 2009, $18.8 million in 2010 and $18.8 million in 2011.

19.  DEFERRED CHARGES

     Deferred charges represent debt arrangement fees that are capitalised. If a
     loan is repaid early, any unamortised portion of the related deferred
     charges is charged against income in the period in which the loan is
     repaid. The deferred charges are comprised of the following amounts:

     ---------------------------------------------------------------------------
     (in thousands of $)                                      2006         2005
     ---------------------------------------------------------------------------
     Debt arrangement fees                                  24,102       32,224
     Accumulated amortisation                               (7,165)     (14,213)
     ---------------------------------------------------------------------------
                                                            16,937       18,011
     ===========================================================================

20.  ACCRUED EXPENSES

     ---------------------------------------------------------------------------
     (in thousands of $)                                     2006           2005
     ---------------------------------------------------------------------------
     Voyage expenses                                       22,064         25,404
     Ship operating expenses                               22,748         14,528
     Administrative expenses                                6,618          3,409
     Interest expense                                      37,627         38,733
     Taxes                                                    317            200
     Other                                                    942          2,573
     ---------------------------------------------------------------------------
                                                           90,316         84,847
     ===========================================================================

21.  OTHER CURRENT LIABILITIES

     ---------------------------------------------------------------------------
     (in thousands of $)                                     2006           2005
     ---------------------------------------------------------------------------
     Forward contract payable                                  --         70,851
     Accrued charterhire                                       --            674
     Related party payables                                   941          2,587
     Other                                                  9,037          9,744
     ---------------------------------------------------------------------------
                                                            9,978         83,856
     ===========================================================================

22.  DEBT

     ---------------------------------------------------------------------------
     (in thousands of $)                                     2006          2005
     ---------------------------------------------------------------------------
     US Dollar denominated floating rate debt
     (LIBOR + 0.50% to 1.25%) due through 2011          1,602,920     1,450,574
     8.5% Senior Notes due 2013                           449,080       457,080
     Serial Notes (6.5% to 6.68%) due through 2010         30,800        53,100
     Term Loans (8.52%) due 2015                           12,744            --
     Term Notes (7.84% to 8.04%) due through 2021         366,200       366,200
     ---------------------------------------------------------------------------
                                                        2,461,744     2,326,954
     Credit facilities                                      1,550         2,242
     ---------------------------------------------------------------------------
     Total debt                                         2,463,294     2,329,196
     Less: short-term and current portion of
           long-term debt                                (281,409)     (228,135)
     ---------------------------------------------------------------------------
                                                        2,181,885     2,101,061
     ===========================================================================

     The outstanding debt as of December 31, 2006 is repayable as follows:

     ---------------------------------------------------------------------------
     (in thousands of $)
     Year ending December 31,
     ---------------------------------------------------------------------------
     2007                                                                279,859
     2008                                                                168,512
     2009                                                                156,566
     2010                                                                142,945
     2011                                                                620,911
     2012 and later                                                    1,092,951
     ---------------------------------------------------------------------------
                                                                       2,461,744
     ===========================================================================

     The weighted average interest rate for the floating rate debt denominated
     in US dollars was 5.39 percent as of December 31, 2006 (2005 - 4.31
     percent). The weighted average interest rate for the floating rate debt
     denominated in Yen was 1.34 percent as of December 31, 2005. There is no
     Yen denominated debt outstanding as of December 31, 2006. These rates take
     into consideration related interest rate swaps.

     US DOLLAR DENOMINATED FLOATING RATE DEBT

     $1,058 million senior secured credit facility

     In February 2005, Ship Finance refinanced its existing $1,058.0 million
     senior secured credit facility with a new $1,131.4 million
     secured credit facility discussed in more detail below.

     $1,131 million secured term loan facility

     In February 2005, Ship Finance entered into a $1,131.4 million term loan
     facility with a syndicate of banks. The proceeds from the facility were
     used to repay the $1,058.0 million syndicated senior secured credit
     facility and for general corporate purposes. The facility bears interest at
     LIBOR plus a margin of 0.7% per annum. The facility is repayable over a
     term of six years.

     In September 2006, Ship Finance signed an agreement whereby the existing
     debt facility, which had been partially repaid, was increased by $219.7
     million to the original amount of $1,131.4 million. The increase is
     available on a revolving basis.

     $350 million combined senior and junior secured term loan facility

     In June 2005, the Company entered into a combined $350 million senior and
     junior secured term loan facility with a syndicate of banks. The proceeds
     from the facility were used to fund the acquisition of five VLCCs. The
     facility bears interest at LIBOR plus a margin of 0.65% per annum for the
     senior loan and LIBOR plus a margin of 1.00% per annum for the junior loan.
     The facility is repayable over a term of seven years.

     $65 million term loan facility

     In August 2004, the Company entered into a $65 million secured term loan
     facility with a syndicate of banks. The facility bore interest at LIBOR
     plus a margin of 1.00%. The facility was repaid in March 2006.

     $20 million term loan facility

     In October 2004, the Company entered into a $20 million secured term loan
     facility. The facility bore interest at LIBOR plus a margin of 0.75%. The
     loan was repaid in full in February 2007.

     $20 million term loan facility

     In January 2005, the Company entered into a $20 million secured term loan
     facility. The facility bears interest at LIBOR plus a margin of 0.80%. The
     facility must be repaid by January 31, 2010.

     The facility contains a minimum value covenant and covenants that require
     the Company to maintain a minimum level of free cash and positive working
     capital.

     $69 million loan facility

     In December 2005, the Company entered into a $69.0 million loan facility
     with DnB NOR Bank ASA. The facility bore interest at LIBOR plus 120 basis
     points secured by certain marketable securities and cash deposits. The
     facility was repaid in full in August 2006.

     $210 million secured term loan facility

     In April 2006, five vessel owning subsidiaries of Ship Finance entered into
     a $210 million secured term loan facility with a syndicate of banks to
     partly fund the acquisition of five new container vessels. The facility
     bears interest at LIBOR plus a margin of 1.4% per annum and the facility is
     repayable over a term of 12 years.

     $80 million term loan facility

     In June 2006, the Company entered into a $80 million secured term loan
     facility. The facility bears interest at LIBOR plus a margin of 0.50%. The
     facility was due June 26, 2007 and has now been refinanced on the same
     terms and conditions with maturity in June 2008.

     $165 million secured term loan facility

     In June 2006, Ship Finance's subsidiary Rig Finance Limited ("Rig Finance")
     entered into a $165 million secured term loan facility with a syndicate of
     banks. The proceeds of the facility were used to partly fund the
     acquisition of the jack up drilling rig West Ceres. The facility currently
     bears interest at LIBOR plus a margin of 1.15% per annum and is repayable
     over a term of six years.

     $24 million term loan facility

     In September 2006, the Company entered into a $24 million secured term loan
     facility. The facility bore interest at LIBOR plus a margin of 0.90%. The
     facility was repaid in April 2007.

     Agreements related to Ship Finance's long-term debt provide limitations on
     the amount of total borrowings and secured debt, and acceleration of
     payment under certain circumstances, including failure to satisfy certain
     financial covenants.

     8.5% SENIOR NOTES DUE 2013

     On December 15, 2003, Ship Finance issued $580 million of senior notes.
     Interest on the notes is payable in cash semi-annually in arrears on June
     15 and December 15. The notes are not redeemable prior to December 15, 2008
     except in certain circumstances. After that date, Ship Finance may redeem
     notes at redemption prices which reduce from 104.25 per cent in 2008 to 100
     per cent in 2011 and thereafter.

     In February 2006, Ship Finance entered into a total return bond swap line
     with a bank for a term of 12 months. The bond swap line has been extended
     for a period up to August 2009. As of December 31, 2006, Ship Finance held
     bonds with a principal amount of $52 million under this agreement. In
     February 2007, Ship Finance entered into an additional bond swap line with
     a second bank for a term of 12 months.

     In 2006 and 2005, Ship Finance bought back and cancelled notes with a
     principal amount of $8.0 million and $73.2 million, respectively. As of
     December 31, 2006, the outstanding amount of Notes was $449.1 million
     (December 31, 2005 - $457.1 million).

     TERM AND SERIAL NOTES

     ITC is the holding company for three separate structures involved in
     financing and leasing transactions. One of these structures has Serial
     Notes maturing between 2007 and 2010 and two of these structures have Term
     Notes maturing between 2015 and 2021. The Notes are collateralised by first
     preferred mortgages on the vessels owned by the ITC subsidiaries. As of
     December 31, 2006 the effective interest rate for the Term and Serial Notes
     was 7.90% (2005 - 7.90%).

     The 8.52% First Preferred Mortgage Notes due 2015, the 7.84% First
     Preferred Mortgage Term Notes due 2018 and the 8.04% First Preferred
     Mortgage Term Notes due 2019 are each subject to redemption through the
     operation of mandatory sinking funds according to the schedule of sinking
     fund redemption payments set forth below. The sinking fund redemption price
     is 100% of the principal amount of Term Notes being redeemed, together with
     accrued and unpaid interest to the date fixed for redemption.

     ---------------------------------------------------------------------------
     (in thousands of $)
     Year ending December 31,
     ---------------------------------------------------------------------------
     2007                                                                  1,340
     2008                                                                  5,765
     2009                                                                  7,600
     2010                                                                 11,115
     2011                                                                 16,635
     2012 and later                                                      323,745
     ---------------------------------------------------------------------------
                                                                         366,200
     ===========================================================================

     Term Loans

     Principal is repayable on the 8.52% Term Loans due 2015 in accordance with
     a remaining nine-year sinking fund schedule. Of the four entities reporting
     these term loans, only one entity, CalPetro Tankers (Bahamas III) Limited
     ("Bahamas III") is consolidated as the remaining three entities are
     accounted for under the equity method under FIN 46(R) as it has been
     determined that the Company is not the primary beneficiary of these
     entities. As discussed above, Bahamas III's intial charter with Chevron was
     terminated on April 1, 2006 and as such, the revised sinking fund
     redemption amounts and final principal payment is as follows:

     ---------------------------------------------------------------------------
     Scheduled
     payment                                                              Amount
     date                                                                  $'000
     ---------------------------------------------------------------------------
     2007                                                                    570
     2008                                                                    620
     2009                                                                    670
     2010                                                                    730
     2011                                                                    790
     2012, and later                                                       9,364
     ---------------------------------------------------------------------------
                                                                          12,744
     ===========================================================================

     Assets pledged
     ---------------------------------------------------------------------------
     (in thousands of $)                                  2006              2005
     ---------------------------------------------------------------------------
     Ship mortgages                                  2,494,526         2,393,984
     ===========================================================================

23.  SHARE CAPITAL

     Authorised share capital:

     ---------------------------------------------------------------------------
     (in thousands of $, except share data)                       2006      2005
     ---------------------------------------------------------------------------
     125,000,000 ordinary shares of $2.50 each                 312,500   312,500

     Issued and fully paid share capital:

     ---------------------------------------------------------------------------
     (in thousands of $, except share data)                       2006      2005
     ---------------------------------------------------------------------------
     74,825,169 ordinary shares of $2.50 each
     (2005: 74,825,169)                                        187,063   187,063

     The Company's ordinary shares are listed on the New York Stock Exchange,
     the Oslo Stock Exchange and the London Stock Exchange.

24.  ACCUMULATED OTHER COMPREHENSIVE INCOME

     The activity in Accumulated Other Comprehensive Income may be summarised as
     follows:

     
     
     --------------------------------------------------------------------------------------
                                      Unrealised    Gains (losses)  Translation      Total
                                      investment     on derivative  adjustments
                                  gains (losses)       instruments    and other
     --------------------------------------------------------------------------------------
                                                                       
     Balance at December 31, 2003            (14)           (2,471)      (4,468)    (6,953)
     Change in 2004                       10,441             2,471         (545)    12,367
     --------------------------------------------------------------------------------------
     Balance at December 31, 2004         10,427                --       (5,013)     5,414
     Change in 2005                      (11,877)               --         (221)   (12,098)
     --------------------------------------------------------------------------------------
     Balance at December 31, 2005         (1,450)               --       (5,234)    (6,684)
     Change in 2006                        1,721                --          538      2,259
     --------------------------------------------------------------------------------------
     Balance at December 31, 2006            271                --       (4,696)    (4,425)
     ======================================================================================
     

25.  SHARE OPTION PLANS

     Frontline Ltd Share Option Scheme

     In November 2006, the board of directors approved the Frontline Ltd Share
     Option Scheme (the "Frontline Scheme"). The Frontline Scheme permits the
     board of directors, at its discretion, to grant options to employees of the
     Company or its subsidiaries. The Frontline Scheme will expire in November
     2016. The subscription price for all options granted under the scheme will
     be reduced by the amount of all dividends declared by the company per share
     in the period from the date of grant until the date the option is
     exercised, provided the subscription price never shall be reduced below the
     par value of the share. Options granted under the scheme will vest at a
     date determined by the board at the date of the grant. The options granted
     under the plan to date vest over a period of one to three years. There is
     no maximum number of shares authorised for awards of equity share options
     and authorised, unissued shares of Frontline Ltd will be used to satisfy
     exercised options.

     The fair value of each option award is estimated on the date of the grant
     using a Black Scholes option valuation model with the following
     assumptions: risk-free interest rate of 4.74%, volatility of 44%, a
     dividend yield of 0% and a weighted average expected option term of 3.5
     years. The risk-free interest rate was estimated using the interest rate on
     3 year US treasury zero coupon issues. The volatility was estimated using
     historical share price data. The dividend yield has been estimated at 0% as
     the exercise price is reduced by all dividends declared by the company from
     the date of grant to the exercise date. It is assumed that all options
     granted under the plan will vest.

     The following summarises share option transactions related to the Frontline
     Scheme:

     ---------------------------------------------------------------------------
     (in thousands except per share data)               Shares    Exercise Price
     ---------------------------------------------------------------------------
     Options outstanding at December 31, 2005               --                --
        Granted                                            100        NOK 238.50
        Exercised                                           --                --
        Cancelled                                           --                --
        Vested                                              --                --
     ---------------------------------------------------------------------------
     Options outstanding at December 31, 2006              100        NOK 238.50
     ===========================================================================

     The weighted average grant-date fair value of options granted during 2006
     is $15.23.

     As of December 31, 2006, there was $1.5 million in unrecognised
     compensation cost related to non-vested options granted under the Frontline
     Scheme. The compensation expense will be recognized over a period of three
     years in accordance with vesting conditions.

     Ship Finance International Limited Share Option Scheme

     In November 2006, the board of directors of Ship Finance approved the Ship
     Finance International Limited Share Option Scheme (the "Ship Finance
     Scheme"). The Ship Finance Scheme permits the board of directors, at its
     discretion, to grant options to employees of Ship Finance or its
     subsidiaries. The Ship Finance Scheme will expire in November 2016. The
     subscription price for all options granted under the scheme will be reduced
     by the amount of all dividends declared by the company per share in the
     period from the date of grant until the date the option is exercised,
     provided the subscription price never shall be reduced below the par value
     of the share. Options granted under the scheme will vest at a date
     determined by the board at the date of the grant. The options granted under
     the plan to date vest over a period of one to three years. There is no
     maximum number of shares authorised for awards of equity share options and
     authorised, unissued shares of Ship Finance will be used to satisfy
     exercised options.

     The fair value of each option award is estimated on the date of the grant
     using a Black Scholes option valuation model with the following
     assumptions: risk-free interest rate of 4.74%, volatility of 31%, a
     dividend yield of 0% and a weighted average expected option term of 3.5
     years. The risk-free interest rate was estimated using the interest rate on
     3 year US treasury zero coupon issues. The volatility was estimated using
     historical share price data. The dividend yield has been estimated at 0% as
     the exercise price is reduced by all dividends declared by the company from
     the date of grant to the exercise date. It is assumed that all options
     granted under the plan will vest.

     The following summarises share option transactions related to the Ship
     Finance Scheme:

     ---------------------------------------------------------------------------
     (in thousands except per share data)                Shares   Exercise Price
     ---------------------------------------------------------------------------
     Options outstanding at December 31, 2005                --               --
        Granted                                             150           $22.85
        Exercised                                            --               --
        Cancelled                                            --               --
        Vested                                               --               --
     ---------------------------------------------------------------------------
     Options outstanding at December 31, 2006               150           $22.85
     ===========================================================================

     The weighted average grant-date fair value of options granted during 2006
     is $6.67.

     As of December 31, 2006, there was $0.95 million in unrecognised
     compensation cost related to non-vested options granted under the Ship
     Finance Scheme. The compensation expense will be recognized over a period
     of three years in accordance with vesting conditions.

     Share-based bonus

     The employment contract for one employee of Ship Finance contains a
     share-based bonus provision. Under the terms of the contract, the share
     based bonus is payable annually based on the share-price movement of Ship
     Finance, plus dividend declarations, multiplied by a notional share holding
     of 200,000 shares. The share-based bonus fair value of $1.7 million as of
     December 31, 2006 was recorded as a liability.

     Bermuda and United Kingdom Share Option Plans

     The Company had in place a Bermuda Share Option Plan (the "Bermuda Plan")
     and a United Kingdom Share Option Plan (the "U.K. Plan"), both of which
     expired in 2004. Both share option plans have been accounted for as
     variable plans. Under the terms of the plans, the exercise price set on the
     grant of share options could not be less than the average of the fair
     market value of the underlying shares for the three dealing days before the
     date of grant. The number of shares granted under the plans could not in
     any ten year period exceed 7% of the issued share capital of the Company.
     No consideration was payable for the grant of an option. In 2004, the
     Bermuda Plan was amended to provide that all outstanding options that had
     not vested became immediately exercisable.

     The following summarises the share options transactions relating to the
     Bermuda Plan:

     ---------------------------------------------------------------------------
     (in thousands except per share data)                      Shares   Weighted
                                                                         average
                                                                        exercise
                                                                           price
     ---------------------------------------------------------------------------
     Options outstanding at December 31, 2003                     297      $8.49
        Granted                                                    --         --
        Exercised                                                (297)     $5.91
        Cancelled                                                  --         --
     ---------------------------------------------------------------------------
     Options outstanding at December 31, 2004                      --         --
     ===========================================================================

     As of December 31, 2006, 2005 and 2004 there were no options remaining
     outstanding under the U.K. Plan or the Bermuda Plan.

     There were no options granted in the years ended December 31, 2005 and
     2004.

26.  FINANCIAL INSTRUMENTS

     Interest rate risk management

     Interest rate swaps

     In certain situations, the Company may enter into financial instruments to
     reduce the risk associated with fluctuations in interest rates. Ship
     Finance has a portfolio of swaps that swap floating rate interest to fixed
     rate, which from a financial perspective hedge interest rate exposure. The
     Company does not hold or issue instruments for speculative or trading
     purposes. The counterparties to such contracts are Credit Agricole
     Indosuez, Deutsche Schiffsbank, DnB NOR ASA, Skandinaviska Enskilda Banken
     AB, Fortis Bank, Scotia Bank, Nordea Bank Norge ASA, Citibank, HSH
     Nordbank, HBOS, and NIBC. Credit risk exists to the extent that the
     counterparties are unable to perform under the contracts.

     The Company manages its debt portfolio with interest rate swap agreements
     in U.S. dollars to achieve an overall desired position of fixed and
     floating interest rates. Ship Finance has entered into the following
     interest rate swap transactions involving the payment of fixed rates in
     exchange for LIBOR:

     ---------------------------------------------------------------------------
     Principal (in thousands of $)     Inception Date   Maturity Date      Fixed
                                                                        Interest
                                                                            Rate
     ---------------------------------------------------------------------------
     $50,000                            February 2004   February 2009      3.49%
     $100,000                           February 2004   February 2009      3.49%
     $50,000                            February 2004   February 2009      3.35%
     $50,000                            February 2004   February 2009      3.49%
     $50,000                            February 2004   February 2009      3.35%
     $50,000                            February 2004   February 2009      3.35%
     $50,000                            February 2004   February 2009      3.37%
     $25,000                            February 2004   February 2009      3.32%
     $25,000                            February 2004   February 2009      3.32%
     $25,000                            February 2004   February 2009      3.33%
     $25,000                            February 2004   February 2009      3.32%
     $41,588                               April 2006   November 2018      5.64%
     $41,588                               April 2006      March 2019      5.64%
     $41,588                               April 2006      April 2019      5.64%
     $41,588                               April 2006        May 2019      5.64%
     $41,588                               April 2006        May 2019      5.64%
     $14,849                            February 2004     August 2008      6.24%
     $15,919                            February 2004     August 2008      6.24%

     As of December 31, 2006 and 2005, the notional principal amounts subject to
     such swap agreements were $738.7 million and $618.3 million, respectively.

     Foreign currency risk

     The majority of the Company's transactions, assets and liabilities are
     denominated in U.S. dollars, the functional currency of the Company.
     Certain of the Company's subsidiaries report in Sterling, Swedish kronor or
     Norwegian kroner and risks of two kinds arise as a result: a transaction
     risk, that is, the risk that currency fluctuations will have a negative
     effect on the value of the Company's cash flows; and a translation risk,
     the impact of adverse currency fluctuations in the translation of foreign
     operations and foreign assets and liabilities into U.S. dollars for the
     Company's consolidated financial statements. The Company has not entered
     into derivative contracts for either transaction or translation risk.

     From time to time the Company may enter into forward currency contracts for
     speculative purposes. As of December 31, 2005 the Company had five forward
     currency contracts outstanding with a notional principal of (Y)8.8 billion
     expiring January and February 2006 with exchange rates ranging from 117.42
     to 119.35. As of December 31, 2006 there were no such contracts
     outstanding.

     Accordingly, such risk may have an adverse effect on the Company's
     financial condition and results of operations.

     Forward freight contracts

     The Company may enter into forward freight contracts, futures and option
     contracts in order to manage its exposure to the risk of movements in the
     spot market for certain trade routes for speculative purposes. Market risk
     exists to the extent that spot market fluctuations have a negative effect
     on the Company's cash flows and consolidated statements of operations. As
     of December 31, 2006 and 2005, the notional principal amounts subject to
     such forward freight contracts, futures and option contracts were $nil and
     $12.0 million, respectively.

     Fair Values

     The carrying value and estimated fair value of the Company's financial
     instruments as of December 31, 2006 and 2005 are as follows:

     
     
     -----------------------------------------------------------------------------------------------------
                                                                2006                        2005
                                                                     Carrying                    Carrying
     (in thousands of $)                             Fair Value         Value    Fair Value         Value
     -----------------------------------------------------------------------------------------------------
                                                                                    
     Non-Derivatives:
     Cash and cash equivalents                          197,181       197,181        92,782        92,782
     Restricted cash                                    677,533       677,533       636,790       636,790
     Marketable securities                                1,469         1,469       144,156       144,156
     Floating rate debt and credit facilities         1,604,470     1,604,470     1,452,816     1,452,816
     8.5% Senior notes                                  448,799       449,080       425,999       457,080
     Serial Notes (6.5% to 6.68%) due through 2010       31,307        30,800        54,639        53,100
     8.52% Term Loan, due 2015                           13,588        12,744            --            --
     Term Notes (7.84% to 8.04%) due through 2019       383,492       366,200       393,705       366,200

     Derivatives:
     Interest rate swap transactions receivable          17,807        17,807        19,563        19,563
     Interest rate swap transactions payable             (8,743)       (8,743)       (1,241)       (1,241)
     Forward freight contracts                               --            --         3,021         3,021
     Forward currency contracts                              --            --          (169)         (169)
     Bond swaps                                           2,931         2,931            --            --
     

     The carrying value of cash and cash equivalents, which are highly liquid,
     is a reasonable estimate of fair value.

     The estimated fair value of marketable securities is based on the quoted
     market price of these or similar instruments when available.

     The estimated fair value for floating rate long-term debt is considered to
     be equal to the carrying value since it bears variable interest rates,
     which are reset on a quarterly basis. The estimated fair value for fixed
     rate long-term senior notes is based on the quoted market price. The
     estimated fair value for the remaining fixed rate long-term loans and notes
     is based on the quoted market price of these or similar instruments when
     available.

     The fair value of interest rate swaps is estimated by taking into account
     the cost of entering into interest rate swaps to offset the Company's
     outstanding swaps.

     The fair value of forward freight contracts is the estimated amount that
     the Company would receive or pay to terminate the agreements at the
     reporting date.

     In February 2006, Ship Finance entered into a total return bond swap line
     with Fortis Bank for a term of twelve months. This swap facilitated the
     repurchase of Ship Finance's 8.5% Senior Notes in the amount of $50.0
     million. The fair value of the bond swap is estimated by taking into
     account the cost of entering into the bond swap to offset Ship Finance's
     outstanding bond swap.

     Concentrations of risk

     There is a concentration of credit risk with respect to cash and cash
     equivalents to the extent that substantially all of the amounts are carried
     with Skandinaviska Enskilda Banken, The Bank of New York and Nordea Bank
     Norge. There is a concentration of credit risk with respect to restricted
     cash to the extent that substantially all of the amounts are carried with
     Skandinaviske Enskilda Banken, Nordea Pacific Life, The Bank of New York,
     HSBC Midland, CIBC World Markets and JP Morgan Chase. However, the Company
     believes this risk is remote as these banks are high credit quality
     financial institutions.

     The majority of the vessels' gross earnings are receivable in U.S. dollars.
     During the year ended December 31, 2006, one customer accounted for more
     than 10% of our consolidated operating revenues (2005: one customer, 2004:
     two customers).

27.  RELATED PARTY TRANSACTIONS

     In July 2003, the Company purchased a call option to acquire all of the
     shares of ITC from Hemen Holding Ltd ("Hemen") for a total consideration of
     $4.0 million plus 4% interest per year. Hemen is indirectly controlled by
     John Fredriksen who is the Company's Chairman and Chief Executive Officer.
     On May 27, 2004 the Company exercised this option. The total purchase price
     paid to Hemen for ITC was $14.1 million which comprised a payment of $10.0
     million for the purchase option and a payment of $4.1 million to exercise
     the option. This purchase price represents the initial arms length price
     paid by the Company in May 1998 plus an interest component calculated from
     that date. The Company initially recorded the $10.0 million paid in 2003 on
     the Company's balance sheet as an asset at cost. In December 2003 the
     Company implemented the provisions of FIN 46(R) and consequently was
     required to consolidate ITC, with the exception of certain ITC subsidiaries
     which have been accounted for using the equity method as discussed in note
     3. The consolidation of ITC resulted in the Company recording a $25.2
     million expense as the cumulative effect of a change in accounting
     principle in accordance with the guidance of FIN 46(R). The Company
     accounted for the exercise payment in 2004 as an addition to the total
     purchase price for ITC and specifically as an addition to the recorded cost
     of the underlying long-term assets, being the vessels owned by ITC. The
     results of ITC have been reflected in the consolidated results of the
     Company.

     In June 2004, the Company drew down $49.5 million under a short-term loan
     facility from a related party and used the proceeds to repay Yen
     denominated debt of (Y)5.5 billion (equivalent to $49.4 million). This
     short-term loan facility was repaid in August 2004.

     In June 2004, the Company participated in a bidding process to acquire from
     the Indonesian state oil enterprise's shipping division, PT Pertamina
     (Persero) two VLCCs that were under construction by Hyundai Heavy
     Industries Co. Ltd. The Company was successful in this process and
     nominated two single purpose companies, Windstar Marine Inc. ("Windstar")
     and Speed Shipping Corp. ("Speed"), to acquire the vessels for total
     consideration of $184 million. Windstar and Speed are controlled by Hemen.
     Hemen took delivery of these vessels in July and September, 2004. In June
     2005, Ship Finance purchased the vessels from Hemen for a total
     consideration of $184.6 million. This transaction has been recorded at fair
     value of $270 million and an equity contribution from Hemen of $85.4
     million has been recorded within contributed surplus.

     In November 2004, the Company formed Golden Ocean as a wholly owned
     subsidiary for the purpose of transferring, by way of contribution, certain
     dry bulk shipping interests held by the Company. These assets were
     transferred to Golden Ocean on December 1, 2004 and a summary of the assets
     and liabilities contributed is as follows:

     ---------------------------------------------------------------------------
     (in thousands of $)
     ---------------------------------------------------------------------------
     Vessels and equipment, net                                           48,918
     Long-term debt                                                       48,950
     Cash and other assets and liabilities, net                           22,418

     The assets and liabilities contributed by Frontline are recorded at their
     historical net book values as recorded in Frontline's consolidated
     financial statements. Golden Ocean was spun-off on December 15, 2004 to
     Frontline's shareholders.

     In 2005 Golden Ocean exercised its options to acquire from the Company the
     shares in two single purpose companies each owing a newbuilding contract
     for a Panamax vessel. These options were at a price equal to the Company's
     costs, including instalments paid to date, plus the Company's funding
     expenses. These options were exercised during 2005 at a total price of
     $16.8 million.

     In May 2005, Ship Finance entered into an agreement with parties affiliated
     with Hemen, to acquire two vessel owning companies, each owning one 2005
     built containership for a total consideration of $98.6 million. The Sea
     Alfa was delivered in May 2005, and the Sea Beta was delivered in September
     2005.

     In June 2006, Ship Finance purchased the jack up rig Seadrill 3 from
     SeaDrill Invest I Ltd ("SeaDrill Invest"), an affiliated company, for $210
     million. The rig was immediately chartered back to SeaDrill Invest for a
     period of 15 years. The charter party is fully guaranteed by Seadrill
     Limited, the ultimate parent company of SeaDrill Invest. SeaDrill Invest
     has been granted fixed price purchase options after 3, 5, 7, 10, 12 and 15
     years. This transaction was enacted through the Company's 100% owned
     subsidiary Rig Finance.

     In June 2006, Ship Finance entered into an agreement to acquire a Panamax
     vessel, Rain Shadow, for $28.4 million from Golden Ocean. The vessel was
     chartered back to Golden Ocean for a period of 10 years. As part of the
     agreement, Golden Ocean has provided an interest free and non-amortising
     seller credit of $2.6 million. Golden Ocean has been granted fixed purchase
     options after 3, 5, 7 and 10 years. At the end of the charter, the Company
     also has an option to sell the vessel back to Golden Ocean at an agreed
     fixed price of $10.4 million. This transaction was enacted through the
     Company's 100% owned subsidiary Front Shadow Inc. As a result of this
     transaction, under FIN 46(R), Front Shadow Inc is now equity accounted by
     the Company.

     A summary of amounts earned and balances with related parties is as
     follows:

     ---------------------------------------------------------------------------
     Net amounts earned from related parties             Year ended December 31,
     (in thousands of $)                                  2006     2005     2004
     ---------------------------------------------------------------------------
     Seatankers Ltd                                        432      265       49
     Golar LNG Limited                                     180      255      495
     Northern Offshore Ltd                                  --       --       25
     Norse Energy Group ASA (formerly Northern Oil ASA)     --        6       92
     Golden Ocean Group Limited                            597      362        8
     Individual related to John Fredriksen                  12       --       --
     Aktiv Kapital First Investment Ltd                     --       10       --
     Bryggegata AS                                      (1,021)    (692)      --
     Seadrill Limited                                      545      (24)      --
     CalPetro Tankers (Bahamas I) Limited                   40       38       37
     CalPetro Tankers (Bahamas II) Limited                  40       38       37
     CalPetro Tankers (Bahamas III) Limited                 --       38       37
     CalPetro Tankers (IOM) Limited                         40       38       37

     Net amounts earned from related parties comprise office rental income and
     management, technical advisory, corporate and administrative service income
     and expenses.

     ---------------------------------------------------------------------------
     Receivables (payables) with related parties              As of December 31,
     (in thousands of $)                                      2006         2005
     ---------------------------------------------------------------------------
     Seatankers  Ltd                                            275       1,397
     Golar LNG Limited                                         (553)        644
     Northern Offshore Ltd                                       49          48
     Golden Ocean Group Limited                                 942      (2,182)
     Seadrill Limited                                            30          55
     CalPetro Tankers (Bahamas I) Limited                        10          10
     CalPetro Tankers (Bahamas II) Limited                       10          10
     CalPetro Tankers (Bahamas III) Limited                      --          10
     CalPetro Tankers (IOM) Limited                              10          10

     Receivables and payables with related parties comprise unpaid management,
     technical advisory, administrative service and rental charges. In addition,
     certain payables and receivables arise when the company pays an invoice on
     behalf of a related party and vice versa.

     Golar, Northern Offshore, Norse Energy (formerly Northern Oil), Aktiv
     Kapital, Seadrill, Bryggegata AS, Golden Ocean and Seatankers are each
     subject to the significant influence or indirect control of John
     Fredriksen. CalPetro Tankers (Bahamas I), CalPetro Tankers (Bahamas II),
     CalPetro Tankers (Bahamas III) and CalPetro Tankers (IOM) were all equity
     accounted until March 30, 2006 when we began consolidation of CalPetro
     Tankers (Bahamas III).

28.  MINORITY INTEREST AND DIVIDEND DISTRIBUTION TO SHAREHOLDERS

     The Company accounts for pro-rata distributions to owners in a spin-off at
     the book value of shares distributed and accounts for non pro-rata
     distributions to owners in a spin-off at the fair value of shares
     distributed.

     A summary of pro-rata partial spin offs of Ship Finance by the Company are
     as follows:

     ---------------------------------------------------------------------------
     Distribution       % Frontline       Distribution Ratio   Value of dividend
     Date                   holding           (Ship Finance/          $ millions
                        Distributed   Frontline shares held)
     ---------------------------------------------------------------------------
     June 16, 2004            25.0%                      1/4            $142.5
     September 24, 2004        9.9%                     1/10             $59.8
     December 15, 2004        13.3%                     2/15             $85.7
     February 18, 2005        25.0%                      1/4            $154.9
     March 24, 2005           10.0%                     1/10             $57.0
     March 20, 2006           5.14%                     1/20             $27.8

     The value of the non-cash dividend is valued based on the book value of
     Ship Finance at the date of distribution.

     On December 13, 2004 the Company completed the non pro-rata spin off of its
     subsidiary Golden Ocean and distributed 76.0% of Golden Ocean's common
     shares to the Company's shareholders with each qualifying shareholder
     receiving three shares in Golden Ocean for every one share held in the
     Company. Non qualifying shareholders received a cash equivalent of $1.80
     per Frontline share held. The value of the non-cash dividend has been
     established as $102.3 million, representing 76.0% of the fair value of
     Golden Ocean on the date of distribution. Fair value was established by
     using the average price of Golden Ocean's shares over the first five
     trading days after the shares were listed on the Oslo Stock Exchange.

     As of December 31, 2006 the Company owned 11.1% of the shares in Ship
     Finance and consolidated Ship Finance in accordance with the provisions of
     FIN 46(R).

     In November 2006, 30% of shares in Puffin Ltd, a subsidiary of the company,
     were issued to a third party for $7.8 million as part of the proposed spin
     off of the Company's FPSO (Floating Production, Storage and Offloading)
     operations.

29.  COMMITMENTS AND CONTINGENCIES

     The Company insures the legal liability risks for its shipping activities
     with Assuranceforeningen SKULD, Assuranceforeningen Gard Gjensidig and
     Britannia Steam Ship Insurance Association Limited, all mutual protection
     and indemnity associations. As a member of these mutual associations, the
     Company is subject to calls payable to the associations based on the
     Company's claims record in addition to the claims records of all other
     members of the associations. A contingent liability exists to the extent
     that the claims records of the members of the associations in the aggregate
     show significant deterioration, which result in additional calls on the
     members.

     As of December 31, 2006, the Company had nine vessels that were sold by the
     Company at various times during the period from November 1998 to December
     31, 2003, and leased back on charters that range for periods of eight to
     twelve and a half years with options on the lessors' side to extend the
     charters for periods that range up to five years. Eight of these charters
     are accounted for as capital leases and one is accounted for as an
     operating lease. The Company has purchase options at certain specified
     dates and the lessor has options to put the vessels on the Company at the
     end of the lease terms for all of these nine vessels. The total amount that
     the Company would be required to pay under these put options with respect
     to the operating lease is $9.0 million.

     As of December 31, 2006 Chevron Transport Corporation charters three
     vessels on long-term bareboat charters recorded as investments in finance
     leases. Chevron holds options to purchase each vessel for $1 on April 1,
     2015 provided no earlier optional termination of the bareboat charter has
     occurred. The Company has not received notice of Chevron's intent to
     terminate any of these charters.

     As of December 31, 2006, the Company had eight contracts for the
     construction of four VLCC newbuildings scheduled for delivery in 2009 and
     2010 and four Suezmax newbuildings scheduled for delivery in 2008. As of
     December 31, 2006, the Company was committed to make further instalments of
     $626.7 million.

     As of December 31, 2006, the Company had a contract for the conversion of
     the Aframax vessel Front Puffin to a FPSO (Floating Production Storage
     Offloading) vessel with the delivery of the converted vessel in June, 2007.
     As of December 31, 2006, the Company was committed to make further
     instalments of $72.8 million.

     As of December 31, 2006, the Company had contracts for the conversion of
     the single hull Suezmax vessels Front Sunda and Front Target into heavy
     lift vessels. As of December 31, 2006, the Company was committed to make
     further instalments of $64.9 million.

     In June 2006, Ship Finance guaranteed a $165 million term loan facility for
     its wholly owned subsidiary Rig Finance Ltd to finance a portion of the
     acquisition costs of the jack up rig SeaDrill 3. Ship Finance's maximum
     liability under this guarantee is limited to $10.0 million.

     In September 2006, Ship Finance guaranteed a $22.7 million term loan
     facility for its wholly owned subsidiary Front Shadow Inc to assist in
     financing the purchase of the vessel Front Shadow. Ship Finance's maximum
     liability under this guarantee is $2.1 million plus any outstanding
     interest.

     The Company is a party, as plaintiff or defendant, to several lawsuits in
     various jurisdictions for demurrage, damages, off-hire and other claims and
     commercial disputes arising from the operation of its vessels, in the
     ordinary course of business or in connection with its acquisition
     activities. The Company believes that the resolution of such claims will
     not have a material adverse effect on the Company's operations or financial
     condition.

30.  SUPPLEMENTAL INFORMATION

     Non-cash investing and financing activities includes the following:

     
     
     -----------------------------------------------------------------------------------------------
     (in thousands of $)                                               2006        2005        2004
     -----------------------------------------------------------------------------------------------
                                                                                   
     Exchange of interests in associated companies:
     Additions to investments in associated companies                    --          --      96,072
     Disposals of investments in associated companies                    --          --     (96,072)

     Exercise of employee share options:
     Non-cash proceeds recorded for issuance of shares                   --          --       7,585

     Stock dividends:
     Spin-off of Golden Ocean                                            --          --     102,335
     Spin-off of Ship Finance                                        27,841     211,881     287,995

     Purchase of marketable securities:
     Forward contract                                                    --      70,850      25,084

     Vessels:
     Reclassification of vessel under conversion to newbuildings    (55,317)         --          --
     Vessel addition on termination of capital lease                 13,502          --          --
     Additions to vessels purchased from related party                   --      85,363          --
     Equity contribution from related party                              --     (85,363)         --
     

     In December 2003, Frontline agreed with its partner, Overseas Shipholding,
     Group, Inc ("OSG"), to swap interests in six joint venture companies, which
     each own a VLCC. These agreements resulted in the Company exchanging its
     interest in three vessels in exchange for OSG's interest in three other
     vessels, thereby increasing its interest in those vessels to 100% each. The
     exchanges of interests were completed on February 24, 2004. These
     transactions have been accounted for as a non-monetary exchange of
     productive assets. The Company received a net cash settlement of $2.3
     million in the exchange transaction to reflect the difference in values of
     the assets exchanged and recognised a gain of $0.2 million.

31.  DISCONTINUED OPERATIONS

     During the years ended December 31, 2005 and 2004, the Company disposed of
     portions of its dry bulk operations. In 2005, the Company's last remaining
     dry bulk vessel was sold and in 2004, dry bulks were disposed of in
     connection with the spin off of Golden Ocean. The portions disposed of have
     been recorded as discontinued operations in accordance with the
     requirements of FAS 144 Accounting for the Impairment or Disposal of
     Long-Lived Assets ("FAS 144") as the operations and cash flows of the
     operations have been eliminated from the ongoing operations of the Company
     as a result of the disposal. The Company will not have any significant
     continuing involvement in these dry bulk operations in the future.

     The following table presents the information required by FAS 144 in respect
     of discontinued operations:

     ---------------------------------------------------------------------------
     (in thousands of $)                                          2005      2004
     ---------------------------------------------------------------------------
     Carrying amount of assets disposed of                      12,875    72,592
     Carrying amount of debt or lease retired                   11,246    48,950

     Amounts recorded in discontinued operations:
     Operating revenues                                          1,324    32,594
     Net income before cumulative effect of change in
     accounting principle                                        8,785   117,619
     Gain on disposal                                            5,533    99,505

     The gain on disposal of $99.5 million in 2004 comprises of $84.6 million
     from the distribution of 170,558,775 shares of Golden Ocean (equivalent of
     76.0% of outstanding shares) and $14.9 million from the sale of 30 million
     shares (equivalent of 13.4% of outstanding shares) which were sold on
     behalf of certain of the Company's U.S. shareholders who were excluded from
     the distribution of shares.

     The fair value of the spin off of Golden Ocean was determined to be $0.60
     per Golden Ocean share (equivalent to NOK 3.71) by reference to the quoted
     share price of Golden Ocean on the Oslo Stock Exchange. In each of the
     first five days of trading on the Oslo Stock Exchange, the Company sold six
     million Golden Ocean shares in order to fund the cash portion of the
     distribution.

     The Company used NOK 3.71 (S$0.60) as the per share fair value in
     calculating the gain on the distribution of shares and cash. The $84.6
     million gain on the distribution of shares and cash was been calculated as
     the difference between the fair value of the shares distributed of $102.3
     million and their book value of $17.7 million. The $14.9 million gain on
     the sale of shares was calculated as the difference between the sale
     proceeds of $18.0 million and the book value of the shares of $3.1 million.

     As of December 31, 2004, the Company held 23,918,832 Golden Ocean shares
     representing 10.6% of the shares outstanding. These were reported under
     Marketable Securities and in February 2005, the Company sold these shares
     for a net gain of $12.8 million, of which $11.8 million was classified as
     discontinued operations representing the difference between the cost of the
     shares sold and the fair value of the shares at the date of the spin off of
     Golden Ocean.

     In 2005 the Company recognised an expense in discontinued operations of
     $10.2 million in connection with its guarantee of profit sharing payments
     for the vessel Channel Alliance.

32.  POOL REVENUES

     Voyage charter revenues include pool revenues. Certain pools are
     responsible for paying voyage expenses and distribute net pool revenues to
     the participants while other pools require the participants to pay and
     account for voyage expenses, and distribute gross pool revenues to the
     participants such that the participants' resulting net pool revenues are
     equal to net pool revenues calculated according to the agreed formula. An
     analysis of the Company's pool revenues included within voyage revenues is
     as follows:

     ---------------------------------------------------------------------------
                                                        2006      2005      2004
     ---------------------------------------------------------------------------
     Pool earnings allocated on gross basis          131,099   128,726    78,430
     Pool earnings allocated on net basis                 --    25,015   117,179
     ---------------------------------------------------------------------------
     Total pool earnings                             131,099   153,741   195,609
     ===========================================================================

33.  GAIN ON ISSUANCE OF SHARES BY ASSOCIATE

     The Company has a 24.49% investment in IMAREX. IMAREX is an authorised
     marketplace for the trading of freight derivatives in the global oil and
     dry cargo shipping markets and was established in early 2000.

     On March 31, 2005, IMAREX announced that it had successfully concluded a
     share issue prior to its listing on the Oslo Stock Exchange. A total of
     432,098 shares were sold for a price of NOK 81 per share (par value NOK 1)
     raising a total of NOK 35 million. The Company did not participate in this
     share issue and as a result, its holding changed from 26.56% to 24.84%. On
     July 14, 2005, IMAREX issued 98,750 shares pursuant to their employee share
     option scheme and as a result, in 2005, the Company's holding changed to
     24.49%. A gain of $1.1 million was recorded in the statement of operations
     as a result of these share issues by IMAREX.

34.  SUBSEQUENT EVENTS

     In January 2007, Ship Finance announced the sale of the vessel Front
     Transporter to an unrelated third party for gross proceeds of $38 million.
     The vessel was delivered to her new owner in March 2007.

     In January 2007, Ship Finance announced that it had entered into an
     agreement with Seadrill Limited to acquire the newbuilding jack-up rig West
     Prospero for an agreed purchase price of $210 million with expected
     delivery in July 2007. Upon delivery, the rig will be bareboat chartered
     back to Seadrill for 15 years.

     In January 2007, the Board of Directors of the Company's then wholly owned
     subsidiary Sealift Ltd ("Sealift") approved for up to 5% of Sealift's
     authorised share capital to be made available for the issuance of stock
     options to employees, directors and officers of Sealift.

     In February 2007, the Company's Board of Directors declared a cash dividend
     of $2.05 per share, which was paid on March 22, 2007.

     In February 2007, Ship Finance announced the acquisition of two newbuilding
     Capesize dry bulk vessels from Golden Ocean for a purchase price of $160
     million with delivery expected to be in the fourth quarter of 2008 and the
     first quarter of 2009. Upon delivery, the vessels will commence a 15 year
     bareboat charter back to Golden Ocean.

     In February 2007, the Board of Directors of the Company's then wholly owned
     subsidiary Sea Production Ltd ("Sea Production") approved for up to nine
     million shares of Sea Production to be made available for the issuance of
     stock options to present and future employees and directors and officers of
     Sea Production and its subsidiaries.

     In February 2007, the Company's Board of Directors declared the
     distribution of its remaining holding in Ship Finance Shares. The
     distribution of three shares in Ship Finance for every 28 shares held in
     Frontline was made on March 22, 2007. As a result of the distribution the
     Company will deconsolidate Ship Finance as of the distribution date as it
     currently holds 73,383 shares which represents 0.01% of Ship Finance's
     total shares..

     In February 2007, the Company's 100% owned subsidiary, Frontline Floating
     Production Ltd ("FFP"), sold its assets to Sea Production. The assets of
     FFP included a 70% investment in Puffin Ltd, the entity who ultimately owns
     the vessel Front Puffin. Sea Production was incorporated in 2007 as a 100%
     owned subsidiary of the Company. In February 2007 Sea Production completed
     a private placement of its equity. After the private placement the Company
     owned 28% of the equity of Sea Production. In June 2007, the Company sold
     its entire remaining shareholding in Sea Production for a net price of NOK
     15.75 per share (approximately $67 million).

     In February 2007, the Board of Directors of Ship Finance approved the
     granting of the option for 10,000 shares in Ship Finance to an employee at
     a strike price of $25.34.

     In January 2007, the Company incorporated Sealift Ltd. ("Sealift") and sold
     six subsidiaries to Sealift. Sealift's total investment before conversion
     of vessel five and six is approximately $476 million, adjusted for working
     capital. Concurrently, Sealift raised $180 million in a private placement.
     Subsequent to the private placement, the Company held 33.33 percent of the
     shares in Sealift. As part of the sale agreement, Frontline has undertaken
     to convert four of the vessels owned by Sealift subsidiaries into heavy
     lift vessels. In May 2007, in line with the strategy previously advised,
     Sealift successfully completed the combination of its businesses with the
     Dockwise group of companies. Frontline is the second largest shareholder in
     the combined entity with an ownership of 17.1%. The first heavy lift vessel
     was delivered May 30, 2007 and the estimated delivery dates for the
     remaining three units will be in the period from September 2007 through
     second quarter 2008. Two of the vessels have been chartered back to the
     Company on a bareboat rate of $15,000 per day per vessel from the end of
     March 2007 until the conversion takes place and two of the vessels have
     been chartered back to the Company on a bareboat rate of $12,500 per day
     from early May 2007 until March 2008 and May 2008, respectively.

     In March 2007, the single hull VLCC Front Vanadis was sold to an unrelated
     third party and delivery took place in May 2007. Upon delivery, the long
     term charter party between Frontline and Ship Finance was terminated, and
     Frontline received a compensation payment in the amount of $13.2 million
     for the early termination of the charter party, which will be recorded in
     the second quarter of 2007.

     In March 2007, Ship Finance announced the acquisition of three newbuilding
     seismic vessels for a price of $210 million from an unrelated third party.
     The vessels are expected to be delivered in January, April and July 2008.
     Upon delivery, the vessels will commence 12 year contracts back to the
     seller.

     In March and April 2007, the Company exercised its four remaining options
     for 156,000 dwt Suezmax newbuilding contracts which are scheduled for
     delivery between April and December 2010, respectively.

     In May 2007, the Company's Board of Directors declared a cash dividend of
     $1.50 per share, to be paid on or around June 22, 2007.

     In June 2007, the Company announced that it had agreed to sell the Front
     Horizon for $28 million with delivery to her new owners expected in July or
     August 2007.

EX-1.2

                                    BYE-LAWS

                                       OF

                                 FRONTLINE LTD.

                      Amended and Adopted December 1, 2006


                                 INTERPRETATION

1. In these Bye-Laws unless the context otherwise requires-

     o    "Associate" means:

          (a)  in respect of an individual, such individual's spouse, former
               spouse, sibling, aunt, uncle, nephew, niece or lineal ancestor or
               descendant, including any step-child and adopted child and their
               issue and step parents and adoptive parents and their issue or
               lineal ancestors;

          (b)  in respect of an individual, such individual's partner and such
               partner's relatives (within the categories set out in (a) above);

          (c)  in respect of an  individual  or body  corporate,  an employer or
               employee (including,  in relation to a body corporate, any of its
               directors or officers);

          (d)  in respect of a body corporate, any person who controls such body
               corporate,  and any other body  corporate  if the same person has
               control of both or if a person has control of one and persons who
               are  his  Associates,  or such  person  and  persons  who are his
               Associates,  have  control of the other,  or if a group of two or
               more persons has control of each body  corporate,  and the groups
               either  consist  of the same  persons  or could  be  regarded  as
               consisting of the same persons by treating (in one or more cases)
               a member of either group as replaced by a person of whom he is an
               Associate.  For the  purposes  of this  paragraph,  a person  has
               control of a body  corporate  if either (i) the  directors of the
               body corporate or of any other body  corporate  which has control
               of it (or any of them) are  accustomed  to  acting in  accordance
               with his  instructions  or (ii) he is  entitled to  exercise,  or
               control the exercise of, one-third or more of the votes attaching
               to all of the issued  shares of the body  corporate or of another
               body  corporate  which has control of it (provided that where two
               or more  persons  acting in concert  satisfy  either of the above
               conditions,  they are each to be taken as having  control  of the
               body corporate);

     o    "Bermuda" means the Islands of Bermuda;

     o    "Board"  means the Board of Directors of the Company or the  Directors
          present at a meeting of Directors at which there is a quorum;

     o    "Business Day" means a day on which banks are open for the transaction
          of general banking business in each of Oslo,  Norway,  London, UK, New
          York, USA and Hamilton, Bermuda;

     o    "Company" means the company  incorporated in Bermuda under the name of
          London & Overseas Freighters Limited on the 12th day of June, 1992;

     o    "Companies  Acts" means  every  Bermuda  statute  from time to time in
          force concerning companies insofar as the same applies to the Company;

     o    "employees   share   scheme"  means  a  scheme  for   encouraging   or
          facilitating  the holding of shares or debentures in the Company by or
          for the benefit of: -

          (a)  the bona fide employees or former employees of the Company or any
               subsidiary of the Company; or

          (b)  the  wives,   husbands,   widows,   widowers   or   children   or
               step-children  under  the age of 18 of such  employees  or former
               employees;

     o    "Extraordinary  Resolution" means a resolution passed by a majority of
          not less than two-thirds of the votes cast at a general meeting of the
          Company;

     o    "Listing  Exchange" means any stock exchange or quotation  system upon
          which any of the shares of the Company are listed from time to time;

     o    "London Stock Exchange" means London Stock Exchange Limited;

     o    "New York Stock Exchange" means the New York Stock Exchange;

     o    "Ordinary  Resolution"  means a resolution passed by a simple majority
          of votes cast at a general meeting of the Company;

     o    "Oslo Stock Exchange" means the Oslo Stock Exchange;

     o    "paid up" means paid up or credited as paid up;

     o    "Register"  means the  Register  of  Shareholders  of the  Company and
          includes any branch Register;

          "Registered  Office" means the registered office for the time being of
          the Company;

     o    "Registrar"    means    Christiania    Bank   og   Kreditkasse    ASA,
          Verdipapirservice, or such other person or body corporate who may from
          time to time be appointed by the Board in place of Christiania Bank og
          Kreditkasse ASA, Verdipapirservice,  as Registrar of the Company under
          these Bye-laws;

     o    "Registration Office" means the place where the Board may from time to
          time  determine to keep a branch  Register of  Shareholders  and where
          (except in cases where the Board  otherwise  directs) the transfer and
          documents of title are to be lodged for registration;

     o    "Seal" means the common seal of the Company and includes any duplicate
          thereof;

     o    "Secretary" includes a temporary or assistant Secretary and any person
          appointed by the Board to perform any of the duties of the Secretary;

     o    "Shareholder" means a shareholder of the Company;

     o    "these Bye-Laws" means these Bye-Laws in their present form or as from
          time to time amended;

     o    "VPS" means the  Verdipapirsentralen,  the computerized  central share
          registry maintained in Oslo, Norway, for bodies corporate whose shares
          are listed for trading on the Oslo Stock  Exchange,  and  includes any
          successor registry;

     o    for the purpose of these Bye-Laws a body corporate  shall be deemed to
          be present in person if its representative duly authorized pursuant to
          the Companies Acts is present;

     o    words importing the singular number also include the plural number and
          vice versa;

     o    words  importing  the  masculine  gender also include the feminine and
          neuter genders respectively;

     o    words  importing  persons also include  companies and  associations or
          bodies of persons, whether corporate or unincorporated;

     o    references   to   writing   shall   include   typewriting,   printing,
          lithography,  facsimile, photography and other modes of reproducing or
          reproducing words in a legible and non-transitory form;

     o    unless otherwise defined herein,  any words or expressions  defined in
          the  Companies  Acts in force at the date when these  Bye-Laws  or any
          part thereof are adopted shall bear the same meaning in these Bye-Laws
          or such part (as the case may be);

     o    headings in these  Bye-Laws are inserted for  convenience of reference
          only and shall not affect the construction thereof.

                                REGISTERED OFFICE

2.   The Registered  Office shall be at such place in Bermuda as the Board shall
     from time to time appoint.

                                  SHARE RIGHTS

3.   Subject to the  Companies  Acts and any  special  rights  conferred  on the
     holders of any other share of class of shares, any share in the Company may
     be issued with or have attached thereto such preferred, deferred, qualified
     or  other  special  rights  or such  restrictions,  whether  in  regard  to
     dividend,  voting,  return of capital or  otherwise,  as the Company may by
     Ordinary Resolution determine.

4.   Subject to the Companies Acts, any preference shares may, with the sanction
     of an Ordinary Resolution, be issued on terms:

     (a)  that they are to be redeemed on the happening of a specified  event or
          on a given date; and/or

     (b)  that they are  liable to be  redeemed  at the  option of the  Company;
          and/or

     (c)  if authorized by the Memorandum/Incorporating Act of the Company, that
          they are liable to be redeemed at the option of the holder.

     The terms and manner of  redemption  shall be either as the  Company may in
     general  meeting  determine  or, in the event  that the  Company in general
     meeting may have so authorized,  as the Board of Directors or any committee
     thereof may by resolution determine before the issuance of such shares.

                             MODIFICATION OF RIGHTS

5.   Subject to the Companies  Acts, all or any of the rights for the time being
     attached to any class of shares for the time being  issued may from time to
     time (whether or not the Company is being wound up) be altered or abrogated
     with the  consent in writing of the  holders of not less than  seventy-five
     percent  in nominal  value of the  issued  shares of that class or with the
     sanction of a resolution  passed by a majority of  seventy-five  percent of
     the votes cast at a separate  general meeting of the holders of such shares
     voting in person or by proxy. To any such separate general meeting, all the
     provisions  of these  Bye-Laws as to general  meetings of the Company shall
     mutatis mutandis apply, but so that:

     (a)  the necessary  quorum at any such meeting shall be two or more persons
          (or in the event  that  there is only one  holder of the shares of the
          relevant  class,  one person)  holding or representing by proxy in the
          aggregate  at least one third in  nominal  value of the  shares of the
          relevant class;

     (b)  every holder of shares of the relevant  class  present in person or by
          proxy  shall be  entitled  on a poll to one vote for every  such share
          held by him; and

     (c)  any  holder of shares of the  relevant  class  present in person or by
          proxy may demand a poll.

6.   The  rights  conferred  upon the  holders  of any shares or class of shares
     shall not, unless otherwise  expressly  provided in the rights attaching to
     or the  terms of issue of such  shares,  be  deemed  to be  altered  by the
     creation or issue of further shares ranking pari passu therewith.

                                     SHARES

7.   Subject to the  provisions of these  Bye-Laws,  the unissued  shares of the
     Company  (whether  forming  part of the original  capital or any  increased
     capital)  shall be at the  disposal of the Board,  which may offer,  allot,
     grant  options  over or  otherwise  dispose of them to such persons at such
     times and for such  consideration and upon such terms and conditions as the
     Board may determine.

8.   The  Board may in  connection  with the issue of any  shares  exercise  all
     powers of paying commission and brokerage conferred or permitted by law.

9.   Except as ordered by a court of competent jurisdiction,  as required by law
     or as otherwise  provided in these Bye-Laws,  no person shall be recognized
     by the Company as holding any share upon trust and the Company shall not be
     bound by or  required  in any way to  recognize  (even when  having  notice
     thereon) any equitable, contingent, future or partial interest in any share
     or any  interest  in any  fractional  part of a share or any other right in
     respect of any share except an absolute  right to the  entirety  thereof in
     the registered holder.

10.  No  shares  shall be issued  until  they are  fully  paid  except as may be
     prescribed by an Ordinary Resolution.

                                  CERTIFICATES

11.  The  preparation,  issue and delivery of certificates  shall be governed by
     the  Companies  Acts. A person whose name is entered in the Register as the
     holder of any shares  shall be entitled  to receive  within two months of a
     demand for same a certificate for such shares under the Seal of the Company
     as prima facie evidence of title of such person to such shares. In the case
     of a share held jointly by several  persons,  delivery of a certificate for
     such share to one of several joint holders shall be sufficient  delivery to
     all.

12.  If a share  certificate  is defaced,  lost or  destroyed it may be replaced
     without  fee but on such  terms  (if  any) as to  evidence,  indemnity  and
     payment  of the  costs  and  out of  pocket  expenses  of  the  Company  in
     investigating  such evidence and preparing  such indemnity as the Board may
     think fit and, in case of defacement, on delivery of the old certificate to
     the Company.

13.  All  certificates  for share or loan  capital  or other  securities  of the
     Company (other than letters of allotment, scrip certificates and other like
     documents)  shall,  except to the extent that the terms and  conditions for
     the time being  relating  thereto  otherwise  provide,  be issued under the
     Seal.  The Board may by resolution  determine,  either  generally or in any
     particular case, that any signatures on any such  certificates  need not be
     autographic but may be affixed to such  certificates by mechanical means or
     may be printed thereon or that such  certificates need not be signed by any
     persons.

                                      LIEN

14.  The Company shall have a first and paramount lien on every share (not being
     a fully  paid  share) for all  moneys,  whether  presently  payable or not,
     called or payable,  at a date fixed by or in  accordance  with the terms of
     issue of such share in respect of such share,  and the  Company  shall also
     have a first and  paramount  lien on every  share  (other than a fully paid
     share) standing registered in the name of a Shareholder,  whether singly or
     jointly with any other person,  for all the debts and  liabilities  of such
     Shareholder or his estate to the Company,  whether the same shall have been
     incurred  before or after  notice to the  Company  of any  interest  of any
     person other than such Shareholder, and whether the time for the payment or
     discharge   of  the  same  shall  have   actually   arrived  or  not,   and
     notwithstanding  that the  same are  joint  debts  or  liabilities  of such
     Shareholder  or his estate and any other person,  whether a Shareholder  or
     not. The Company's  lien on a share shall extend to all  dividends  payable
     thereon.  The Board may at any time,  either generally or in any particular
     case,  waive any lien that has arisen or declare  any share to be wholly or
     in part exempt from the provisions of this Bye-Law.

15.  The Company may sell,  in such manner as the Board may think fit, any share
     on which the Company has a lien,  but no sale shall be made unless some sum
     in  respect of which the lien  exists is  presently  payable  nor until the
     expiration of fourteen days after a notice in writing stating and demanding
     payment of the sum presently  payable and giving notice of the intention to
     sell in default of such  payment has been served on the holder for the time
     being of the share.

16.  The net  proceeds  of sale by the  Company  of any shares on which it has a
     lien shall be applied in or  towards  payment or  discharge  of the debt or
     liability  in  respect  of  which  the  lien  exists  so far as the same is
     presently payable,  and any residue shall (subject to a like lien for debts
     or liabilities not presently payable as existed upon the share prior to the
     sale) be paid to the holder of the share immediately  before such sale. For
     giving  effect  to any such sale the Board  may  authorize  some  person to
     transfer the share sold to the purchaser  thereof.  The purchaser  shall be
     registered  as the  holder of the share and he shall not be bound to see to
     the  application  of the purchase money nor shall his title to the share be
     affected by any  irregularity or invalidity in the proceedings  relating to
     the sale.

                                 CALLS ON SHARES

17.  The Board may from time to time make calls upon the Shareholders in respect
     of any moneys  unpaid on their shares  (whether on account of the par value
     of the shares or by way of premium)  and not by the terms of issue  thereof
     made payable at a date fixed by or in accordance  with such terms of issue,
     and each  Shareholder  shall  (subject to the Company  serving  upon him at
     least seven days notice  specifying the time or times and place of payment)
     pay to the Company at the time or times and place so  specified  the amount
     called on his shares.  A call may be revoked or  postponed as the Board may
     determine.

18.  A call may be made payable by installments and shall be deemed to have been
     made at the time when the resolution of the Board  authorizing the call was
     passed.

19.  The joint holders of a share shall be jointly and  severally  liable to pay
     all calls in respect thereof.

20.  If a sum called in respect of the share  shall not be paid before or on the
     day  appointed  for  payment  thereof,  the person from whom the sum is due
     shall  pay  interest  on the sum from  the day  appointed  for the  payment
     thereof  to the  time of  actual  payment  at such  rate as the  Board  may
     determine,  but the Board  shall be at  liberty  to waive  payment  of such
     interest wholly or in part.

21.  Any sum  which,  by the  terms  of issue of a  share,  becomes  payable  on
     allotment  or at any date  fixed by or in  accordance  with  such  terms of
     issue,  whether on account of the nominal  amount of the share or by way of
     premium,  shall for all the  purposes  of these  Bye-Laws be deemed to be a
     call duly made,  notified and payable on the date on which, by the terms of
     issue,  the same  becomes  payable  and,  in case of  non-payment,  all the
     relevant provisions of these Bye-Laws as to payment of interest, forfeiture
     or otherwise  shall apply as if such sum had become  payable by virtue of a
     call duly made and notified.

22.  The Board may on the issue of shares differentiate between the allottees or
     holders as to the amount of calls to be paid and the times of payment.

                              FORFEITURE OF SHARES

23.  If a Shareholder  fails to pay any call or installment of a call on the day
     appointed for payment thereof,  the Board may at any time thereafter during
     such time as any part of such call or  installment  remains  unpaid serve a
     notice on him requiring payment of so much of the call or installment as is
     unpaid, together with any interest which may have accrued.

24.  The notice shall name a further day (not being less than fourteen days from
     the date of the  notice)  on or  before  which,  and the place  where,  the
     payment  required by the notice is to be made and shall state that,  in the
     event of non-payment on or before the day and at the place  appointed,  the
     shares in respect of which such call is made or installment is payable will
     be liable to be forfeited.  The Board may accept the surrender of any share
     liable to be  forfeited  hereunder  and, in such case,  reference  in these
     Bye-Laws to forfeiture shall include surrender.

25.  If the  requirements of any such notice as aforesaid are not compiled with,
     any share in respect  of which  such  notice has been given may at any time
     thereafter, before payment of all calls or installments and interest due in
     respect thereof has been made, be forfeited by a resolution of the Board to
     that  effect.  Such  forfeiture  shall  include all  dividends  declared in
     respect  of  the  forfeited   shares  and  not  actually  paid  before  the
     forfeiture.

26.  When any share has been forfeited, notice of the forfeiture shall be served
     upon the person who was before  forfeiture the holder of the share;  but no
     forfeiture shall be in any manner invalidated by any omission or neglect to
     give such notice as aforesaid.

27.  A forfeited share shall be deemed to be the property of the Company and may
     be sold,  re-offered or otherwise disposed of either to the person who was,
     before  forfeiture,  the holder thereof or entitled thereto or to any other
     person  upon such terms and in such  manner as the Board  shall  think fit,
     and, at any time before a sale, re-allotment or disposition, the forfeiture
     may be canceled on such terms as the Board may think fit.

28.  A person whose shares have been  forfeited  shall  thereupon  cease to be a
     Shareholder in respect of the forfeited shares, but shall,  notwithstanding
     the forfeiture, remain liable to pay to the Company all moneys which at the
     date of forfeiture were presently  payable by him to the Company in respect
     of the shares with interest thereon at such rate as the Board may determine
     from the date of  forfeiture  until  payment,  and the  Company may enforce
     payment  without  being under any  obligation to make any allowance for the
     value of the shares forfeited.

29.  An affidavit  in writing  that the deponent is a Director or the  Secretary
     and  that a share  has  been  duly  forfeited  on the  date  stated  in the
     affidavit  shall be  conclusive  evidence  of the facts  therein  stated as
     against all persons  claiming to be entitled to the share.  The Company may
     receive  the  consideration  (if any)  given  for the  share  on the  sale,
     re-allotment or disposition thereof and the Board may authorize some person
     to transfer  the share to the person to whom the same is sold,  re-allotted
     or disposed of, and he shall  thereupon be  registered as the holder of the
     share  and  shall not be bound to see to the  application  of the  purchase
     money  (if any)  nor  shall  his  title to the  share  be  affected  by any
     irregularity or invalidity in the  proceedings  relating to the forfeiture,
     sale, re-allotment or disposal of the share.

                            REGISTER OF SHAREHOLDERS

30.  The Secretary  shall establish and maintain the Register of Shareholders at
     the  Registered  Office in the manner  prescribed  by the  Companies  Acts.
     Unless the Board otherwise  determines,  the Register of Shareholders shall
     be open to  inspection  in the  manner  prescribed  by the  Companies  Acts
     between 10:00 a.m. and 12:00 noon on every working day. Unless the Board so
     determines,  no Shareholder or intending  Shareholder  shall be entitled to
     have entered in the Register any  indication of any trust or any equitable,
     contingent,  future or partial interest in any share or any interest in any
     fractional  part of a share and if any such entry exists or is permitted by
     the  Board it shall  not be deemed to  abrogate  any of the  provisions  of
     Bye-Law 9.

31.  Subject to the  Companies  Act,  the Company may keep a branch  Register of
     Shareholders in any place, and the Board may make and vary such regulations
     as it  determines  in  respect  of the  keeping  of any such  Register  and
     maintaining a Registration Office in connection therewith.

                       REGISTER OF DIRECTORS AND OFFICERS

32.  The Secretary  shall establish and maintain a register of the Directors and
     Officers of the Company as required by the Companies  Acts. The register of
     Directors and Officers shall be open to inspection in the manner prescribed
     by the  Companies  Acts between  10:00 a.m. and 12:00 noon on every working
     day.

                               TRANSFER OF SHARES

33.  Subject to the Companies Acts and to such of the restrictions  contained in
     these Bye-Laws as may be applicable and to the provisions of any applicable
     United States  securities  laws  including  without  limitation  the United
     States  Securities  Act,  1933,  as  amended,  and  the  rules  promulgated
     thereunder,  any  Shareholder  may  transfer all or any of his shares by an
     instrument  of transfer in the usual common form or in any other form which
     the Board may approve.

34.  The  instrument  of  transfer of a share shall be signed by or on behalf of
     the transferor and, where any share is not fully-paid,  the transferee. The
     transferor shall be deemed to remain the holder of the share until the name
     of the transferee is entered in the Register in respect thereof. Should the
     Company be  permitted  to do so under the laws of  Bermuda,  the Board may,
     either  generally or in any particular case, upon request by the transferor
     or the  transferee,  accept  mechanically  or  electronically  (including a
     transfer by a London  Stock  Exchange  nominee to whom no  certificate  was
     issued)  executed  transfer and may also make such regulations with respect
     to transfer in addition to the provisions of these Bye-Laws as it considers
     appropriate. The Board may, in its absolute discretion, decline to register
     any transfer of any share which is not a fully-paid share.

     o    The Board shall  decline to register  the  transfer of any share,  and
          shall  direct  the  Registrar  to  decline  (and the  Registrar  shall
          decline) to register  the  transfer of any  interest in any share held
          through  the VPS, to a person  where the Board is of the opinion  that
          such transfer  might breach any law or requirement of any authority or
          any Listing  Exchange  until it has received  such  evidence as it may
          require to satisfy itself that no such breach would occur.

     o    The Board may decline to register the  transfer of any share,  and may
          direct the Registrar to decline (and the Registrar shall decline if so
          requested)  to register the transfer of any interest in any share held
          through the VPS, if the registration of such transfer would be likely,
          in the opinion of the Board, to result in fifty percent or more of the
          aggregate issued share capital of the Company or shares of the Company
          to which are attached  fifty percent or more of the votes  attached to
          all outstanding  shares of the Company being held or owned directly or
          indirectly,  (including,  without  limitation,  through  the VPS) by a
          person or persons  resident  for tax purposes in Norway (or such other
          jurisdiction  as the Board may nominate  from time to time),  provided
          that this provision  shall not apply to the  registration of shares in
          the name of the  Registrar  as nominee of persons  whose  interests in
          such  shares  are  reflected  in the VPS,  but  shall  apply,  mutatis
          mutandis,  to  interests  in shares  of the  Company  held by  persons
          through the VPS.

     o    For the purposes of this  Bye-Law,  each  Shareholder  (other than the
          Registrar  in respect of those  shares  registered  in its name in the
          Register  as nominee of persons  whose  interests  in such  shares are
          reflected  in the VPS) shall be deemed to be resident for tax purposes
          in the jurisdiction specified in the address shown in the Register for
          such  Shareholder,  and each  person  whose  interests  in shares  are
          reflected  in the VPS shall be deemed to be resident  for tax purposes
          in the jurisdiction specified in the address shown in the VPS for such
          person.  If such Shareholder or person is not resident for tax purpose
          in  such  jurisdiction  or if  there  is a  subsequent  change  in his
          residence for tax purposes,  such Shareholder shall notify the Company
          immediately of his residence for tax purposes.

     o    Where  any  Shareholder  or  person  whose  interests  in  shares  are
          reflected  in the VPS fails to notify the Company in  accordance  with
          the  foregoing,  the Board and the Registrar may suspend sine die such
          Shareholder's  or person's  entitlement to vote or otherwise  exercise
          any rights attaching to the shares or interests therein and to receive
          payments of income or capital  which  become due or payable in respect
          of such shares or interests and the Company shall have no liability to
          such  Shareholder  or  person  arising  out of  the  late  payment  or
          non-payment  of such sums and the Company may retain such sums for its
          own use and benefit.  In addition to the  foregoing  the Board and the
          Registrar may dispose of the shares in the Company or interests herein
          of such Shareholder or person at the best price reasonably  obtainable
          in all the circumstances. Where a notice informing such Shareholder or
          person of the proposed disposal of his shares or interests therein has
          been  served,  his shares or interest  therein may not be  transferred
          otherwise  than in  accordance  with  this  Bye-Law  34 and any  other
          purported  transfer of such shares or interests  therein  shall not be
          registered  in the books of the  Company  or the VPS and shall be null
          and void.

     o    The  provision  of  these  Bye-Laws  relating  to  the  protection  of
          purchaser  of shares  sold under lien or upon  forfeiture  shall apply
          mutatis  mutandis to a disposal of shares or interests  therein by the
          Company or the Registrar in accordance with this Bye-Law.

     o    Without  limiting the generality of the foregoing,  the Board may also
          decline to register any transfer unless:-

          (i)  the  instrument  of transfer is duly  stamped and lodged with the
               Company accompanied by the certificate for the shares to which it
               relates  if  any  and  such  other  evidence  as  the  Board  may
               reasonably  require to show the right of the  transferor  to make
               the transfer;

          (ii) the  instrument  of  transfer  is in respect of only one class of
               share; and

          (iii) where  applicable,   the  permission  of  the  Bermuda  Monetary
               Authority with respect thereto has been obtained.

     o    Subject to any  directions of the Board from time to time in force the
          Secretary  may exercise the powers and  discretion  of the Board under
          this Bye-Law and Bye-Laws 33 and 35.

     o    If fifty percent or more of the aggregate  issued share capital of the
          Company or shares to which are attached  fifty  percent or more of the
          votes attached to all  outstanding  shares of the Company are found to
          be  held  or  owned   directly  or  indirectly   (including,   without
          limitation,  through the VPS) by a person or persons  resident for tax
          purposes  in  Norway  (or such  other  jurisdiction  as the  Board may
          nominate  from time to time),  other than the  Registrar in respect of
          those  shares  registered  in its name in the  Register  as nominee of
          persons  whose  interests in such shares are reflected in the VPS, the
          Board shall make an announcement to such effect through the Oslo Stock
          Exchange, and the Board and the Registrar shall thereafter be entitled
          and  required  to dispose of such  number of shares of the  Company or
          interests  therein held or owned by such persons as will result in the
          percentage of the  aggregate  issued share capital of the Company held
          or owned as aforesaid  being less than fifty  percent,  and, for these
          purposes,  the Board and the  Registrar  shall in such case dispose of
          shares or interests therein owned by persons resident for tax purposes
          in the relevant  jurisdiction in question on the basis that the shares
          or interests  therein most recently  acquired shall be the first to be
          disposed of (i.e. on the basis of last acquired first sold) save where
          there is a breach of the  obligation to notify tax residency  pursuant
          to the  foregoing,  in which event the shares or interests  therein of
          the person in breach thereof shall be sold first.  Shareholders  shall
          not be  entitled  to raise  any  objection  to the  disposal  of their
          shares,   but  the  provisions  of  these  Bye-Laws  relating  to  the
          protection of purchasers of shares sold under lien or upon  forfeiture
          shall apply  mutatis  mutandis to any  disposal of shares or interests
          therein made in accordance with this Bye-Law.

35.  If the Board  declines to register a transfer it shall,  within  sixty days
     after the date on which the instrument of transfer was lodged,  send to the
     transferee notice of such refusal.

36.  No fee shall be  charged  by the  Company  for  registering  any  transfer,
     probate, letters of administration, certificate of death or marriage, power
     of attorney,  distringas or stop notice, order of court or other instrument
     relating to or affecting  the title to any share,  or  otherwise  making an
     entry in the Register relating to any share.

                             TRANSMISSION OF SHARES

37.  In the case of the death of a Shareholder, the survivor or survivors, where
     the deceased was a joint holder,  and the estate  representative,  where he
     was sole  holder,  shall be the only  person  recognized  by the Company as
     having any title to his shares;  but nothing herein contained shall release
     the estate of a deceased  holder (whether sole or joint) from any liability
     in respect of any share held by him solely or jointly  with other  persons.
     For the purpose of this Bye-Law,  estate representative means the person to
     whom  probate  or  letters of  administration  has or have been  granted in
     Bermuda or, failing any such person,  such other person as the Board may in
     its  absolute  discretion  determine  to be the  person  recognized  by the
     Company for the purpose of this Bye-Law.

38.  Any person  becoming  entitled to a share in  consequence of the death of a
     Shareholder  or otherwise by operation of  applicable  law may,  subject as
     hereafter  provided and upon such evidence  being produced as may from time
     to  time  be  required  by the  Board  as to  his  entitlement,  either  be
     registered  himself as the holder of the share or elect to have some person
     nominated by him  registered as the  transferee  thereof.  If the person so
     becoming entitled elects to be registered himself, he shall deliver or send
     to the Company a notice in writing signed by him stating that he so elects.
     If he shall elect to have another person  registered,  he shall signify his
     election  by signing an  instrument  of  transfer of such share in favor of
     that other person.  All the  limitations,  restrictions  and  provisions of
     these Bye-Laws  relating to the right to transfer and the  registration  of
     transfer of shares shall be  applicable to any such notice or instrument of
     transfer as  aforesaid  as if the death of the  Shareholder  or other event
     giving  rise  to the  transmission  had not  occurred  and  the  notice  or
     instrument  of  transfer  was an  instrument  of  transfer  shared  by such
     Shareholder.

39.  A person  becoming  entitled  to a share in  consequence  of the death of a
     Shareholder  or otherwise by operation of  applicable  law shall (upon such
     evidence  being  produced as may from time to time be required by the Board
     as to his  entitlement) be entitled to receive and may give a discharge for
     any dividends or other moneys payable in respect of the share, but he shall
     not be entitled in respect of the share to receive  notices of or to attend
     or vote at general  meetings  of the  Company  or,  save as  aforesaid,  to
     exercise  in  respect  of the share any of the  rights or  privileges  of a
     Shareholder  until he shall have become  registered as the holder  thereof.
     The Board may at any time give notice requiring such person to elect either
     to be registered  himself or to transfer the share and if the notice is not
     complied with within sixty days the Board may thereafter  withhold  payment
     of all  dividends  and other moneys  payable in respect of the shares until
     the requirements of the notice have been complied with.

40.  Subject  to any  directions  of the Board  from time to time in force,  the
     Secretary  may  exercise  the powers  and  discretions  of the Board  under
     Bye-Laws 37, 38 and 39.

                        DISCLOSURE OF MATERIAL INTERESTS

41.  a)   Any person  (other than the  Registrar  in respect of those  shares
          registered in its name in the Register as the nominee of persons whose
          interests  in such shares are  reflected  in the VPS) who  acquires or
          disposes of an interest in shares to the effect that the  requirements
          of the Oslo Stock Exchange in effect from time to time  concerning the
          duty to flag  changes in a person's  interest in shares  require  such
          changes to be notified shall notify the Registrar  immediately of such
          acquisition  or disposal and the resulting  interest of that person in
          shares.

     b)   For the purposes of this Bye-Law,  a person shall be deemed to have an
          interest in shares:

          (i)  owned by such person's spouse, minor child or cohabitant;

          (ii) owned by any body  corporate  in which such  person  owns  shares
               representing  the  majority of the votes  attaching to all of the
               issued  and  outstanding  shares of such body  corporate  or over
               which he has as owner of  shares  in such  body  corporate  or by
               virtue of an agreement a determining  influence and a substantial
               participation  (as those terms are  interpreted  by the Norwegian
               courts from time to time) in the results of such body corporate's
               operations;

         (iii) owned by any person  with whom such  person  acts in concert (as
               such  term is  interpreted  from  time to time by the Oslo  Stock
               Exchange), by virtue of any agreement or otherwise;

          (iv) registered  in the  name  of the  Registrar  in the  Register  as
               nominee  of such  person or of any person  referred  to in clause
               (i), (ii), or (iii) in relation to such person;

          (v)  which are issuable on the  exercise of any  options,  convertible
               bonds,  subscription rights or any other rights to acquire shares
               in which such person has an interest;

          (vi) subject  to a lien or other  security  interest  in favor of such
               person;

         (vii) which  are  issuable  on  the   exercise  of  purchase   rights,
               preemption  rights, or other rights related thereto in which such
               person  has  an  interest   and  which  are   activated   by  the
               acquisition, disposal or conversion of shares;

        (viii) subject  of any other  agreed  restriction  on a  Shareholder's
               right to dispose of same or to exercise such Shareholder's rights
               as a Shareholder,  in favor of such person,  except agreements to
               separate the dividend right from the ownership right of a share;

          (ix) in  connection  with the  acquisition  of which  there  was given
               guarantee of their  purchase  price by such person or such person
               otherwise  undertook a risk with respect to the value thereof and
               which guarantee or risk remains outstanding.

     (c)  The Registrar shall promptly report any such  notification of interest
          to the Oslo Stock Exchange and the Company.

     (d)  If a person fails to give  notification of a change in his interest in
          shares in accordance  with this Bye-Law 41 and the Board believes that
          such  person has  acquired  or  disposed  of an  interest in shares in
          circumstances  in  which  he  would  be  subject  to the  notification
          requirements of this Bye-Law 41, the Board shall require the Registrar
          to serve upon that person a notice:

          (i)  requiring  him to comply with the  notification  requirements  in
               relation to the change in his interest in shares; and

          (ii) informing  him that,  pending  compliance  with the  notification
               requirements,  the registered  holder or holders of the shares in
               which that person is interested  shall not be entitled to vote or
               otherwise  exercise  any rights  attaching to the shares to which
               the notice relates nor shall such registered holder or holders be
               entitled to receive  payments of income or capital  which  become
               due or payable in respect of such shares. The registered holder's
               or  holders'  entitlement  to such  payments  shall be  suspended
               pending compliance with the notification requirements without any
               liability  of the Company to such  holder or holders  arising for
               late payment or  nonpayment  and the Company may retain such sums
               for its own use and benefit during such period of suspension.

     (e)  The  provisions  of  these  Bye-Laws  relating  to the  protection  of
          purchasers of shares sold under a lien or upon forfeiture  shall apply
          mutatis mutandis to disposals under this Bye-Law 41.

                               INCREASE OF CAPITAL

42.  The  Company may from time to time  increase  its capital by such sum to be
     divided into shares of such par value as the Company by Ordinary Resolution
     shall prescribe.

43.  The Company may, by the Ordinary Resolution increasing the capital,  direct
     that the new shares or any of them  shall be offered in the first  instance
     either  at  par or at a  premium  or  (subject  to  the  provisions  of the
     Companies  Act) at a  discount  to all the  holders  for the time  being of
     shares of any class or classes in  proportion  to the number of such shares
     held by them  respectively  or make any other  provision as to the issue of
     the new shares.

44.  The new shares  shall be subject to all the  provisions  of these  Bye-Laws
     with  reference  to lien,  the  payment  of  calls,  forfeiture,  transfer,
     transmission and otherwise.

                              ALTERATION OF CAPITAL

45.  The Company may from time to time by Ordinary Resolution:

     (a)  divide its shares into several classes and attach thereto respectively
          any preferential, deferred, qualified or special rights, privileges or
          conditions;

     (b)  consolidate  and divide all or any of its share capital into shares of
          larger par value than its existing shares;

     (c)  sub-divide  its shares or any of them into  shares of  smaller  amount
          than is fixed by its memorandum, so, however, that in the sub-division
          the proportion  between the amount paid and the amount, if any, unpaid
          on each  reduced  share shall be the same as it was in the case of the
          share from which the reduced share is derived;

     (d)  make  provision  for the issue and  allotment  of shares  which do not
          carry any voting rights;

     (e)  cancel  shares which at the date of the passing of the  resolution  in
          that  behalf  have not been  taken or agreed to be taken by any person
          and  diminish  the  amount of its share  capital  by the amount of the
          shares so cancelled;

     (f)  change the currency denomination of its share capital.

     Where any difficulty  arises in regard to any division,  consolidation,  or
     sub-division under this Bye-Law, the Board may settle the same as it thinks
     expedient  and,  in  particular,  may  arrange  for the sale of the  shares
     representing  fractions and the distribution of the net proceeds of sale in
     due proportion amongst the Shareholders who would have been entitled to the
     fractions,  and, for this purpose,  the Board may authorize  some person to
     transfer the shares  representing  fractions to the purchaser thereof,  who
     shall  not be bound to see to the  application  of the  purchase  money nor
     shall his title to the shares be affected by any irregularity or invalidity
     in the proceedings relating to the sale.

46.  Subject to the provisions of the Companies Act and to any  confirmation  or
     consent  required  by law or these  Bye-Laws,  the  Company may by Ordinary
     Resolution from time to time convert any preference  shares into redeemable
     preference shares.

47.  The Company may from time to time purchase its own shares on such terms and
     in such manner as may be authorized  by the Board of Directors,  subject to
     the rules, if applicable,  of the London Stock Exchange, the New York Stock
     Exchange and the Oslo Stock Exchange.  In the event the Company  conducts a
     tender  offer for its  shares,  any such offer  which is made  through  the
     facilities  of  the  Oslo  Stock  Exchange  shall  be  expressed  as  being
     conditional  upon no Shareholders  or persons  resident for tax purposes in
     Norway (or such other  jurisdiction  as the Board may nominate from time to
     time)  owning or  controlling  fifty  percent or more of the  issued  share
     capital or the votes attaching to the issued and outstanding  share capital
     of the Company following such purchase.

     Any share so purchased shall be treated as cancelled, and the amount of the
     Company's  issued share capital shall be diminished by the nominal value of
     the shares purchased,  but such purchase shall not be taken as reducing the
     amount of the Company's authorized share capital.

47(a)Subject to the Companies  Act, the Company  shall have the option,  but not
     the obligation,  to repurchase  from any  Shareholder or  Shareholders  all
     fractions of shares, and all holdings of fewer than 100 shares,  registered
     in the name of said Shareholder or  Shareholders.  Such repurchase shall be
     on such terms and conditions as the Board may  determine,  provided that in
     any event,  the repurchase  price shall be not less than the closing market
     price per share  quoted on the New York  Stock  Exchange  or the Oslo Stock
     Exchange on the effective date of the repurchase. Each Shareholder shall be
     bound by the  determination  of the  Company to  repurchase  such shares or
     fractions thereof.  If the Company determines to repurchase any such shares
     or  fractions,  the Company shall give written  notice to each  Shareholder
     concerned  accompanied by a cheque or warrant for the repurchase  price and
     the relevant  shares,  fractions and  certificates in respect thereof shall
     thereupon be cancelled.

                              REDUCTION OF CAPITAL

48.  Subject to the Companies  Acts,  its  memorandum  and any  confirmation  or
     consent  required  by law or these  Bye-Laws,  the Company may from time to
     time by Ordinary  Resolution  authorize  the  reduction of its issued share
     capital or any  capital  redemption  reserve  fund or any share  premium or
     contributed surplus account in any manner.

49.  In relation to any such  reduction  the Company may by Ordinary  Resolution
     determine the terms upon which such reduction is to be effected, including,
     in the case of a reduction of part only of a class of shares,  those shares
     to be affected.

                                GENERAL MEETINGS

50.  The Board  shall  convene and the Company  shall hold  general  meetings as
     Annual  General  Meetings  in  accordance  with  the  requirements  of  the
     Companies  Acts at such times and places  subject to the limitation set out
     below as the Board shall appoint. The Board may whenever it thinks fit, and
     shall when required by the Companies Acts,  convene general  meetings other
     than  Annual  General  Meetings  which  shall  be  called  Special  General
     Meetings.  Any such Annual or Special  General Meeting shall be held at any
     place other than Norway.

                           NOTICE OF GENERAL MEETINGS

51.  An Annual  General  Meeting  shall be called  by not less than  seven  days
     notice in writing and a Special General Meeting shall be called by not less
     than seven days notice in writing.  The notice period shall be exclusive of
     the day on which the notice is served or deemed to be served and of the day
     on which the  meeting to which it  relates is to be held and shall  specify
     the  place,  day and  time of the  meeting,  and in the  case of a  Special
     General  Meeting,  the general  nature of the  business  to be  considered.
     Notice of every general  meeting shall be given in any manner  permitted by
     Bye-Laws 127 and 128 to all Shareholders. Notwithstanding that a meeting of
     the  Company  is called by  shorter  notice  than  that  specified  in this
     Bye-Law, it shall be deemed to have been duly called if it is so agreed:

     (a)  in the case of a meeting  called as an Annual  General  Meeting by all
          the Shareholders entitled to attend and vote thereat;

     (b)  in the case of any  other  meeting  by a  majority  in  number  of the
          Shareholders having the right to attend and vote at the meeting, being
          a  majority  together  holding  not less than  ninety-five  percent in
          nominal value of the shares giving that right;

     provided  that   notwithstanding  any  provision  of  these  Bye-Laws,   no
     Shareholder  shall be entitled to attend any general  meeting unless notice
     in writing of the intention to attend and vote in person or by proxy signed
     by or on behalf of the Shareholder  (together with the power of attorney or
     other authority, if any, under which it is signed or a notarially certified
     copy thereof)  addressed to the  Secretary is deposited (by post,  courier,
     facsimile  transmission or other electronic means) at the Registered Office
     at least 48 hours before the time appointed for holding the general meeting
     or adjournment thereof.

52.  The  accidental  omission  to give  notice of a meeting or (in cases  where
     instruments of proxy are sent out with the notice) the accidental  omission
     to send  such  instrument  of proxy to or the  non-receipt  of  notice of a
     meeting or such  instrument of proxy by any person entitled to receive such
     notice shall not invalidate the proceedings at that meeting.

53.  The Board may convene a Special General  Meeting  whenever it thinks fit. A
     Special  General Meeting shall also be convened by the Board on the written
     requisition  of  Shareholders  holding  at the date of the  deposit  of the
     requisition not less than one tenth in nominal value of the paid-up capital
     of the  Company  which as at the date of the  deposit  carries the right to
     vote at a general meeting of the Company.  The  requisition  must state the
     purposes  of the  meeting  and must be  signed by the  requisitionists  and
     deposited  at the  registered  office of the  Company,  and may  consist of
     several  documents  in  like  form  each  signed  by  one  or  more  of the
     requisitionists.

                         PROCEEDINGS AT GENERAL MEETING

54.  No business shall be transacted at any general meeting unless the requisite
     quorum is present when the meeting proceeds to business, but the absence of
     a quorum  shall not  preclude  the  appointment,  choice or  election  of a
     chairman which shall not be treated as part of the business of the meeting.
     Save as  otherwise  provided by these  Bye-Laws,  the quorum at any general
     meeting shall be constituted by one or more shareholders, either present in
     person or represented by proxy, holding in the aggregate shares carrying 33
     1/3% of the voting rights entitled to be exercised at such meeting.

55.  If within five  minutes (or such longer time as the chairman of the meeting
     may determine to wait) after the time  appointed for the meeting,  a quorum
     is  not  present,   the  meeting,   if  convened  on  the   requisition  of
     Shareholders,  shall be  dissolved.  In any  other  case,  it  shall  stand
     adjourned  to such other day and such other time and place as the  chairman
     of the meeting may determine and at such adjourned meeting two Shareholders
     or, in the  event  that  there is only one  Shareholder,  one  Shareholder,
     present in person or by proxy  (whatever the number of shares held by them)
     shall be a quorum. The Company shall give not less than five days notice of
     any meeting  adjourned through want of a quorum and such notice shall state
     that two  Shareholders or, in the event that there is only one Shareholder,
     one  Shareholder,  present  in person or by proxy  (whatever  the number of
     shares held by them) shall be a quorum.

56.  A meeting of the  Shareholders or any class thereof may be held by means of
     such telephone,  electronic or other communication facilities as permit all
     persons  participating  in the  meeting  to  communicate  with  each  other
     simultaneously and  instantaneously and participation in such meeting shall
     constitute presence in person at such meeting.

57.  Each Director and the Company's  auditor and Secretary shall be entitled to
     attend and speak at any general meeting of the Company.

58.  The Chairman (if any) of the Board or, in his absence,  the President shall
     preside as chairman at every general meeting.  If there is no such Chairman
     or President,  or if at any meeting  neither the Chairman nor the President
     is present  within five minutes  after the time  appointed  for holding the
     meeting, or if neither of them is willing to act as chairman, the Directors
     present  shall choose one of their number to act or if one Director only is
     present he shall  preside as  chairman if willing to act. If no Director is
     present or if each of the Directors present declines to take the chair, the
     persons  present  and  entitled  to vote on a poll shall elect one of their
     number to be chairman.

59.  The chairman of the meeting may,  with the consent of those  present at any
     meeting  at which a quorum is  present  (and  shall if so  directed  by the
     meeting), adjourn the meeting from time to time and from place to place but
     no business shall be transacted at any adjourned  meeting  except  business
     which might  lawfully  have been  transacted  at the meeting from which the
     adjournment  took  place.  When a meeting is  adjourned  for thirty days or
     more,  notice of the adjourned  meeting shall be given as in the case of an
     original meeting.

60.  Save as expressly provided by these Bye-Laws,  it shall not be necessary to
     give any notice of an adjournment or of the business to be transacted at an
     adjourned meeting.

                                     VOTING

61.  Save where a greater  majority is required by the  Companies  Acts or these
     Bye-Laws,  any question  proposed for  consideration at any general meeting
     shall be decided on by Ordinary Resolution.

62.  The Board may, with the sanction of an Ordinary Resolution,  amalgamate the
     Company with another  company  (whether or not the Company is the surviving
     company  and whether or not such an  amalgamation  involves a change in the
     jurisdiction of the Company).

63.  At any general  meeting,  a resolution put to the vote of the meeting shall
     be decided on a show of hands unless  (before or on the  declaration of the
     result of the show of hands or on the  withdrawal of any other demand for a
     poll) a poll is demanded by:

     (a)  the chairman of the meeting; or

     (b)  at least three shareholders present in person or represented by proxy;
          or

     (c)  any  shareholder or  shareholders  present in person or represented by
          proxy and  holding  between  them not less than one tenth of the total
          voting rights of all the shareholders having the right to vote at such
          meeting; or

     (d)  a shareholder  or  shareholders  present in person or  represented  by
          proxy  holding  shares  conferring  the right to vote at such meeting,
          being  shares on which an  aggregate  sum has been paid up equal to at
          least one-tenth of the total sum paid up on all such shares conferring
          such right.

     Unless a poll is so demanded and the demand is not withdrawn, a declaration
     by the chairman that a resolution has, on a show of hands,  been carried or
     carried  unanimously  or by a  particular  majority  or  not  carried  by a
     particular majority or lost shall be final and conclusive,  and an entry to
     that effect in the Minute Book of the Company shall be conclusive  evidence
     of the fact  without  proof of the number of votes  recorded for or against
     such resolution.

64.  A  poll  demanded  on the  election  of a  chairman,  or on a  question  of
     adjournment,  shall  be  taken  forthwith.  A poll  demanded  on any  other
     question shall be taken in such manner and either forthwith or at such time
     (being not later than three  months after the date of the demand) and place
     as the  chairman  shall  direct.  It shall  not be  necessary  (unless  the
     chairman otherwise directs) for notice to be given of a poll.

65.  The demand for a poll shall not  prevent the  continuance  of a meeting for
     the  transaction  of any business other than the question on which the poll
     has been  demanded  and it may be withdrawn at any time before the close of
     the meeting or the taking of the poll whichever is the earlier.

66.  On a poll, votes may be cast either personally or by proxy.

67.  A person  entitled  to more  than  one vote on a poll  need not use all his
     votes or cast all the votes he uses in the same way.

68.  If a poll is duly  demanded,  the  result of the poll shall be deemed to be
     the resolution of the meeting at which the poll is demanded.

69.  In the case of any  equality  of votes at a general  meeting,  whether on a
     show of hands or on a poll,  the  chairman  of such  meeting  shall  not be
     entitled to a second or casting vote.

70.  Subject to the  provisions of these  Bye-Laws and to any special  rights or
     restrictions as to voting for the time being attached to any shares,  every
     Shareholder  who is present in person or by proxy or proxies shall have one
     vote for every share of which he is the holder.

71.  In the  case of joint  holders  of a share,  the vote of the  senior  joint
     holder who tenders a vote, whether in person or by proxy, shall be accepted
     to the  exclusion  of the votes of the other  joint  holders,  and for this
     purpose seniority shall be determined by the order in which the names stand
     in the Register in respect of the joint holding.

72.  A Shareholder who is a patient for any purpose of any statute or applicable
     law relating to mental  health or in respect of whom an order has been made
     by any Court having  jurisdiction  for the  protection or management of the
     affairs of persons  incapable of managing their own affairs may vote by his
     receiver,  committee,  curator  bonis or other  person  in the  nature of a
     receiver,  committee  or  curator  bonis  appointed  by such Court and such
     receiver,  committee,  curator bonis or other person may vote by proxy, and
     may  otherwise  act and be treated as such  Shareholder  for the purpose of
     general meetings.

73.  No Shareholder shall, unless the Board otherwise determines, be entitled to
     vote at any  general  meeting  unless  all  calls or other  sums  presently
     payable by him in respect of shares in the Company have been paid.

74.  If (i) any objection shall be raised to the  qualification  of any voter or
     (ii) any votes have been  counted  which ought not to have been  counted or
     which might have been  rejected  or (iii) any votes are not  counted  which
     ought to have been  counted,  the  objection or error shall not vitiate the
     decision of the meeting or adjourned  meeting on any resolution  unless the
     same is raised or pointed  out at the  meeting  or, as the case may be, the
     adjourned  meeting at which the vote objected to is given or tendered or at
     which the error  occurs.  Any  objection  or error shall be referred to the
     chairman of the meeting and shall only  vitiate the decision of the meeting
     on any  resolution if the chairman  decides that the same may have affected
     the decision of the  meeting.  The decision of the chairman on such matters
     shall be final and conclusive.

                      PROXIES AND CORPORATE REPRESENTATIVES

75.  A  Shareholder  may  appoint  one or more  proxies  to  attend at a general
     meeting of the Company and to vote on his behalf and proxies appointed by a
     single Shareholder need not all exercise their vote in the same manner. The
     instrument  appointing  a proxy  shall be in writing  under the hand of the
     appointor  or of his  attorney  authorized  by him in  writing  or,  if the
     appointor is a body  corporate,  either under its seal or under the hand of
     an officer, attorney or other person authorized to sign the same.

76.  Any  Shareholder  may  appoint a  standing  proxy or (if a body  corporate)
     representative by depositing at the Registered Office a proxy or (if a body
     corporate) an authorization and such proxy or authorization  shall be valid
     for  all  general  meetings  and  adjournments   thereof  until  notice  of
     revocation is received at the Registered Office.  Where a standing proxy or
     authorization  exists, its operation shall be deemed to have been suspended
     at any general  meeting or adjournment  thereof at which the Shareholder is
     present or in respect of which the  Shareholder  has specially  appointed a
     proxy or  representative.  The  Board may from  time to time  require  such
     evidence as it shall deem  necessary as to the due execution and continuing
     validity of any such standing proxy or  authorization  and the operation of
     any such standing  proxy or  authorization  shall be deemed to be suspended
     until such time as the Board  determines that it has received the requested
     evidence or other evidence satisfactory to it.

77.  Subject to Bye-Law 76, the instrument appointing a proxy together with such
     other  evidence as to its due  execution as the Board may from time to time
     require,  shall be delivered at the Registered  Office, at the place of the
     meeting,  or at such place as may be specified in the notice  convening the
     meeting or in any notice of any  adjournment,  or, in either  case,  in any
     document sent  therewith,  prior to the holding of the meeting or adjourned
     meeting at which the person named in the instrument proposes to vote or, in
     the case of a poll taken  subsequent  to the date of a meeting or adjourned
     meeting,  before  the  time  appointed  for the  taking  of the poll and in
     default the instrument of proxy shall not be treated as valid.

78.  Instruments  of proxy  shall be in any common form or in such other form as
     the Board may approve  and the Board may,  if it thinks fit,  send out with
     the notice of any  meeting  forms of  instruments  of proxy for use at that
     meeting.  The  instrument  of proxy shall be deemed to confer  authority to
     vote on any  amendment of a  resolution  put to the meeting for which it is
     given as the proxy  thinks fit.  The  instrument  of proxy shall unless the
     contrary  is stated  therein  be valid as well for any  adjournment  of the
     meeting as for the meeting to which it relates.

79.  A vote given in  accordance  with the terms of an instrument of proxy shall
     be valid notwithstanding the previous death or insanity of the principal or
     revocation of the  instrument  of proxy or of the authority  under which it
     was  executed,  provided  that no  intimation  in  writing  of such  death,
     insanity  or  revocation  shall have been  received  by the  Company at the
     Registered  Office,  the place of the meeting or such other place as may be
     specified for the delivery of instruments of proxy in the notice  convening
     the meeting or other  documents sent therewith  before the  commencement of
     the meeting or adjourned  meeting,  or the taking of the poll, at which the
     instrument of proxy is used.

80.  Subject to the Companies Acts, the Board may at its discretion waive any of
     the provisions of these Bye-Laws related to proxies or authorizations  and,
     in particular,  may accept such verbal or other assurances as it thinks fit
     as to the  right  of any  person  to  attend  and  vote  on  behalf  of any
     Shareholder at general meetings.

                    TRANSACTIONS WITH PRINCIPAL SHAREHOLDERS

81.  (a) Subject to paragraph (e) below,  where any transaction with a Principal
         Shareholder is proposed, a circular must be sent to each Shareholder.

     (b)  For the purposes of this Bye-Law:

          (i)  "transaction  with a Principal  Shareholder"  means a transaction
               (other than a  transaction  of a revenue  nature in the  ordinary
               course  of  business)   between  the  Company,   or  any  of  its
               subsidiaries,  and a Principal  Shareholder  or an Associate of a
               Principal Shareholder; and

          (ii) "Principal Shareholder" means any person (excluding the Registrar
               in respect of those shares registered in its name on the Register
               as  nominee  of  persons  whose  interests  in  such  shares  are
               reflected in the VPS and any bare  trustee) who is, or was within
               the twelve months preceding the date of the transaction, entitled
               to exercise,  or to control the exercise of, whether  directly or
               indirectly  (including  through interests in shares registered in
               the name of the  Registrar  on the  Register  as  nominee of such
               person whose  interests in such shares are reflected in the VPS),
               twenty  percent  or more  of the  votes  attaching  to all of the
               issued shares.

     (c)  Any circular sent to  Shareholders  in accordance  with  paragraph (a)
          above shall provide sufficient  information to enable each Shareholder
          to  evaluate  the  effects of the  transaction  on the  Company or the
          relevant subsidiary.

     (d)  The  provisions  of paragraph  (a) of this Bye-Law shall apply mutatis
          mutandis to any variation or novation of an existing agreement between
          the Company (or any of its subsidiaries)  and a Principal  Shareholder
          (or Associate of a Principal  Shareholder)  whether or not at the time
          that the  original  agreement  was entered into the latter party was a
          Principal Shareholder (or Associate of a Principal Shareholder).

     (e)  Notwithstanding  the  foregoing,  the provisions of this Bye-Law shall
          not apply to any of the following transactions:

          (i)  an issue of new  shares  for cash by the  Company  (or any of its
               subsidiaries); or

          (ii) the  issue  of  shares  of  the   Company   (or  of  any  of  its
               subsidiaries) pursuant to an employee share scheme of the Company
               (or such subsidiary); or

         (iii) an  underwriting  of all or part of an  issue of  shares  by the
               Company (or any of its subsidiaries) where the consideration paid
               by  the  Company  (or  such   subsidiary)   in  respect  of  such
               underwriting  is no more than the usual  commercial  underwriting
               consideration  and  is  determined  on  the  same  basis  as  the
               consideration to be paid to the other underwriters (if any); or

          (iv) a  transaction  that is not  material.  For the  purposes of this
               Bye-Law a transaction shall be material where the market value of
               the assets which are the subject of the transaction (ignoring for
               these purposes any related indebtedness) is greater than or equal
               to five  percent of the net  assets of the  Company as set out in
               the latest audited accounts of the Company then available (or, if
               there are none, in the latest consolidated balance sheet reported
               on by the auditors of the Company) or, if less,  U.S.$20,000,000;
               or

          (v)  a  transaction  in  which a  Principal  Shareholder  participates
               solely by virtue of his  shareholding  in, or interests in shares
               of, the Company and on a pro-rata basis with the other holders of
               shares  or  interests  in  shares  of the  relevant  class of the
               Company,  including,  without  limitation,  the  declaration of a
               dividend  by the Company or other  distribution  of assets of the
               Company.

                      APPOINTMENT AND REMOVAL OF DIRECTORS

82.  The  number  of  Directors  shall be such  number  not less than two as the
     Company by Ordinary  Resolution  may from time to time  determine  and each
     Director shall hold office until the next annual general meeting  following
     his election or until his successor is elected.

83.  The  Company  shall at the  Annual  General  Meeting  and may in a  general
     meeting by Ordinary Resolution determine the minimum and the maximum number
     of  Directors  and may by Ordinary  Resolution  determine  that one or more
     vacancies in the Board shall be deemed casual vacancies for the purposes of
     these  Bye-Laws.  Without  prejudice  to the  power of the  Company  in any
     general  meeting in pursuance of any of the provisions of these Bye-Laws to
     appoint  any person to be a  Director,  the  Board,  so long as a quorum of
     Directors remains in office,  shall have power at any time and from time to
     time to appoint  any  individual  to be a  Director  so as to fill a casual
     vacancy.

84.  The Company may in a Special General Meeting called for that purpose remove
     a Director  provided  notice of any such  meeting  shall be served upon the
     Director  concerned  not less than  fourteen days before the meeting and he
     shall be entitled to be heard at that meeting.  Any vacancy  created by the
     removal of a Director  at a Special  General  Meeting  may be filled at the
     Meeting by the  election of another  person as Director in his place or, in
     the absence of any such election, by the Board.

                  RESIGNATION AND DISQUALIFICATION OF DIRECTORS

85.  The office of a Director  shall be vacated upon the happening of any of the
     following events:

     (a)  if he  resigns  his  office  by  notice in  writing  delivered  to the
          Registered Office or tendered at a meeting of the Board;

     (b)  if he  becomes  of unsound  mind or a patient  for any  purpose of any
          statute or  applicable  law  relating  to mental  health and the Board
          resolves that he shall be removed from office;

     (c)  if he becomes bankrupt or compounds with his creditors;

     (d)  if he is prohibited by law from being a Director; or

     (e)  if he ceases to be a Director  by virtue of the  Companies  Acts or is
          removed from office pursuant to these Bye-Laws.

                               ALTERNATE DIRECTORS

86.  (a)  The  Company  may by  Ordinary  Resolution  elect a person or  persons
          qualified to be Directors  to act as Directors in the  alternative  to
          any of the  Directors  of the  Company or may  authorize  the Board to
          appoint such Alternate Directors and a Director may appoint and remove
          his own Alternate Director. Any appointment or removal of an Alternate
          Director by a Director  shall be effected  by  depositing  a notice of
          appointment  or removal with the Secretary at the  Registered  Office,
          signed by such Director,  and such appointment or removal shall become
          effective  on the date of  receipt  by the  Secretary.  Any  Alternate
          Director may be removed by Ordinary  Resolution of the Company and, if
          appointed  by the  Board,  may be  removed  by the  Board.  Subject as
          aforesaid,  the office of Alternate  Director shall continue until the
          next annual  election of Directors  or, if earlier,  the date on which
          the relevant Director ceases to be a Director.  An Alternate  Director
          may also be a Director  in his own right and may act as  alternate  to
          more than one Director.

     (b)  A  Director  may at any  time,  by  notice  in  writing  signed by him
          delivered to the  Registered  Office of the Company or at a meeting of
          the Board,  appoint any person (including  another Director) to act as
          Alternate  Director  in his place  during his  absence and may in like
          manner at any time determine such  appointment.  If such person is not
          another Director such appointment  unless  previously  approved by the
          Board shall have  effect  only upon and subject to being so  approved.
          The  appointment  of an  Alternate  Director  shall  determine  on the
          happening of any event which,  were he a Director,  would cause him to
          vacate such office or if his appointor ceases to be a Director.

                  DIRECTORS' FEES AND ADDITIONAL REMUNERATION AND EXPENSES

87.  The  amount,  if  any,  of  Directors'  fees  shall  from  time  to time be
     determined  by the Company by Ordinary  Resolution  and in the absence of a
     determination to the contrary in general meeting, such fees shall be deemed
     to  accrue  from  day to day.  Each  Director  may be paid  his  reasonable
     traveling, hotel and incidental expenses properly incurred in attending and
     returning from meetings of the Board or committees  constituted pursuant to
     these Bye-Laws or general meetings and shall be paid all expenses  properly
     and reasonably  incurred by him in the conduct of the Company's business or
     in the discharge of his duties as a Director. Any Director who, by request,
     goes or resides  abroad for any  purposes  of the  Company or who  performs
     services which in the opinion of the Board go beyond the ordinary duties of
     a Director may be paid such extra  remuneration  (whether by way of salary,
     commission,  participation  in  profits  or  otherwise)  as the  Board  may
     determine,  and  such  extra  remuneration  shall  be in  addition  to  any
     remuneration provided for by or pursuant to any other Bye-Law.

                              DIRECTORS' INTERESTS

88.  (a)  A  Director  may hold any other  office  or place of  profit  with the
          Company  (except  that of auditor) in  conjunction  with his office of
          Director  for  such  period  and upon  such  terms  as the  Board  may
          determine and may be paid such extra remuneration therefor (whether by
          way of salary,  commission,  participation in profits or otherwise) as
          the Board  may  determine,  and such  extra  remuneration  shall be in
          addition to any remuneration  provided for by or pursuant to any other
          Bye-Law.

     (b)  A Director may act by himself or his firm in a  professional  capacity
          for the Company  (otherwise  than as auditor) and he or his firm shall
          be entitled to remuneration  for  professional  services as if he were
          not a Director.

     (c)  Subject to the  provisions  of the  Companies  Acts,  a  Director  may
          notwithstanding  his office be a party to or otherwise  interested  in
          any  transaction  or  arrangement  with the  Company  or in which  the
          Company is otherwise interested and may be a director or other officer
          of,  employed by, a party to any  transaction or arrangement  with, or
          otherwise  interested in any body corporate promoted by the Company or
          in which the  Company  is  interested.  The  Board may also  cause the
          voting power  conferred by the shares in any other body corporate held
          or owned by the Company to be exercised in such manner in all respects
          as it thinks  fit,  including  the  exercise  thereof  in favor of any
          resolution  appointing the Directors or any of them to be directors or
          officers of such other body corporate,  or voting or providing for the
          payment of  remuneration  to the  directors  or officers of such other
          body corporate.

     (d)  So long as,  where it is  necessary,  he  declares  the  nature of his
          interest  at the first  opportunity  at a  meeting  of the Board or by
          writing to the Directors as required by the Companies Acts, a Director
          shall not by reason of his office be  accountable  to the  Company for
          any benefit  which he derives from any office or  employment  to which
          these  Bye-Laws  allow him to be appointed or from any  transaction or
          arrangement in which these Bye-Laws allow him to be interested, and no
          such  transaction or arrangement  shall be liable to be avoided on the
          ground of any interest or benefit.

     (e)  Subject to the  Companies  Acts and any  further  disclosure  required
          thereby,  a general  notice to the  Directors by a Director or officer
          declaring  that he is a director  or officer or has an  interest  in a
          person and is to be  regarded  as  interested  in any  transaction  or
          arrangement made with that person,  shall be a sufficient  declaration
          of interest in relation to any transaction or arrangement so made.

                         POWERS AND DUTIES OF THE BOARD

89.  Subject to the  provisions of the Companies  Acts and these Bye-Laws and to
     any  directions  given by the Company in general  meeting,  the Board shall
     manage the  business of the Company  and may pay all  expenses  incurred in
     promoting and  incorporating the Company and may exercise all the powers of
     the Company.  No alteration of these Bye-Laws and no such  direction  shall
     invalidate  any prior act of the Board  which would have been valid if that
     alteration  had not been made or that  direction  had not been  given.  The
     powers  given by this  Bye-Law  shall not be limited by any  special  power
     given to the Board by these  Bye-Laws and a meeting of the Board at which a
     quorum  is  present   shall  be  competent  to  exercise  all  the  powers,
     authorities  and discretions for the time being vested in or exercisable by
     the Board.

90.  The Board may exercise all the powers of the Company to borrow money and to
     mortgage or charge all or any part of the  undertaking  property and assets
     (present  and  future)  and  uncalled  capital of the  Company and to issue
     debentures and other securities, whether outright or as collateral security
     for any  debt,  liability  or  obligation  of the  Company  or of any other
     persons.

91.  All  checks,   promissory  notes,  drafts,  bills  of  exchange  and  other
     instruments,  whether  negotiable or  transferable or not, and all receipts
     for money paid to the Company shall be signed, drawn, accepted, endorsed or
     otherwise  executed,  as the case may be, in such manner as the Board shall
     from time to time by resolution determine.

92.  The Board on behalf of the  Company may  provide  benefits,  whether by the
     payment of gratuities or pensions or  otherwise,  for any person  including
     any  Director  or  former  Director  who has held any  executive  office or
     employment with the Company or with any body corporate which is or has been
     a subsidiary or affiliate of the Company or a  predecessor  in the business
     of the Company or of any such subsidiary or affiliate, and to any member of
     his family or any person who is or was dependent on him, and may contribute
     to any fund and pay  premiums  for the  purchase or  provision  of any such
     gratuity, pension or other benefit, or for the insurance of any such person
     in connection with the provision of pensions.  The Board may also establish
     and maintain any employees'  share scheme,  share option or share incentive
     scheme approved by Ordinary  Resolution  whereby selected  employees of the
     Company or of any company  which is a  subsidiary  of the Company are given
     the  opportunity  of acquiring  shares in the capital of the Company on the
     terms and subject to the  conditions  set out in such scheme and  establish
     and (if any such  scheme so  provides)  contribute  to any  scheme  for the
     purchase by or  transfer,  allotment  or issue to trustees of shares in the
     Company to be held for the benefit of employees  (including  Directors  and
     officers)  of the Company and  subject to the  Companies  Act lend money to
     such trustees or employees to enable the purchase of such shares.

93.  The  Board may from  time to time  appoint  one or more of its body to be a
     managing  director,  joint  managing  director  or  an  assistant  managing
     director  or to hold any other  employment  or  executive  office  with the
     Company for such period and upon such terms as the Board may  determine and
     may revoke or  terminate  any such  appointments.  Any such  revocation  or
     termination  as  aforesaid  shall be  without  prejudice  to any  claim for
     damages that such  Director may have against the Company or the Company may
     have  against  such  Director  for any  breach of any  contract  of service
     between him and the Company  which may be  involved in such  revocation  or
     termination.  Any person so appointed shall receive such  remuneration  (if
     any,  whether by way of  salary,  commission,  participation  in profits or
     otherwise) as the Board may determine, and either in addition to or in lieu
     of his remuneration as a Director.

                        DELEGATION OF THE BOARD'S POWERS

94.  The Board may by power of attorney  appoint any company,  firm or person or
     any fluctuating body of persons,  whether nominated  directly or indirectly
     by the Board,  to be the  attorney  or  attorneys  of the  Company for such
     purposes and with such power,  authorities and  discretions  (not exceeding
     those vested in or exercisable  by the Board under these  Bye-Laws) and for
     such period and  subject to such  conditions  as it may think fit,  and any
     such power of attorney may contain such  provisions  for the protection and
     convenience of persons  dealing with any such attorney and of such attorney
     as the Board may think fit,  and may also  authorize  any such  attorney to
     sub-delegate all or any of the powers,  authorities and discretions  vested
     in him. The Board may revoke or vary any such  delegation of power,  but no
     person  dealing  in good faith with such  delegate  without  notice of such
     revocation or variation shall be affected by such revocation or variation.

95.  The Board may  entrust  to and confer  upon any  Director  or  officer  or,
     without  prejudice to the provisions of Bye-Law 97, other individual any of
     the  powers  exercisable  by it upon such  terms and  conditions  with such
     restrictions  as it thinks fit,  and either  collaterally  with,  or to the
     exclusion  of its own powers,  and may from time to time revoke or vary all
     or any of such  powers  but no person  dealing  in good  faith and  without
     notice of such revocation or variation shall be affected thereby.

96.  The Board may delegate any of its powers,  authorities  or  discretions  to
     committees,  consisting  of such  person or  persons  (whether  a member or
     members  of its body or not) as it  thinks  fit.  Any  committee  so formed
     shall,  in the  exercise  of the powers,  authorities  and  discretions  so
     delegated,  conform to any regulations  which may be imposed upon it by the
     Board.  The Board may  revoke or vary any such  delegation  of its  powers,
     authorities  and  discretions,  but no  person  dealing  in good  faith and
     without notice of such revocation or variation shall be affected thereby.

                            PROCEEDINGS OF THE BOARD

97.  The Board may meet for the  despatch of  business,  adjourn  and  otherwise
     regulate its meetings as it thinks fit, provided that Board meetings are to
     be held outside  Norway and the United  Kingdom.  Questions  arising at any
     meeting  shall be determined by a majority of votes cast. In the case of an
     equality of votes the motion  shall be deemed to have been lost. A Director
     may, and the Secretary on the  requisition of a Director shall, at any time
     summon a Board meeting.

98.  Notice of a Board meeting shall be deemed to be duly given to a Director if
     it is given to him  personally  or by word of mouth or sent to him by post,
     cable, telex, telecopier or other mode of representing or reproducing words
     in a legible and non-transitory form at his last known address or any other
     address given by him to the Company for this purpose.  A Director may waive
     notice of any meeting either prospectively or retrospectively.

99.  (a)  The quorum  necessary for the transaction of the business of the Board
          may be fixed by the Board  and,  unless so fixed at any other  number,
          shall be a  majority  of the  Board  present  in  person  or by proxy,
          provided  that a quorum shall not be present  unless a majority of the
          Directors present are not resident in Norway.  Any Director who ceases
          to be a Director at a Board  meeting may continue to be present and to
          act as a Director and be counted in the quorum  until the  termination
          of the Board meeting if no other  Director  objects and if otherwise a
          quorum of Directors would not be present.

     (b)  Subject  to the  provisions  of  Bye-Law  89,  a  Director  who to his
          knowledge is in any way, whether directly or indirectly, interested in
          a contract or proposed  contract,  transaction or arrangement with the
          Company and has complied with the provisions of the Companies Acts and
          these  Bye-Laws  with regard to  disclosure  of his interest  shall be
          entitled  to  vote  in  respect  of  any  contract,   transaction   or
          arrangement  in  which he is so  interested  and if he shall do so his
          vote  shall  be  counted,  and he  shall  be  taken  into  account  in
          ascertaining whether a quorum is present.

100. So  long as a  quorum  of  Directors  remains  in  office,  the  continuing
     Directors may act  notwithstanding any vacancy in the Board but, if no such
     quorum remains,  the continuing Directors or a sole continuing Director may
     act only for the purpose of calling a general meeting.

101. The Chairman (if any) of the Board or, in his absence,  the President shall
     preside as  chairman  at every  meeting  of the Board.  If there is no such
     Chairman or  President,  or if at any meeting  neither the Chairman nor the
     President  is present  within five  minutes  after the time  appointed  for
     holding the  meeting,  or if neither of them is willing to act as chairman,
     the Directors  present may choose one of their number to be chairman of the
     meeting.

102. The meetings and  proceedings  of any  committee  consisting of two or more
     members shall be governed by the provisions contained in these Bye-Laws for
     regulating the meetings and proceedings of the Board so far as the same are
     applicable and are not superseded by any regulations imposed by the Board.

103. A  resolution  in writing  signed by all the  Directors  for the time being
     entitled to receive  notice of a meeting of the Board or by all the members
     of a  committee  for the time being  shall be as valid and  effectual  as a
     resolution passed at a meeting of the Board or, as the case may be, of such
     committee duly called and constituted.  Such resolution may be contained in
     one document or in several documents in the like form each signed by one or
     more of the Directors or members of the committee concerned.

104. A meeting of the Board or a committee appointed by the Board may be held by
     means of such telephone,  electronic or other  communication  facilities as
     permit all persons  participating  in the meeting to communicate  with each
     other  simultaneously  and  instantaneously  and  participation  in  such a
     meeting shall constitute  presence in person at such meeting.  A meeting of
     the Board or committee  appointed by the Board held in the foregoing manner
     shall be deemed  to take  place at the place  where  the  largest  group of
     participating  Directors or committee  members has assembled or, if no such
     group exists, at the place where the chairman of the meeting  participates.
     The Board or relevant  committee  shall use its best  endeavours  to ensure
     that any such  meeting  is not  deemed  to have  been held in Norway or the
     United  Kingdom,  and the fact that one or more Directors may be present at
     such  teleconference  by virtue of his  being  physically  in Norway or the
     United Kingdom shall not deem such meeting to have taken place in Norway or
     the United Kingdom.

105. All acts done by the Board or by any committee or by any person acting as a
     Director or member of a  committee  or any person  duly  authorized  by the
     Board  or any  committee,  shall,  notwithstanding  that  it is  afterwards
     discovered  that there was some defect in the  appointment of any member of
     the Board or such  committee or person  acting as aforesaid or that they or
     any of them were  disqualified or had vacated their office,  be as valid as
     if every such  person had been duly  appointed  and was  qualified  and had
     continued  to  be a  Director,  member  of  such  committee  or  person  so
     authorized.

                                    OFFICERS

106. The officers of the Company shall include a President and a  Vice-President
     who  shall be  Directors  and  shall  be  elected  by the  Board as soon as
     possible after the statutory  meeting and each annual general  meeting.  In
     addition,  the Board may appoint one of the Directors to be Chairman of the
     Board and any person  whether  or not he is a  Director  to hold such other
     office (including any additional  Vice-Presidencies)  as the Board may from
     time to time  determine.  Any person elected or appointed  pursuant to this
     Bye-Law  shall hold office for such period and upon such terms as the Board
     may  determine  and the Board may revoke or terminate  any such election or
     appointment.  Any such revocation or termination shall be without prejudice
     to any claim for damages  that such officer may have against the Company or
     the Company may have against such officer for any breach of any contract of
     service  between  him  and  the  Company  which  may be  involved  in  such
     revocation or termination.  Save as provided in the Companies Acts or these
     Bye-Laws,  the powers and duties of the  officers of the  Company  shall be
     such (if any) as are determined from time to time by the Board.

                                     MINUTES

107. The Directors shall cause minutes to be made and books kept for the purpose
     of recording:

     (a) all appointments of officers made by the Directors;

     (b)  the names of the  Directors and other persons (if any) present at each
          meeting of Directors and of any committee;

     (c)  all  proceedings  at  meetings of the  Company,  of the holders of any
          class of shares in the Company, and of committees; and

     (d)  all proceedings of managers (if any).

                                    SECRETARY

108. The Secretary shall be appointed by the Board at such remuneration (if any)
     and upon such terms as it may think fit and any  Secretary so appointed may
     be removed by the Board.

     The duties of the Secretary shall be those prescribed by the Companies Acts
     together with such other duties as shall from time to time be prescribed by
     the Board.

109. A  provision  of  the  Companies  Acts  or  these  Bye-Laws   requiring  or
     authorizing a thing to be done by or to a Director and the Secretary  shall
     not be satisfied by its being done by or to the same person  acting both as
     Director and as, or in the place of, the Secretary.

                                    THE SEAL

110. (a)  The  seal of the  Company  shall  be in such  form  as the  Board  may
          determine.  The Board may  adopt one or more  duplicate  seals for use
          outside Bermuda.

     (b)  The seal of the Company shall not be affixed to any instrument  except
          attested by the  signature of a Director and the  Secretary or any two
          Directors,  or any  person  appointed  by the Board for that  purpose,
          provided that any Director,  Officer or Resident  Representative,  may
          affix the seal of the Company  attested by such  Director,  Officer or
          Resident  Representative's  signature to any  authenticated  copies of
          these  Bye-Laws,  the  incorporating  documents  of the  Company,  the
          minutes  of  any  meetings  or  any  other  documents  required  to be
          authenticated by such Director, Officer or Resident Representative.

                          DIVIDENDS AND OTHER PAYMENTS

111. The Board may from time to time declare cash dividends or distributions out
     of contributed  surplus to be paid to the  Shareholders  according to their
     rights and interests  including interim dividends as appear to the Board to
     be justified  by the  position of the  Company.  The Board may also pay any
     fixed cash  dividend  which is payable  on any shares of the  Company  half
     yearly or on such other dates,  whenever the position of the Company in the
     opinion of the Board, justifies such payment.

112. Except  insofar as the rights  attaching  to, or the terms of issue of, any
     share otherwise provide:

     (a)  all  dividends  or  distributions  out of  contributed  surplus may be
          declared  and paid  according  to the amounts paid up on the shares in
          respect of which the  dividend or  distribution  is paid and an amount
          paid up on a share in advance of calls may be treated  for the purpose
          of this Bye-Law as paid-up on the share;

     (b)  dividends  or  distributions   out  of  contributed   surplus  may  be
          apportioned  and paid pro rata according to the amounts paid up on the
          shares  during  any  portion or  portions  of the period in respect of
          which the dividend or distribution is paid.

113. The  Board may  deduct  from any  dividend,  distribution  or other  moneys
     payable to a  Shareholder  by the Company on or in respect of any share all
     sums of money (if any)  presently  payable by him to the Company on account
     of calls or otherwise in respect of shares of the Company.

114. No dividend,  distribution  or other moneys payable by the Company on or in
     respect  of any share  shall  bear  interest  against  the  Company  unless
     otherwise provided by the rights attached to such share.

115. Any  dividend  distribution,  interest  or other sum payable in cash to the
     holder of shares  may be paid by check or  warrant  sent  through  the mail
     addressed  to the holder at his address in the  Register or, in the case of
     joint  holders,  addressed  to the holder  whose name  stands  first in the
     Register in respect of the shares at his registered address as appearing in
     the  Register or  addressed to such person at such address as the holder or
     joint  holders may in writing  direct.  Every such check or warrant  shall,
     unless the holder or joint holders otherwise direct, be made payable to the
     order of the holder or, in the case of joint  holders,  to the order of the
     holder  whose name stands  first in the Register in respect of such shares,
     and shall be sent at his or their risk, and payment of the check or warrant
     by the bank on which it is drawn shall  constitute a good  discharge to the
     Company.  Any one of two or more joint holders may give effectual  receipts
     for any  dividends,  distributions  or other  moneys  payable  or  property
     distributable in respect of the shares held by such joint holders.

116. Any  dividend  or  proceeds  of share  repurchase  or  distribution  out of
     contributed  surplus  unclaimed  for a period of six years from the date of
     declaration   of  such   dividend  or  proceeds  of  share   repurchase  or
     distribution  shall be forfeited  and shall revert to the Company,  and the
     payment by the Board of any unclaimed dividend,  distribution,  interest or
     proceeds of share  repurchase  or other sum payable on or in respect of the
     share into a separate account shall not constitute the Company a trustee in
     respect thereof.

117. The  Board  may  direct  payment  or   satisfaction   of  any  dividend  or
     distribution  out  of  contributed   surplus  wholly  or  in  part  by  the
     distribution  of specific  assets and, in particular,  of paid up shares or
     debentures of any other body corporate,  and where any difficulty arises in
     regard to such  distribution  or  dividend  the  Board may  settle it as it
     thinks  expedient and, in particular,  may authorize any person to sell and
     transfer any fractions or may ignore  fractions  altogether and may fix the
     value for distribution or dividend purposes of any such specific assets and
     may determine that cash payments shall be made to any Shareholders upon the
     basis of the value so fixed in order to secure equality of distribution and
     may vest any such specific  assets in trustees as may seem expedient to the
     Board.

                                    RESERVES

118. The  Board  may,   before   recommending   or  declaring  any  dividend  or
     distribution out of contributed  surplus,  set aside such sums as it thinks
     proper  as  reserves  which  shall,  at the  discretion  of the  Board,  be
     applicable for any purpose of the Company and pending such application may,
     also at such discretion,  either be employed in the business of the Company
     or be invested in such investments as the Board may from time to time think
     fit. The Board may also without  placing the same to reserve  carry forward
     any sums which it may think it prudent not to distribute.

                            CAPITALIZATION OF PROFITS

119. The Company may, upon the recommendation of the Board, at any time and from
     time to time  resolve  by  Ordinary  Resolution  to the  effect  that it is
     desirable  to  capitalize  all or any part of any amount for the time being
     standing  to the  credit of any  reserve  or fund  which is  available  for
     distribution  or to the credit of any share premium  account or any capital
     redemption  reserve fund and  accordingly  that such amount be set free for
     distribution  amongst the  Shareholders  or any class of  Shareholders  who
     would be entitled thereto if distributed by way of dividend and in the same
     proportions,  provided  that the  same be not  paid in cash but be  applied
     either in or  towards  paying up amounts  for the time being  unpaid on any
     shares in the Company held by such Shareholders  respectively or in payment
     up in full of  unissued  shares,  debentures  or other  obligations  of the
     Company, to be allotted,  distributed and credited as fully paid among such
     Shareholders,  or partly in one way or partly in the  other,  and the Board
     shall give effect to such resolution, provided that for the purpose of this
     Bye-Law,  a share premium account and a capital redemption reserve fund may
     be  applied  only in  paying  up of  unissued  shares  to be issued to such
     Shareholders  credited  as fully  paid and  provided  further  that any sum
     standing  to the credit of a share  premium  account may only be applied in
     crediting  as fully  paid  shares of the same  class as that from which the
     relevant share premium was derived.

120. Where any difficulty  arises in regard to any  distribution  under the last
     preceding  Bye-Law,  the Board may settle  the same as it thinks  expedient
     and, in  particular,  may  authorize  any person to sell and  transfer  any
     fractions,  may resolve that the distribution should be as nearly as may be
     practicable  in the  correct  proportion  but not exactly so, or may ignore
     fractions  altogether,  and may determine that cash payments should be made
     to any  Shareholders  in order to adjust the rights of all parties,  as may
     seem  expedient  to the Board.  The Board may appoint any person to sign on
     behalf of the  persons  entitled to  participate  in the  distribution  any
     contract  necessary  or  desirable  for  giving  effect  thereto  and  such
     appointment shall be effective and binding upon the Shareholders.

                                  RECORD DATES

121. Notwithstanding any other provision of these Bye-Laws the Directors may fix
     any date as the record date for:

     (a)  determining  the Members  entitled  to receive  any  dividend or other
          distribution  and such record date may be on, or not more than 30 days
          before or after,  any date on which such dividend or  distribution  is
          declared;

     (b)  determining  the Members  entitled to receive notice of and to vote at
          any general meeting of the Company.

                               ACCOUNTING RECORDS

122. The Board shall cause to be kept  accounting  records  sufficient to give a
     fair  presentation  in all material  respects of the state of the Company's
     affairs and to show and explain its  transactions  in  accordance  with the
     Companies Acts.

123. The records of account  shall be kept at the  Registered  Office or at such
     other  place or places as the  Board  thinks  fit and shall at all times be
     open to  inspection  by the  Directors;  PROVIDED  that if the  records  of
     account are kept at some place outside  Bermuda,  there shall be kept at an
     office of the Company in Bermuda  such  records as will enable the Director
     to ascertain with reasonable accuracy the financial position of the Company
     at the  end of each  three-month  period.  No  Shareholder  (other  than an
     officer of the  Company)  shall have any right to  inspect  any  accounting
     record or book or document of the Company except as required by any Listing
     Exchange,  by law,  by  regulations  or as  authorized  by the  Board or by
     Ordinary Resolution.

124. A copy of every  balance  sheet and  statement  of income and  expenditure,
     including every document required by law to be annexed thereto, which is to
     be laid before the Company in general meeting,  together with a copy of the
     auditor's  report,  shall  be sent  to  each  person  entitled  thereto  in
     accordance with the requirements of the Companies Acts.

                                      AUDIT

125. Save and to the extent that an audit is waived in the manner  permitted  by
     the Companies Acts,  auditors shall be appointed and their duties regulated
     in accordance  with the Companies  Acts, any other  applicable law and such
     requirements not inconsistent with the Companies Acts as the Board may from
     time to  time  determine,  save  that  the  fees of the  auditor  shall  be
     determined by Ordinary Resolution.

                     SERVICE OF NOTICES AND OTHER DOCUMENTS

126. Any notice or other document  (including a share  certificate)  shall be in
     writing (except where otherwise  expressly  stated) and may be served on or
     delivered to any Shareholder by the Company either personally or by sending
     it through  the mail (by  airmail  where  applicable)  in a prepaid  letter
     addressed to such  Shareholder  at his address as appearing in the Register
     or by delivering  it to or leaving it at such  registered  address.  In the
     case of joint  holders  of a share,  service or  delivery  of any notice or
     other  document on or to one of the joint holders shall for all purposes be
     deemed as sufficient  service on or delivery to all the joint holders.  Any
     notice  or other  document  if sent by mail  shall be  deemed  to have been
     served or delivered two Business Days after it was put in the mail; and, in
     proving such service or delivery,  it shall be sufficient to prove that the
     notice or document was properly addressed, stamped and put in the mail.

127. Any notice of a general  meeting of the Company  shall be deemed to be duly
     given to a Shareholder if it is sent to him by cable, telex,  telecopier or
     other  mode  of  representing  or  reproducing   words  in  a  legible  and
     non-transitory  form at his  address as  appearing  in the  Register or any
     other address given by him to the Company for this purpose. Any such notice
     shall be deemed to have been served two Business Days after its dispatch.

128. Any notice or other document  delivered,  sent or given to a Shareholder in
     any manner  permitted by these Bye-Laws  shall,  notwithstanding  that such
     Shareholder  is then dead or bankrupt or that any other event has occurred,
     and  whether  or not the  Company  has  received  notice  of the  death  or
     bankruptcy or other event,  be deemed to have been duly served or delivered
     in respect of any share  registered in the name of such Shareholder as sole
     or joint  holder  unless  his name  shall,  at the time of the  service  or
     delivery of the notice or document,  have been removed from the Register as
     the  holder  of the  share,  and such  service  or  delivery  shall for all
     purposes  be deemed as  sufficient  service or  delivery  of such notice or
     document on all persons  interested  (whether  jointly  with or as claiming
     through or under him) in the share.

                                   WINDING UP

129. If the Company shall be wound up, the liquidator  may, with the sanction of
     an  Extraordinary  Resolution  and  any  other  sanction  required  by  the
     Companies Acts,  divide among the  Shareholders in specie or kind the whole
     or any part of the assets of the  Company  (whether  they shall  consist of
     property of the same kind or not) and may for such purposes set such values
     as he deems  fair upon any  property  to be divided  as  aforesaid  and may
     determine  how  such   division   shall  be  carried  out  as  between  the
     Shareholders or different classes of Shareholders. The liquidator may, with
     the like  sanction,  vest the whole or any part of such  assets in trustees
     upon such trust for the benefit of the contributors as the liquidator, with
     the like  sanction,  shall think fit, but so that no  Shareholder  shall be
     compelled  to accept any  shares or other  assets  upon which  there is any
     liability.

                                    INDEMNITY

130. Subject to the proviso below every person who is or was a Director, officer
     of the Company or member of a committee  constituted  under Bye-Law 96 (the
     "Company  Indemnitee") or who is or was a director or officer of any of the
     Company's subsidiaries  ("Subsidiary  Indemnitee") shall be indemnified out
     of the funds of the Company against all civil liabilities,  loss, damage or
     expense (including but not limited to liabilities under contract,  tort and
     statute or any  applicable  foreign law or  regulation  and all  reasonable
     legal and other costs and expenses  properly  payable) incurred or suffered
     by him as such Director,  officer of the Company or committee member, or as
     a  director  or  officer  of any  of the  Company's  subsidiaries  and  the
     indemnity  contained in this Bye-Law shall extend to any person acting as a
     Director,  officer of the Company or committee  member, or as a director or
     officer of any of the Company's  subsidiaries in the reasonable belief that
     he has been so  appointed  or  elected  notwithstanding  any defect in such
     appointment  or election  PROVIDED  ALWAYS that the indemnity  contained in
     this  Bye-Law  shall not extend to any matter  which  would  render it void
     pursuant to the Companies Acts.

131. Every Company Indemnitee or Subsidiary  Indemnitee shall be indemnified out
     of the funds of the Company against all liabilities incurred by him as such
     Company  Indemnitee or Subsidiary  Indemnitee in defending any proceedings,
     whether civil or criminal,  in which judgment is given in his favor,  or in
     which he is acquitted,  or in  connection  with any  application  under the
     Companies  Acts in which  relief  from  liability  is granted to him by the
     court.

132. To the extent that any  Company  Indemnitee  or  Subsidiary  Indemnitee  is
     entitled to claim an  indemnity  pursuant  to these  Bye-Laws in respect of
     amounts paid or discharged by him, the relevant indemnity shall take effect
     as an obligation of the Company to reimburse the person making such payment
     or  effecting  such  discharge.   The  expenses  incurred  by  the  Company
     Indemnitee or Subsidiary Indemnitee pursuant to Bye-Laws 130 and 131 in any
     threatened  or  pending  legal  suits or  proceedings  shall be paid by the
     Company in advance upon the written  request of the Company  Indemnitee  or
     Subsidiary  Indemnitee upon proper  documentation of such costs having been
     incurred.   The  same  indemnity   applies  to  expenses  incurred  in  any
     proceedings  where such Company  Indemnitee or  Subsidiary  Indemnitee is a
     party or threatened to be made a party to any legal suits or proceedings by
     or in the rights of the  Company or any of the  Company's  subsidiaries  to
     procure a  judgment  in its  favor by  reason of the fact that the  Company
     Indemnitee  or Subsidiary  Indemnitee is or was such Company  Indemnitee or
     Subsidiary  Indemnitee.  Provided,  however, that the Company Indemnitee or
     Subsidiary  Indemnitee  shall  undertake to repay such amount to the extent
     that it is ultimately  determined that the Company Indemnitee or Subsidiary
     Indemnitee is not entitled to indemnification.

133. Subject to the  Companies  Acts,  the Company may purchase and maintain for
     any Company  Indemnitee or  Subsidiary  Indemnitee,  insurance  against any
     liability  arising in connection with his office with the Company or any of
     the Company's subsidiaries.

                             ALTERATION OF BYE-LAWS

134. These Bye-Laws may be amended from time to time in the manner  provided for
     in the Companies  Acts,  provided that any such amendment shall only become
     operative to the extent that it has been confirmed by Ordinary Resolution.

SK 02089 0009 786640

EX-8.1

Exhibit 8.1


          Significant Subsidiaries and Equity Interests at May 31, 2007
          -------------------------------------------------------------

Name                                                Vessel/Activity    Incorporation   Ownership %
- ----                                                ---------------    -------------   -----------
                                                                                    
Frontline Shipping Limited                                Charterer          Bermuda          100%
Frontline Shipping II Limited                             Charterer          Bermuda          100%
Key Chartering Inc                                        Charterer          Liberia          100%

Frontline Management (Bermuda) Ltd               Management company          Bermuda          100%
ICB Shipping (Bermuda) Limited                   Management company          Bermuda          100%
Frontline Tankers Limited                        Management company          Bermuda          100%

Independent Tankers Corporation                     Holding company   Cayman Islands          100%

Buckingham Shipping Plc                             British Pioneer      Isle of Man          100%
Caernarfon Shipping Plc                            British Progress      Isle of Man          100%
CalPetro Tankers (IOM) Ltd                           Sirius Voyager      Isle of Man          100%
CalPetro Tankers (Bahamas I) Ltd                     Cygnus Voyager          Bahamas          100%
CalPetro Tankers (Bahamas II) Ltd                    Altair Voyager          Bahamas          100%
CalPetro Tankers (Bahamas III) Ltd                    Virgo Voyager          Bahamas          100%
Golden State Petro (IOM 1-A) Plc                    Antares Voyager      Isle of Man          100%
Golden State Petro (IOM 1-B) Plc                    Phoenix Voyager      Isle of Man          100%
Holyrood Shipping Plc                                 British Pride      Isle of Man          100%
Sandringham Shipping Plc                            British Purpose      Isle of Man          100%

Front Eagle Corporation                                 Front Eagle          Liberia          100%
Front Horizon Inc.                                    Front Horizon          Liberia          100%
Golden Channel Corporation                          Front Commodore          Liberia          100%
Kea Navigation Ltd                                     Front Melody          Liberia          100%
Otina Inc.                                               Front Tina          Liberia          100%
Optimal Shipping SA                                  Front Symphony          Liberia          100%
Pablo Navigation SA                                     Front Chief          Liberia          100%

Ryan Shipping Corporation                             Front Warrior          Liberia          100%
Saffron Rose Shipping Limited                           Front Crown          Liberia          100%
Tidebrook Maritime Corporation                      Front Commander          Liberia          100%
Bandama Investment Ltd                           Management company          Liberia          100%

Sealift Ltd                                              Heavy lift          Bermuda         17.1%

Frontline Management AS                          Management company           Norway          100%
International Maritime Exchange ASA    Freight derivatives exchange           Norway         16.6%

EX-4.13

                                                                    Exhibit 4.13

CLIFFORD                                            CLIFFORD CHANCE LLP
CHANCE                                              ADVOCATEN SOLICITORS NOTARIS
                                                    BELASTINGADVISEURS

                                  FRONTLINE LTD

                                   SEALIFT LTD

                             3i EUROPARTNERS Va L.P.

                             3i EUROPARTNERS Vb L.P.

                     3i PAN EUROPEAN BUY-OUTS 2006-08A L.P.

                     3i PAN EUROPEAN BUY-OUTS 2006-08B L.P.

                     3i PAN EUROPEAN BUY-OUTS 2006-08C L.P.

                          3i GLOBAL GROWTH 2006-08 L.P.

                       3i PAN-EUROPEAN GROWTH 2006-08 L.P.

                   PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 L.P.

                   PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 FCPR

              PAN-EUROPEAN BUYOUTS (NORDIC) CO-INVEST 2006-08 L.P.

              PAN EUROPEAN BUYOUTS (DUTCH) A CO-INVEST 2006-08 L.P.

                      GLOBAL GROWTH CO-INVEST 2006-08 L.P.

                     OIL, GAS & POWER CO-INVEST 2006-08 L.P.

                            STICHTING MANAGEMENT SEAL

                          STICHTING MANAGEMENT DELPHI

                              NEPTUN HEAVY LIFT AS

                             CAPRICORN INVESTMENT AS

                                  SJOKONSULT AS

                                   ----------

                                MERGER AGREEMENT
                              DOCKWISE AND SEALIFT

                                   ----------


CLIFFORD                                            CLIFFORD CHANCE LLP
CHANCE                                              ADVOCATEN SOLICITORS NOTARIS
                                                    BELASTINGADVISEURS

                                    CONTENTS

CLAUSE                                                                      PAGE

 1.   Definitions                                                             3
 2.   Sale And Purchase Agreement                                             3
 3.   Shareholders Agreement                                                  3
 4.   The Debt Restructuring                                                  3
 5.   Vessels, Conversion, Shipco's Transfer Transaction                      3
 6.   Private Placement                                                       3
 7.   Interconditionality And Announcement                                    4
 8.   Conditions To Completion                                                4
 9.   Pre-Completion Conduct                                                  5
10.   Completion                                                              6
11.   Due Diligence                                                           6
12.   Warranties                                                              7
13.   Ancillary Restraints & Undertakings                                     8
14.   Confidentiality                                                        10
15.   No Rescission                                                          11
16.   Whole Agreement                                                        11
17.   Language                                                               11
18.   Further Assurances; Post-Completion Actions                            11
19.   Assignment                                                             11
20.   Notices                                                                12
21.   Costs                                                                  13
22.   General                                                                14
23.   Interpretation                                                         15
24.   Governing Law; Jurisdiction                                            17
25.   Counterparts                                                           17


THIS MERGER AGREEMENT is made on 27 April 2007.

BETWEEN:

The investment funds listed in SCHEDULE 1 (3i Investors) to this Merger
Agreement (the "3i INVESTORS");

FRONTLINE LTD, a company incorporated under the laws of Bermuda with its
registration number 17460 and its registered office at Par la Ville Place, 14
Par la Ville Road, Hamilton, Bermuda and listed on the Oslo Stock Exchange
("FRONTLINE");

SEALIFT LTD a company incorporated under the laws of Bermuda with the
registration number 39466 and its registered office at Par la Ville Place, 14
Par la Ville Road, Hamilton, Bermuda, ("SEALIFT" or the "COMPANY");

STICHTING MANAGEMENT DELPHI, a foundation (STICHTING) incorporated under the
laws of The Netherlands, having its registered offices at Lage Mosten 15, 4822
NJ Breda, the Netherlands, registered with the Commercial Register in
West-Brabant, The Netherlands, under file number 34260899 (the "DELPHI
FOUNDATION");

STICHTING MANAGEMENT SEALIFT, a foundation (STICHTING) incorporated under the
laws of The Netherlands, having its registered offices at Breda, The
Netherlands, and its principal place of business at Lage Mosten 15, 4822 NJ
Breda, the Netherlands, registered with the Commercial Register in West-Brabant,
The Netherlands (the "MPP FOUNDATION");

NEPTUN HEAVY LIFT AS, a company incorporated under the laws of Norway, with its
registered office at Ruselokkveien 26, 0117 Oslo, Norway and registered with the
corporate register in Norway under number 935 302 110 ("NEPTUN");

CAPRICORN INVESTMENT AS, a company incorporated under the laws of Norway, with
its registered office at Dalsveien 57, 0775 Oslo, Norway and registered with the
corporate register in Norway under number 989 048 945 ("CAPRICORN"); and

SJOKONSULT AS, a company incorporated under the laws of Norway, with its
registered office at Bjerkebakken 65 A, 0757 Oslo, Norway and registered with
the corporate register in Norway under number 989 382 810 ("SJOKONSULT");

The above parties (including each of the 3i Investors) are individually referred
to as a "PARTY" and together as the "PARTIES";

WHEREAS:

(A)  The 3i Investors, the Delphi Foundation (which has or will transfer all its
     interests in Delphi to the MPP Foundation), Neptun, Capricorn and
     Sjokonsult (collectively the "DELPHI SHAREHOLDERS") together hold 100% of
     the issued share capital of Delphi Acquisition Holding S.A., a limited
     liability company (SOCIETE ANONYME) incorporated under the laws of
     Luxembourg, with its registered office at 20, rue de la Poste, L-2346
     Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg
     Trade and Companies Register under number B122.411 ("DELPHI");


                                        1


(B)  Delphi is the holding company for a group of companies active in the
     offshore industry operating a fleet of large heavy lift transport vessels
     (the "Delphi Business"). Delphi acquired the group of companies operating
     the Delphi Business on 12 January 2007;

(C)  Sealift is the holding company for a group of, inter alia, six companies
     (the "ShipCo's") each of which owns a single hull Suez max vessel
     (collectively the "Sealift Vessels"). Four Sealift Vessels are being, or
     are scheduled to be, converted at a Cosco shipyard in China into float-over
     heavy lift transport vessels. Sealift has the option to also convert the
     remaining two Sealift Vessels into float-over heavy lift transport vessels.
     Pursuant to the purchase agreement(s) dated 31 January 2007 as supplemented
     on 15th March 2007, the costs of conversion of the first four of the
     Sealift Vessels are for the account of Frontline. The costs of conversion
     of the further two Sealift Vessels are for the account of Sealift;

(D)  The shares of Sealift are traded in Norway on the over the counter system
     ("OTC") administrated by the Norwegian Stockbrokers Association. Frontline
     is a substantial minority shareholder of Sealift holding 33.33% of the
     entire issued share capital of Sealift;

(E)  The Parties have discussed the possibility of merging the Delphi Business
     and the Sealift Business (as defined herein) (the "Merger") and have on 3
     April 2007 entered into a non-binding merger term sheet and a
     confidentiality and exclusivity agreement;

(F)  The Merger will be effected by (i) the sale by the Delphi Shareholders of
     the entire issued share capital of Delphi to Sealift in consideration for
     the issue by Sealift of the Consideration Shares (as defined herein) such
     shares to be admitted for trading on the OTC, and (ii) the sale by Sealift
     of the shares of the ShipCo's to Dockwise Transport B.V. (the "ShipCo
     Transfer Transaction");

(G)  The Parties wish (i) to procure the Private Placement (as defined herein)
     of shares in the capital of Sealift (which will be tradable on the OTC),
     and (ii) to restructure the debt financing of both Sealift, Delphi and
     their respective subsidiaries (the "Debt Restructuring"). (The Merger, the
     ShipCo Transfer Transaction, the Private Placement, and the Debt
     Restructuring, are collectively referred to as the "Transaction");

(H)  Sealift's board has, without prejudice to the provisions of the
     Shareholders Agreement, in a resolution on 27 April 2007, resolved to seek
     a listing of its shares on the Oslo Stock Exchange with Q3/07 as the
     targeted period for the first date of trading (the "Proposed Listing");

(I)  Sealift and Delphi have complied or procured compliance with the provisions
     of the Dutch Social Economic Council Merger Regulations for the protection
     of employees (SER-Besluit Fusiegedragsregels 2000 ter bescherming van de
     belangen van werknemers) and the works council of Dockwise B.V. has
     rendered an unconditional positive advice in relation to the Transaction;
     and

(J)  The Parties now wish to proceed with the Transaction on the terms and
     conditions set out in this Merger Agreement.

IT IS HEREBY AGREED AS FOLLOWS:


                                        2


1. DEFINITIONS

1.1  In this Merger Agreement capitalised terms have the meaning ascribed
     thereto in SCHEDULE 2 (Definitions).

2. SALE AND PURCHASE AGREEMENT

2.1  Sealift, the Delphi Shareholders, the Delphi Foundation, Neptun, Capricorn
     and Sjokonsult shall on the date hereof enter into the Delphi SPA in the
     Agreed Form.

3. SHAREHOLDERS AGREEMENT

3.1  Frontline, certain of the Delphi Shareholders and Sealift shall on the date
     hereof enter into the Sealift Shareholders Agreement in the Agreed Form.

4. THE DEBT RESTRUCTURING

4.1  The Parties shall procure the implementation of the Debt Restructuring in
     accordance with the provisions of SCHEDULE 5 (Debt Restructuring).

5. VESSELS, CONVERSION, SHIPCO'S TRANSFER TRANSACTION

5.1  Frontline shall, and Sealift shall procure that the ShipCo's shall, on the
     date hereof enter into the Second Supplemental Purchase Agreement.

5.2  Sealift shall, and the Delphi Shareholders shall procure that Dockwise
     Transport B.V. shall, on the date hereof enter into the ShipCo SPA and
     shall on the Merger Completion Date complete the ShipCo Transfer
     Transaction in accordance with SCHEDULE 6 (ShipCo Transfer Transaction).

6. PRIVATE PLACEMENT

6.1  The Parties wish to pursue a private placement to professional investors
     ("NEW INVESTORS") of shares in the capital of Sealift (the "OFFERING
     SHARES") to be admitted to trading on the OTC (the "PRIVATE PLACEMENT").

6.2  Part of the Offering Shares shall be issued by Sealift directly to New
     Investors in which case the proceeds shall be for the account of Sealift
     (the "PRIMARY OFFERING SHARES") and part of the Offering Shares shall be
     Consideration Shares to be sold to New Investors by certain of the Delphi
     Shareholders in which case the proceeds shall be for the account of the
     selling Delphi Shareholders (the "SECONDARY OFFERING SHARES"), all in
     accordance with the provisions of SCHEDULE 3 (Private Placement) and the
     Subscription Agreement.

6.3  Sealift has mandated Pareto Securities ASA and Carnegie ASA as managers in
     connection with the Private Placement (the "PLACEMENT MANAGERS").

6.4  The final offer price for the Offering Share shall be NOK 30 per Offering
     Share (the "OFFER PRICE"). The total number of Offering Shares, the number
     of Primary Offering Shares and Secondary Offering Shares and the allotment
     of Offering Shares to New Investors shall be determined in accordance with
     SCHEDULE 3 (Private Placement) and the Subscription Agreement.


                                        3


6.5   Sealift and Frontline shall procure that the Private Placement shall take
      place in accordance with all applicable laws and regulations affecting
      Sealift in Bermuda and all applicable rules and regulations and market
      practice relating to private placements on the OTC.

7. INTERCONDITIONALITY AND ANNOUNCEMENT

7.1   The obligations of each of the Parties is conditional on each of the
      Transaction Documents having been duly signed by the appropriate parties
      thereto ("SIGNING").

7.2   Immediately following Signing Sealift and Frontline shall announce the
      Transaction by issuing the Sealift Press Release and the Frontline Press
      Release.

8. CONDITIONS TO COMPLETION

8.1   Completion of the Transaction is conditional on the Completion Conditions
      set out in clause 8.2 being fulfilled or waived in accordance with clause
      8.3.

8.2   The Completion Conditions are:

      8.2.1 receipt of all required licences and consents required from the
            Bermuda Monetary Authority or the Bermuda Registration of Companies
            or any other governmental authority having jurisdiction in relation
            to the issue of the Consideration Shares and the placement of the
            Offering Shares; and

      8.2.2 receipt by the 3i Investors and Sealift of a confirmation from the
            Placement Managers that they have received irrevocable commitments
            from New Investors in relation to the subscription for Offering
            Shares for an aggregate amount of at least 39,800,000 Offering
            Shares at a price equal to the Offer Price and the allotment of the
            Offering Shares and the satisfaction or waiver of all the Conditions
            of the Offering, all as defined and in accordance with the
            provisions of the Subscription Agreement.

8.3   The Completion Condition set out in clause 8.2.2 is for the benefit of the
      3i Investors and may be waived by the 3i Investors (either in whole or in
      part) at any time by notice to the other Parties. The Completion Condition
      in Clause 8.2.1 is for the benefit of all the Parties. All Parties shall
      (to the extent within their power) use reasonable endeavours to procure
      that the Completion Conditions are satisfied on or before the Merger
      Completion Date.

8.4   If the Completion Conditions have not all been fulfilled or waived in
      accordance with clause 8.3 on or before 23h59m GET on 11 May 2007 (the
      "STOP DATE") but subject to the Parties having complied with their
      obligations under this Merger Agreement, the 3i Investors and Sealift may
      each terminate this Merger Agreement by notice in writing to the other
      Parties without liability of any Party to any other Party and without any
      obligation on any Party to compensate any other Party for any damages or
      cost incurred as a result thereof. Following such termination:

      8.4.1 except for this clause 8 (Conditions), clauses 1 (Definitions), 16
            (Whole Agreement), 17 (Language), 20 (Notices), 23 (Interpretation),
            24 (Governing Law; Jurisdiction) and 25 (Counterparts), all the
            other clauses of this Merger


                                        4


           Agreement and the offer Transaction Documents shall lapse and cease
           to have effect; but

     8.4.2  the lapsing of those provisions and agreements shall not affect any
            rights or liabilities of any Party in respect of damages for
            non-performance of any obligation under the Transaction Documents
            falling due for performance prior to such lapse; and

     8.4.3  except as required by statutory or contractual obligations to a
            stock exchange or other market on which the shares of any Party are
            traded, no Party shall make (or permit any person to make) any
            announcement concerning the termination of this Merger Agreement or
            any ancillary matter without the prior written consent of the 3i
            Investors, Frontline and Sealift (not to be unreasonably withheld or
            delayed).

8.5  Upon fulfilment or waiver (as the case may be) of the Completion
     Conditions, (i) each of Sealift and the 3i Investors may issue the
     Completion Certificate and (ii) the Parties must proceed to completion of
     the Merger in accordance with clause 10, the Delphi SPA and the ShipCo SPA
     ("MERGER COMPLETION").

8.6  Completion of the Private Placement shall occur immediately after Merger
     Completion having occurred.

9. PRE-COMPLETION CONDUCT

9.1 Pending Merger Completion each of Frontline and Sealift shall procure that:

     9.1.1  the Delphi Shareholders, their representatives and advisers are
            given reasonable access to the management and to the books and
            records of the Sealift Group Companies;

     9.1.2  the Delphi Shareholders, their representatives and advisers are
            provided information regarding the business and affairs of the
            Sealift Group Companies they reasonably require for the purposes of
            the Transaction; and

     9.1.3  each of the Sealift Group Companies, if required by the Delphi
            Shareholders, shall provide all co-operation reasonably necessary in
            connection with the Debt Restructuring.

     The Delphi Shareholders shall have no rights under this clause whilst they
     are in breach of this Merger Agreement.

9.2  Pending Merger Completion each of Frontline (to the extent within its
     power) and Sealift shall use their reasonable endeavours so as to procure
     that, except with the written consent of the Delphi Shareholders (which
     shall not be unreasonably withheld or delayed and shall in any event be
     deemed to be given if no response is received within 3 (three) days of a
     written request by Frontline and Sealift) the business of the Sealift Group
     Companies shall be run in the ordinary course and in accordance with
     consistent past practice.


                                        5


10. COMPLETION

10.1 Merger Completion shall take place on the Merger Completion Date at the
     offices of Clifford Chance LLP in Amsterdam in accordance with the terms of
     the Delphi SPA and each of the Parties shall comply with its obligations
     set out therein.

10.2 Completion of the Debt Restructuring shall take place at the offices of
     Clifford Chance LLP in Amsterdam on the Merger Completion Date in
     accordance with the provisions of SCHEDULE 5 (Debt Restructuring) and each
     of the Parties shall comply with its obligations set out therein.

10.3 Completion of the ShipCo Transfer Transaction shall take place at the
     offices of Clifford Chance LLP in Amsterdam on the Merger Completion Date
     in accordance with the provisions of SCHEDULE 6 (ShipCo Transfer
     Transaction) and each of the Parties shall comply with its obligations set
     out therein.

10.4 Completion of the Private Placement shall take place on the Private
     Placement Completion Date in accordance with the Subscription Agreement and
     the provisions of SCHEDULE 3 (Private Placement) and to the extent the same
     relates to them, each of the Parties shall comply with the provisions
     thereof.

11. DUE DILIGENCE

11.1 The Delphi Shareholders acknowledge and agree that:

     11.1.1 they have performed, with the assistance of professional advisors, a
            due diligence investigation with respect to Sealift, the Sealift
            Group Companies and the Sealift Business during the period from 5
            April 2007 to the date hereof (the "SEALIFT DUE DILIGENCE
            INVESTIGATION");

     11.1.2 for the purposes of the Sealift Due Diligence Investigation the
            Delphi Shareholders have had (and their advisors have had)
            sufficient opportunity to review any and all information made
            available to the Delphi Shareholders and its advisors, amongst
            others, (i) by having received verbal and written information
            regarding the Sealift Group Companies and the Sealift Business from
            Frontline, Sealift, and/or their representatives, (ii) by having had
            access to the financial, legal, tax, commercial and other
            information listed on the index attached as SCHEDULE 7 (Disclosed
            Information), (iii) by having had the opportunity to submit
            questions to and receive answers from Frontline and from Sealift on
            any matter that they deemed proper and necessary for the purpose of
            entering into this Merger Agreement, and (iv) by having had access
            to senior management of the Company (including meeting with the
            Company's management group) (together with information
            cross-referred therein collectively the "DISCLOSED SEALIFT
            INFORMATION"); and

     11.l.3 the Delphi Shareholders have to the best of their knowledge raised
            with Frontline and Sealift all specific issues which they considered
            relevant in connection with the transactions contemplated hereby and
            taking into account the information available to the Delphi
            Shareholders at that time.

11.2 Frontline and Sealift acknowledge and agree that:


                                        6


     11.2.1 they have been offered the opportunity to perform, with the
            assistance of professional advisors, a due diligence investigation
            with respect to the Shares, Convertible Bonds, Loan Notes (all as
            defined in the Delphi SPA), the Delphi Group Companies and their
            business during the period from 30 March 2007 to the date hereof
            (the "DOCKWISE DUE DILIGENCE INVESTIGATION");

     11.2.2 for the purposes of the Due Diligence Investigation Frontline and
            Sealift have had (and its advisors have had) sufficient opportunity
            to review any and all information made available to Frontline,
            Sealift and their advisors, amongst others, (i) by having received
            information regarding the Delphi Group Companies and its business
            from the Delphi Shareholders, Delphi and/or their representatives
            (ii) by having had access to the Disclosed Dockwise Information,
            (iii) by having had the opportunity to submit questions to and
            receive answers from the Delphi Shareholders and from Delphi on any
            matter that it deemed proper and necessary for the purpose of
            entering into this Merger Agreement, and (iv) by having had access
            to senior management of Delphi (including meeting with the Delphi
            management group) (together with information cross-referred therein
            collectively the "DISCLOSED DOCKWISE INFORMATION"); and

     11.2.3 Frontline and Sealift have to the best of their knowledge raised
            with the Delphi Shareholders all specific issues which they
            considered relevant in connection with the transactions contemplated
            hereby and taking into account the information available to
            Frontline and Sealift at that time.

12. WARRANTIES

12.1 Each of Frontline and Sealift represents and warrants to the Delphi
     Shareholders that each of the statements set out in SCHEDULE 8 (Warranties)
     is true, accurate in all material respects and not misleading in any
     material respect at the date hereof and will be true, accurate in all
     material respects and not misleading in any material respect at Merger
     Completion.

12.2 In the event that any of the Warranties is not true or accurate or is
     misleading or in the event of any other breach of this Merger Agreement
     (any of the foregoing a "BREACH") Frontline and Sealift shall be jointly
     and severally liable for all damages incurred by the Delphi Shareholders
     directly resulting from such Breach and, subject to the provisions of this
     Merger Agreement, compensate the Delphi Shareholders (or at their direction
     any Sealift Group Company or Delphi Group Company) for these damages,
     provided however, that neither Frontline nor Sealift shall be liable for
     any consequential damages, losses or liabilities or loss of profit.

12.3 If the Delphi Shareholders become aware of a Breach, they shall notify
     Frontline and Sealift thereof, describing in reasonable detail the facts or
     circumstances giving rise thereto, and, if reasonably possible, the amount
     of the claim (the "CLAIM").

12.4 Sealift's aggregate liability with respect to any claim for breach of
     Warranties is limited to USD 37.5 million. Frontline's aggregate liability
     with respect to any claim for breach of Warranties is limited to USD 37.5
     million and Sealift and Frontline shall not be liable


                                        7


     to indemnify the Delphi Shareholders unless and until the amount of the
     aggregated claims for which Frontline and Sealift (as the case may be) are
     liable exceeds USD 10 million in which event Frontline and Sealift shall -
     subject to the limitation above - be liable for the full amount of such
     claim if such claims are justified hereunder. Any individual claim shall
     only be taken into account (including for the purposes of determining if
     the above threshold has been met) if it exceeds five hundred thousand US
     Dollars (USD 500,000).

12.5 Frontline and Sealift are not liable in respect of a claim for any breach
     of Warranties unless the Delphi Shareholders have given Frontline and
     Sealift written notice of the claim within 12 months of the Merger
     Completion Date.

12.6 Frontline's and Sealift's liability for any Breach is limited by (i)
     matters disclosed in the Disclosed Sealift Information, (ii) any matter
     which has been fairly disclosed, or excepted, in the Warranties themselves
     and/or otherwise in this Merger Agreement and/or in the Schedules hereto
     and (iii) any matter of which the Delphi Shareholders are or should have
     been aware of at the time of entering into this Merger Agreement whether on
     the basis of information available from Sealift, Frontline or its advisers,
     from any public register or otherwise.

13. ANCILLARY RESTRAINTS & UNDERTAKINGS

13.1 Frontline undertakes to the Delphi Shareholders, the MPP Foundation,
     Sealift and each of the Sealift Group Companies from time to time that it
     will not, and that it will ensure that each member of the Frontline Group
     will not, either alone or jointly with others, directly or indirectly
     whether for the account of Frontline, any other Frontline Group Company or
     otherwise and in any capacity including as owner, officer, director,
     partner, shareholder, agent, consultant, advisor, developer, or in any
     other capacity do any of the following without the prior written consent of
     Sealift:

     13.1.1 at any time before the expiry of 36 months after the date of
            termination or expiry of the Sealift Shareholders Agreement (the
            "NON-COMPETE PERIOD") directly or indirectly incorporate, establish,
            own, operate, manage, control or engage in any Competing Business;

     13.1.2 at any time before the expiry of the Non-Compete Period acquire or
            hold an interest (financial or otherwise) in any company or business
            that, directly or through any company or business directly or
            indirectly controlled by it, is engaged in any Competing Business;

     13.1.3 at any time before the expiry of the Non-Compete Period participate
            in a joint venture or other co-operative arrangement aimed directly
            or indirectly at generating Competing Business;

     13.1.4 disclose any confidential information relating to the Delphi
            Shareholders, the MPP Foundation, Sealift, or any of the Sealift
            Group Companies, the Delphi Group Companies or the businesses that
            they operate except as permitted in accordance with this clause 13;


                                        8


     13.1.5 at any time before the expiry of 24 months after the date of
            termination or expiry of the Sealift Shareholders Agreement, employ,
            enter into a consulting agreement with or solicit, encourage or
            induce to terminate an existing employment or consulting
            relationship with any person earning an annual salary of more than
            one hundred thousand United States Dollars (USD 100,000) who is on
            the date of this Merger Agreement or has during the three (3) months
            before the date of this Merger Agreement been an employee of or
            consultant to Sealift, any Sealift Group Company or any Delphi Group
            Companies;

     13.1.6 at any time before the expiry of the Non-Compete Period solicit or
            entice away any customer of the Combined Business; or

     13.1.7 at any time after Merger Completion use the trade names Sealift or
            Dockwise or any of their logo's or any other name or logo likely to
            be confused with such trade name or logo.

13.2 Frontline shall not, and shall procure that any person directly or
     indirectly controlled by it shall not at any time during the Non-Compete
     Period:

     13.2.1 sell, transfer, finance, lease or otherwise make available directly
            or indirectly to any Competitor any Competing Vessel or any vessel
            capable of being converted into a Competing Vessel; and

     13.2.2 convert or broker, contract for or otherwise facilitate or assist in
            the conversion of any vessel into a Competing Vessel.

     Frontline will exercise any rights it may have or acquires during the Non
     Compete Period (whether directly or indirectly and whether as owner,
     shareholder, director, partner, agent, consultant, advisor, developer, or
     in any other capacity) in a manner consistent with this clause 13.

13.3 Each undertaking in clauses 13.1 and 13.2 must be interpreted as a separate
     undertaking, severable from the remainder of this Merger Agreement, so that
     if one or more parts of the undertakings are held to be unlawful or against
     the public interest or in any way an unreasonable restraint of trade, and
     then to that extent only, it must be disregarded and the remaining
     undertakings (and, if it applies, the remainder of the undertaking in
     question) will continue to bind Frontline.

13.4 Each undertaking in clauses 13.1 and 13.2 shall confer a benefit on each
     Delphi Shareholder, each member of their respective groups of companies,
     the MPP Foundation and each Sealift Group Company. Each beneficiary (but no
     other person who is not a party to this Merger Agreement) shall be entitled
     to enforce such undertakings subject to and in accordance with the
     provisions of the contracts (Rights of Third Parties) Act 1999 (the "1999
     ACT") provided that it shall only be entitled to enforce such undertakings
     whilst it is a member of the relevant group, or a Sealift Group Company or
     if no longer a member of the relevant group or a Sealift Group Company
     where the same is the result of an Exit Event involving (i) all or
     substantially all of the Sealift Group Companies (or their assets), or (ii)
     all or substantially all of those Sealift Group Companies (or their assets)
     which together form a separate business, business unit or division.


                                       9


13.5 Nothing contained in clause 13.1 or 13.2 shall preclude or restrict
     Frontline or any other member of the Frontline Group from holding (i) as a
     passive investment not more than three per cent (3%) of the issued share
     capital of any company engaged in Competing Business whose shares are
     listed on a recognised stock exchange, the OTC or any similar trading
     platform, and (ii) for the avoidance of doubt, shares in the capital of
     Sealift.

14. CONFIDENTIALITY

14.1 Subject to clauses 14.3 and 14.4, neither Party shall make (or permit any
     member of its group of companies, to make) any announcement concerning the
     Transaction, the Proposed Listing or any ancillary matter before, on or
     after Merger Completion except as specifically provided in this Merger
     Agreement.

14.2 Subject to clauses 14.3 and 14.4, each Party shall keep confidential, and
     shall procure that each member of their respective group of companies from
     time to time shall keep confidential, all information provided to it by or
     on behalf of any other Party or otherwise obtained by or in connection with
     this Merger Agreement and which relates to the other Party.

14.3 Nothing in this clause 14 prevents any announcement being made or any
     confidential information being disclosed:

     14.3.1 with the written approval of the other Parties, which in the case of
            any announcement shall not be unreasonably withheld or delayed; or

     14.3.2 to the extent required by law or any stock exchange or other
            competent regulatory body or by any contractual obligation in
            relation to the market on which the shares of a Party are traded,
            PROVIDED that a Party required to disclose any confidential
            information shall promptly notify the other Parties, where
            practicable and lawful to do so, before disclosing any relevant
            information;

14.4 Nothing in this clause 14 prevents disclosure of confidential information
     by any Party:

     14.4.1 to the extent that the information is in or comes into the public
            domain other than as a result of a breach of any undertaking or duty
            of confidentiality by any person;

     14.4.2 to that Party's professional advisers, auditors or bankers, PROVIDED
            that before any disclosure to any such person is made the relevant
            party shall procure that he is made aware of the terms of this
            clause and that the disclosing party shall use its best endeavours
            to procure that each such person adheres to those terms as if he
            were bound by the provisions of this clause 14.

14.5 The 3i Investors and Frontline may disclose the terms of this Merger
     Agreement and any information concerning Sealift (a) to any 3i Related
     Party, (b) to a director, officer or employee of any 3i Related Party,
     Frontline or their professional advisers, (c) in an information memorandum,
     prospectus or similar document or otherwise in connection with any debt or
     equity fundraising by a 3i Related Party or any Frontline Group Company or
     in connection with the direct or indirect sale of any debt or equity
     interests in any 3i Related Party or any Frontline Group Company.


                                       10


15. NO RESCISSION

     Without prejudice to clauses 7 and 8 of this Merger Agreement, the Parties
     waive their rights, if any, to rescind this Merger Agreement either in
     whole or in part. In the event of a Breach, the only remedy for the Parties
     shall be a claim for specific performance or damages.

16. WHOLE AGREEMENT

     The Transaction Documents together with any documents entered into pursuant
     thereto contain the whole agreement between the Parties relating to the
     Transaction contemplated by this Merger Agreement and supersedes all
     previous agreements, whether oral or in writing, between the Parties
     relating to the Transaction.

17. LANGUAGE

     The language of this Merger Agreement and the transactions envisaged by it
     is English and all notices, demands, requests, statements, certificates or
     other documents or communications shall be in English unless otherwise
     agreed.

18. FURTHER ASSURANCES; POST-COMPLETION ACTIONS

18.1 On or after the date hereof each Party shall, at its own cost and expense,
     execute and do (or procure to be executed and done by any other necessary
     person) all such deeds, documents, acts and things as any other Party may
     from time to time reasonably require in order give full effect to this
     Merger Agreement.

18.2 In relation to each Sealift Group Company, Sealift shall procure the
     convening of all meetings, the giving of all waivers and consents and the
     passing of all resolutions as are necessary under their respective
     constitutions or any agreement or obligation affecting it to give effect to
     this Merger Agreement.

18.3 In relation to each Delphi Group Company, the Delphi Shareholders shall
     procure the convening of all meetings, the giving of all waivers and
     consents and the passing of all resolutions as are necessary under their
     respective constitutions or any agreement or obligation affecting it to
     give effect to this Merger Agreement.

18.4 Sealift and Frontline acknowledge that upon advise from Delphi's counsel a
     general meeting of shareholders of Delphi will be held before a Luxembourg
     notary to resolve (i) to convert Delphi from of a public company (SOCIETE
     ANONYME) into a private company (SOCIETE A RESPONSABILITE LIMITEE) and (ii)
     to amend the articles of association of Delphi in accordance with the
     provisions recommended by counsel to Delphi.

18.5 Sealift shall make any US check-the-box election of Delphi Sarl and other
     Seal or Delphi Group Companies as advised by counsel to Delphi.

19. ASSIGNMENT

     No Party may assign any of its rights, including the benefit of the
     Warranties, or transfer any of the obligations under this Merger Agreement
     without the prior written consent of the other Parties, provided however
     that each of the Parties shall be allowed to assign and transfer its rights
     and obligations to any member of its own group, provided further


                                       11


     that the Delphi Shareholders and Sealift shall be allowed to grant any
     security interests in or a pledge over this Merger Agreement, or its rights
     hereunder, to financial institutions providing financing to the Delphi
     Shareholders, any member within the group of companies to which the
     relevant Delphi Shareholder belongs and/or any of the Delphi Group
     Companies or Sealift Group Companies in connection with the transactions
     contemplated in this Merger Agreement and provided further that Sealift and
     the Delphi Shareholders may assign and transfer their rights hereunder in
     connection with an Exit Event involving (i) Sealift, (ii) all or
     substantially all of the Sealift Group Companies (or their assets) from
     time to time, or (iii) all or substantially all of the Sealift Group
     Companies (or their assets) from time to time which together form a
     separate business, business unit or division.

20. NOTICES

     Any notice or other formal communication given under this Merger Agreement
     must be in writing (which includes fax, but not email) and may be delivered
     in person, or sent by post or fax to the party to be served as follows and
     the Parties hereby choose domicile at such addresses and agree that all
     process may be validly served on it at such address:

20.1 If to 3i Europartners Va, 3i Europartners Vb, 3i Pan European A, 3i Pan
     European B, 3i Pan European C, 3i Global Growth, 3i Pan-European Growth,
     Pan-European Co-invest, Pan-European Co-invest France, Pan-European
     (Nordic) Co-invest, Pan-European (Dutch) Co-invest, Global Growth Co-invest
     or Oil, Gas & Power Co-invest (jointly or individually):

     Attn.:     Investment Operations (reference "Seal")
     Fax:       +44 207 928 0058
     Address:   16 Palace Street
                London SW1E 5JD
                United Kingdom

     c.c.:      3i Investments plc - (attn. Mr. Mark Dickinson)
     Fax:       +44 207 928 0058
     Address:   16 Palace Street
                London SW1E 5JD
                United Kingdom

     c.c.:      3i Europe plc - Benelux (attn. Mr. Guus Overdijkink)
     Fax:       +31 20 305 7455
     Address:   Cornelis Schuytstraat 72
                1071 JL Amsterdam
                The Netherlands

20.2 If to Stichting Management Seal or Stichting Management Delphi

     Attn:      The Board
     Fax:       +31 76 548 4290
     Address:   Lage Mosten l7
                4822 NJ Breda


                                       12


                The Netherlands

20.3 If to Neptun:

     Attn:              John A. Nielsen
     Fax:               +47 23 11 6351
     Address:           Ruselokkveien 26
                        0117 Oslo
                        Norway

20.4 If to Capricorn:

     Attn:              Frederik Steenbuch
     Fax:               +47 22 14 5970
     Address:           Dalsveien 57
                        0775 Oslo
                        Norway

20.5 If to Sjokonsult:

     Attn:              Svein K. Johnsen
     Fax:               +47 23 11 6351
     Address:           Bjerkebakken 65 A
                        0757 Oslo
                        Norway

20.6 If to Frontline:

     Attn:              Tor Olav Troim
     Fax:               +44 207 824 5530
     Address:           c/o Frontline Management (UK) Limited
                        15 Sloane Square
                        London SW1W 8ER
                        United Kingdom

20.7 If to Sealift:

     Attn:              The Board
     Fax:               +31 76 548 4299 (after Merger Completion)
                        +44 207 824 5530 (pre-Merger Completion)
     Address:           c/o Frontline Management (UK) Limited
                        15 Sloane Square
                        London SW1W 8ER
                        United Kingdom

21.  COSTS

21.1 Save as otherwise provided in this Merger Agreement, or as otherwise
     specifically agreed in writing by the Parties after the date of this Merger
     Agreement, all costs, fees and expenses incurred by them in connection with
     the entering into, and completion of, this Merger Agreement and the other
     Transaction Documents, including without


                                       13


      limitation in respect of their obligations in satisfying the Completion
      Conditions and the other requirements for implementing the Transaction,
      will be paid by Sealift except those fees incurred in connection with the
      sale to New Investors of Secondary Offering Shares which shall be borne
      fully by the Delphi Shareholders.

22. GENERAL

22.1  A variation of this Merger Agreement is valid only if it is in writing and
      signed by or on behalf of each Party.

22.2  The failure to exercise or delay in exercising a right or remedy provided
      by this Merger Agreement or by law does not impair or constitute a waiver
      of the right or remedy or an impairment of or a waiver of other rights or
      remedies. No single or partial exercise of a right or remedy provided by
      this Merger Agreement or by law prevents further exercise of the right or
      remedy or the exercise of another right or remedy.

22.3  The Parties' rights and remedies contained in this Merger Agreement are
      cumulative and not exclusive of rights or remedies provided by law.

22.4  Except to the extent that they have been performed and except where this
      Merger Agreement provides otherwise, the obligations contained in this
      Merger Agreement remain in force after Merger Completion.

22.5  Save as otherwise provided herein, any payment to be made by any Party
      under this Merger Agreement shall be made in full without any set-off,
      restriction, condition or deduction for or on account of any counterclaim.

22.6  If at any time any provision of this Merger Agreement is or becomes
      illegal, invalid or unenforceable under the laws of any jurisdiction, that
      shall not affect:

      22.6.1 the legality, validity or enforceability in that jurisdiction of
             any other provision of this Merger Agreement; or

      22.6.2 the legality, validity or enforceability under the laws of any
             other jurisdiction of that or another provision of this Merger
             Agreement;

      22.6.3 the Parties shall commit themselves to replacing the non-binding
             and/or non-enforceable provisions by provisions which are binding
             and enforceable and which differ as little as possible - taking
             into account the object and purpose of this Agreement - from the
             non-binding and/or non-enforceable provisions.

22.7  The undertakings in this Merger Agreement shall confer a benefit on each
      Delphi Shareholder, each Delphi Group Company and each employee, director,
      agent, officer or adviser of each Delphi Shareholder or each Delphi Group
      Company with respect to undertakings made by Frontline and shall confer a
      benefit on Frontline and each employee, director, agent, officer or
      adviser of Frontline with respect to undertakings made by any Delphi
      Shareholders and each such beneficiary (but no other person who is not a
      party to this Merger Agreement) shall be entitled to enforce such
      undertakings subject to and in accordance with the provisions of the 1999
      Act.


                                       14


22.8  The Parties other than the 3i Investors each acknowledge and agree that no
      3i Related Party is acting for them or advising them. For example, 3i
      Investments, which is regulated by the UK Financial Services Authority
      ("FSA"), does not have to provide the protection that it would give to a
      client (as defined in the glossary to the FSA handbook of rules and
      guidance) to any person other than 3i Related Parties. In addition, each
      Party other than the 3i Investors acknowledges and agrees that in
      connection with its decisions concerning a (possible) investment in any
      Sealift or Delphi Group Company:

      22.8.1 it has not relied on any appraisal, recommendation, advice or
             information given by, carried out or effected by, or on behalf of,
             any 3i Related Party or its advisers;

      22.8.2 it has made its own investigations into, and appraisals and
             assessment of, each Sealift or Delphi Group Company and its
             prospects, and will continue to do so for so long as it is the
             holder of, or otherwise interested in, equity in any Sealift or
             Delphi Group Company;

      22.8.3 no 3i Related Party shall have any liability to it from any cause
             of action;

      22.8.4 it is owed no duty of care or other obligation by any 3i Related
             Party or its advisers in connection with its decision to invest or
             not invest in the equity of Sealift or Delphi Group Company; and

      22.8.5 where appropriate, it has sought independent expert advice (whether
             alone or jointly with other Parties).

22.9  Nothing in this Merger Agreement shall be deemed to constitute a
      partnership between any of the Parties.

22.10 The Parties other than the 3i Investors undertakes with each 3i Investor
      that they shall not use the name of any 3i Related Party in any context
      whatsoever (except as required by law) or hold itself, himself or
      themselves (as the case may be) out as being connected or associated with
      any 3i Related Party (other than as regards the 3i Investors being a
      shareholders of Sealift) in any manner whatsoever without the prior
      written consent of the relevant 3i Investor.

23. INTERPRETATION

23.1  In this Merger Agreement:

      23.1.1 a reference to a company or other legal entity shall be construed
             so as to include any legal entity or entities into which such
             company may be merged by means of a statutory merger or into which
             it may be split up or demerged, by means of a statutory split-up or
             demerger.

      23.1.2 a reference to a "person" includes a reference to any individual,
             firm, company, corporation, partnership, association, body
             corporate, and any other entity (whether or not having separate
             legal personality) and includes such person's legal
             representatives, successors and permitted assigns.


                                       15


      23.1.3 the term "subsidiary" of a company shall mean a legal entity with
             respect to which that company is able to direct or control,
             immediately or through one or more subsidiaries through:

             (a)  the exercise of more than half of the votes at a general
                  meeting of shareholders;

             (b)  the appointment of more than half of the members of the
                  management board (or local law equivalent); or

             (c)  the appointment of more than half of the members of the
                  supervisory board (if any),

             in each case whether through holding voting securities, by
             agreement or otherwise, and the term "parent" of a company means a
             legal entity of which that company is a subsidiary;

      23.1.4 the term "control" or "controlled" means, in relation to any
             person:

             (a)  being legally entitled, directly or indirectly, to exercise
                  more than fifty per cent. (50%) of the votes capable of being
                  cast in general meetings of that person; or

             (b)  having the legal right, directly or indirectly, to appoint or
                  replace the majority of the board of directors, supervisory
                  directors or any similar body, or otherwise control the votes
                  at meetings of such boards or similar body, whether through
                  ownership of voting rights, through agreement or otherwise;

      23.1.5 a reference to a particular agreement or document is (unless the
             context otherwise requires) a reference to the version of such
             agreement or document which is binding and enforceable on the date
             hereof, as such agreement or document may be novated, assigned,
             amended or supplemented from time to time;

      23.1.6 a reference to the singular includes a reference to the plural and
             vice versa;

      23.1.7 a reference to the masculine includes a reference to the feminine
             and neuter and vice versa;

      23.1.8 unless the contrary is specifically stated, the words "include" or
             "including" are used to indicate that the matters are not a
             complete enumeration of all matters covered;

      23.1.9 unless the context clearly indicates a contrary intention, when any
             number of days is prescribed, it must be calculated exclusively of
             the first and inclusively of the last day unless the last day falls
             on a day other than a Business Day, in which case the last day will
             be the next succeeding day which is a Business Day.


                                       16


23.2 The recitals and schedules form an integral part of this Merger Agreement,
     and a reference to a Recital, Schedule or clause means a recital, schedule
     or clause of this Merger Agreement unless stated otherwise.

23.3 The headings in this Merger Agreement are inserted for convenience and
     reference purposes only and do not affect its interpretation.

24. GOVERNING LAW; JURISDICTION

24.1 This Merger Agreement is governed by and shall be construed in accordance
     with English law.

24.2 Any dispute (a "DISPUTE") arising from or connected with this Merger
     Agreement (including a dispute regarding the existence, validity or
     termination of this Merger Agreement or the consequences of its nullity),
     shall be referred to and finally resolved by arbitration under the
     Arbitration Rules of the London Court of International Arbitration ("LCIA")
     (the "RULES").

24.3 The tribunal shall consist of three arbitrators, two of whom shall be
     nominated by the respective parties" who shall each be an English lawyer of
     not less than 10 years standing. The seat of the arbitration and the venue
     of all hearings shall be London, England, and the language of the
     arbitration shall be English.

24.4 The Parties agree that the arbitral tribunal shall have power to award on a
     provisional basis any relief which it would have power to grant on a final
     award.

24.5 Without prejudice to the powers of the arbitrator provided by the Rules,
     statute or otherwise, the arbitrator shall have power at any time, on the
     basis of affidavit evidence and the submissions of the parties alone, to
     make an award in favour of the claimant (or the respondent if a
     counterclaim) in respect of any claims (or counterclaims) to which there is
     no reasonably arguable defence, either at all or except as to the amount of
     any damages or other sum to be awarded.

24.6 The Parties exclude any rights to refer points of law or to appeal to the
     courts, to the extent that they can validly waive these rights.

25. COUNTERPARTS

     This Merger Agreement may be executed in any number of counterparts, each
     of which executed and delivered is an original and all of which together
     evidence the same agreement.

                [REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]


                                       17


IN WITNESS WHEREOF this Merger Agreement is signed on the date first written
above.

For and on behalf of

FRONTLINE LTD


/s/ Erling Lind
- --------------------------------------
By: Erling Lind
Title: Attorney-in-fact


SEALIFT LTD


/s/ Erling Lind
- --------------------------------------
By: Erling Lind
Title: Attorney-in-fact


3i EUROPARTNERS Va L.P.


/s/ [Illegible]
- --------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


3i EUROPARTNERS Vb L.P.


/s/ [Illegible]
- --------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


                                       18


3i PAN EUROPEAN BUY-OUTS 2006-08A L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


3i PAN EUROPEAN BUY-OUTS 2006-08B L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


3i PAN EUROPEAN BUY-OUTS 2006-08C L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


3i GLOBAL GROWTH 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


                                       19


3i PAN-EUROPEAN GROWTH 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 FCPR


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Gestion S.A.
By:
Title:


PAN-EUROPEAN BUYOUTS (NORDIC) CO-INVEST 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


                                       20


PAN EUROPEAN BUYOUTS (DUTCH) A CO-INVEST 2006-08 LP


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


GLOBAL GROWTH CO-INVEST 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


OIL, GAS & POWER CO-INVEST 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


STICHTING MANAGEMENT SEALIFT


/s/ Illegible
- -----------------------------------------   ------------------------------------
By: Illegible                               By:
Title: Attorney in fact                     Title:


                                       21


STICHTING SHAREHOLDERS DELPHI


- -----------------------------------------   ------------------------------------
By:                                         By:
Title:                                      Title:


NEPTUN HEAVY LIFT AS


- ----------------------------------------
By:
Title:


CAPRICORN INVESTMENT AS


- ----------------------------------------
By:
Title:


SJOKONSULT AS


- ----------------------------------------
By:
Title:


                                       22


                                   SCHEDULE 1
                                  3I INVESTORS

(1)  3i EUROPARTNERS Va L.P., a limited partnership registered under the Limited
     Partnerships Act 1907 (registered number LP011419), with its registered
     office at 16 Palace Street, London SW1E 5JD, England ("3i EUROPARTNERS
     Va"), acting by its manager, 3i Investments plc (registered number
     3975789), with its registered office at 16 Palace Street, London SW1E 5JD,
     England ("3i INVESTMENTS");

(2)  3i EUROPARTNERS Vb L.P., a limited partnership registered under the Limited
     Partnerships Act 1907 (registered number LP011420), with its registered
     office at 16 Palace Street, London SW1E 5JD, England ("3i EUROPARTNERS
     Vb"), acting by its manager, 3i Investments;

(3)  3i PAN EUROPEAN BUY-OUTS 2006-08A L.P., a limited partnership registered
     under the Limited Partnerships Act 1907 (registered number LP011276), with
     its registered office at 16 Palace Street, London SW1E 5JD, England ("3i
     PAN EUROPEAN A"), acting by its manager, 3i Investments;

(4)  3i PAN EUROPEAN BUY-OUTS 2006-08B L.P., a limited partnership registered
     under the Limited Partnerships Act 1907 (registered number LP011277), with
     its registered office at 16 Palace Street, London SW1E 5JD, England ("3i
     PAN EUROPEAN B"), acting by its manager, 3i Investments;

(5)  3i PAN EUROPEAN BUY-OUTS 2006-08C L.P., a limited partnership registered
     under the Limited Partnerships Act 1907 (registered number LP011278), with
     its registered office at 16 Palace Street, London SW1E 5JD, England ("3i
     PAN EUROPEAN C"), acting by its manager, 3i Investments;

(6)  3i GLOBAL GROWTH 2006-08 L.P., a limited partnership registered under the
     Limited Partnerships Act 1907 (registered number LP011318), with its
     registered office at 16 Palace Street, London SW1E 5JD, England ("3i GLOBAL
     GROWTH"), acting by its manager, 3i Investments;

(7)  3i PAN-EUROPEAN GROWTH 2006-08 L.P., a limited partnership registered under
     the Limited Partnerships Act 1907 (registered number LP011320), with its
     registered office at 16 Palace Street, London SW1E 5JD, England ("3i
     PAN-EUROPEAN GROWTH"), acting by its manager, 3i Investments;

(8)  PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 L.P., a limited partnership
     registered under the Limited Partnerships Act 1907 (registered number
     LP011279), with its registered office at 16 Palace Street, London SW1E 5JD,
     England ("PAN-EUROPEAN CO-INVEST"), acting by its manager, 3i Investments;

(9)  PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 FCPR, a FONDS COMMUNS DE PLACEMENT A
     RISQUE formed under the laws of France, with its registered office at 3,
     rue


                                       23


     Paul Cezanne, 75008 Paris, France ("PAN-EUROPEAN CO-INVEST FRANCE"), acting
     by its manager, 3i Gestion S.A.;

(10) PAN-EUROPEAN BUYOUTS (NORDIC) CO-INVEST 2006-08 L.P., a limited partnership
     registered under the Limited Partnerships Act 1907 (registered number
     LP011553), with its registered office at 16 Palace Street, London SW1E 5JD,
     England ("PAN-EUROPEAN (NORDIC) CO-INVEST"), acting by its manager, 3i
     Investments;

(11) PAN EUROPEAN BUYOUTS (DUTCH) A CO-INVEST 2006-08 L.P., a limited
     partnership registered under the Limited Partnerships Act 1907, with
     registered number LP011874, and having its registered office at 16 Palace
     Street, London, SW1E 5JD, United Kingdom ("PAN-EUROPEAN (DUTCH)
     CO-INVEST"), acting by its manager, 3i Investments;

(12) GLOBAL GROWTH CO-INVEST 2006-08 L.P., a limited partnership registered
     under the laws of Jersey (registered number LP760), with its registered
     office at 22 Grenville Street, St. Helier, Jersey ("GLOBAL GROWTH
     CO-INVEST"), acting by its manager, 3i Investments; and

(13) OIL, GAS & POWER CO-INVEST 2006-08 L.P., a limited partnership registered
     under the Limited Partnerships Act 1907 (registered number LP011321), with
     its registered office at 16 Palace Street, London SW1E 5JD, England ("OIL,
     GAS & POWER CO-INVEST"), acting by its manager, 3i Investments.


                                       24


                                   SCHEDULE 2

                                   DEFINITIONS

3i INVESTMENTS                   has the meaning given to it in paragraph (1) of
                                 SCHEDULE 1 (3i Investors);

3i INVESTORS                     means the parties listed in SCHEDULE 1 (3i
                                 Investors);

3i RELATED PARTY                 means (i) any entity of the 3i Group, (ii) any
                                 3i Investor and any other fund, partnership,
                                 investment vehicle or other entity which is
                                 managed or advised by an entity in the 3i Group
                                 or its nominees or by other parties selected by
                                 3i Group, or in which any entity in the 3i
                                 Group has a majority economic interest (a "3i
                                 FUND") and (iii) any investor in any 3i Fund;

AFFILIATE                        means in relation to any entity or person, any
                                 subsidiary, subsidiary undertaking, parent
                                 company, parent undertaking or other entity or
                                 person that directly or indirectly through one
                                 or more intermediaries, controls, is controlled
                                 by or is under common control with such entity
                                 or person, or any entity for which such entity
                                 or person serves as investment adviser,
                                 discretionary investment manager or in a
                                 similar capacity, and all mutual funds or other
                                 pooled or collective investment vehicles
                                 advised or managed by such entity or person;

AGREED                           FORM shall mean the document in its final form
                                 as approved and initialled by Frontline,
                                 Sealift and the 3i Investors as appropriate;

BAREBOAT CHARTERS                means the bareboat charters forming part of the
                                 Shipping Documents as described in the
                                 Disclosed Information;

BERMUDA                          MONETARY AUTHORITY means the Bermuda Monetary
                                 Authority established in terms of the Bermuda
                                 Monetary Authority Act 1969 as a body corporate
                                 having perpetual succession, to act as an
                                 independent licensing, supervisory and
                                 regulatory body;

BOARD                            RESOLUTION means the resolution of the Board of
                                 Sealift in the form of SCHEDULE 4 (Board
                                 Resolution);

BIDCO                            means Delphi Acquisition Holding I B.V., a
                                 company incorporated under the laws of The
                                 Netherlands with its registered office in
                                 Breda, The Netherlands;

BOND TRUSTEE                     means Norsk Tillitsmann ASA in its capacity as
                                 bond trustee in relation to the Sealift Bonds;

BREACH                           has the meaning given to it in clause 12.2 of
                                 this Merger Agreement;


                                       25


BUSINESS                         DAY means a day other than a Saturday, Sunday
                                 or official public holiday in either the United
                                 Kingdom or Norway, and on which banks are
                                 generally open for business in London, England
                                 and Oslo, Norway;

CAPRICORN                        has the meaning given to it in the introduction
                                 to this Merger Agreement, paragraph 1.7;

CLAIM                            has the meaning given to it in clause 12.3 of
                                 this Merger Agreement;

COMBINED BUSINESS                means the Sealift Business and the Delphi
                                 Business taken together;

COMPANY                          means Sealift;

COMPETING                        BUSINESS means any business or activity which
                                 involves providing heavy lift maritime shipping
                                 services of a type now or during the Non
                                 Compete Period provided by any Sealift Group
                                 Company or any Delphi Group Company from time
                                 to time;

COMPETING VESSEL                 means any vessel capable of being deployed in
                                 Competing Business;

COMPETITOR                       means any person directly or indirectly engaged
                                 in, or seeking to have available to it via
                                 purchase, lease, chartering or otherwise any
                                 vessels where the person restricted by the
                                 provisions of Clause 13 of the Merger Agreement
                                 or Mr Fredriksen, as the case may be, is
                                 reasonably aware such person is seeking to
                                 engage in, Competing Business;

COMPLETION CERTIFICATE           means the certificate substantially in the form
                                 set out in SCHEDULE 6 to the Delphi SPA;

COMPLETION CONDITIONS            means the conditions set out in clause 8.2 of
                                 this Merger Agreement;

CONSIDERATION SHARES             has the meaning set out in the Delphi SPA;

CONVERSION                       CONTRACTS means the contracts entered into with
                                 Cosco for the incorporating of new designs and
                                 materials within the existing structure of the
                                 four Sealift Vessels converting such Sealift
                                 Vessels into float-over heavy lift transport
                                 vessels ;

COSCO                            means either of Cosco (Zhoushan) Shipyard Co.,
                                 Ltd or Cosco (Nantong) Shipyard Co., Ltd, as
                                 the context may require;

DEBT RESTRUCTURING               has the meaning given to it in recital (G) of
                                 this Merger Agreement;

DELPHI                           has the meaning given to it in recital (A);


                                       26


DELPHI BUSINESS                  has the meaning given to it in recital (B);

DELPHI FOUNDATION                has the meaning given to it in the introduction
                                 to this Merger Agreement, paragraph 1.4;

DELPHI GROUP COMPANY /           means Delphi and its Subsidiaries from time to
COMPANIES                        time;

DELPHI SHAREHOLDERS              has the meaning given to it in recital (A);

DELPHI                           SPA means the share purchase agreement of even
                                 date herewith, between the Delphi Shareholders,
                                 the Delphi Foundation as Sellers and Sealift as
                                 Buyer;

DISCLOSED SEALIFT INFORMATION    has the meaning given to it in clause 11.1.2 of
                                 this Merger Agreement;

DOCKWISE DUE DILIGENCE           has the meaning ascribed thereto in clause
INVESTIGATION                    11.2.1;

ENCUMBRANCE                      means a mortgage, charge, pledge, lien, option,
                                 restriction, right of first refusal, right of
                                 pre-emption, third-party right or interest,
                                 other encumbrance or security interest of any
                                 kind, or another type of preferential
                                 arrangement (including, without limitation, a
                                 title transfer or retention arrangement) having
                                 similar effect;

EXISTING                         FACILITY AGREEMENT means the Delphi USD 680
                                 million senior facilities agreement dated 11
                                 January 2007 (as amended from time to time) and
                                 the PIKCo USD 65 million PIK Facility Agreement
                                 dated 10 April
                                 2007;

EXISTING                         SHARES means all the issued share capital of
                                 Sealift being immediately prior to the issuing
                                 of the Primary Offering Shares and the
                                 Consideration Shares a total of 90 million
                                 shares with a nominal vale of USD 1 each;

EXIT                             EVENT means any sale, transfer, merger, share
                                 for share exchange or asset pooling, a listing
                                 on any stock exchange or similar event;

FACILITY AGREEMENTS              means the PIK Facility Agreement and the Senior
                                 Facilities Agreement;

FRONTLINE                        has the meaning given to it in the introduction
                                 to this Merger Agreement, paragraph 1.2;

FRONTLINE GROUP                  means Frontline and any of its Subsidiaries
                                 from time to time;

FRONTLINE PRESS RELEASE          means the press release in the Agreed Form to
                                 be issued by Frontline after Signing;


                                       27


INVESTOR                         PRESENTATION means the investor presentation
                                 dated 26 April 2007 issued by the Company in
                                 connection with the Private Placement;

OFFERING SHARES                  has the meaning given to it in clause 6.1;

OFFER PRICE                      means NOK 30 per Offering Share;

MANAGEMENT AGREEMENTS            means the agreements described in SCHEDULE 8;

MANDATORY BOND                   means 15 Business Days after the issue of the
PREPAYMENT DATE                  Mandatory Prepayment Notice;

MANDATORY PREPAYMENT NOTICE      means the notice in the Agreed Form;

MARKETING MATERIALS              means the Investor Presentation prepared and
                                 distributed in relation to the Private
                                 Placement;

MERGER                           has the meaning given to it in recital (E) of
                                 this Merger Agreement;

MERGER AGREEMENT                 means this Merger agreement including all the
                                 Schedules and Annexes to this Agreement;

MERGER COMPLETION                has the meaning given to it in clause 8.5 of
                                 this Merger Agreement;

MERGER COMPLETION DATE           means the date designated by the 3i Investors
                                 and Seal for Merger Completion which is set at
                                 4 May 2007 but can be deferred by each of Seal
                                 and 3i Investments by notice to all other
                                 Parties to a Business Day no later than 11 May
                                 2007 or such other date as shall be agreed
                                 between Frontline and 3i Investments;

MPP FOUNDATION                   has the meaning given to it in the introduction
                                 to this Merger Agreement, paragraph 1.5;

NEPTUN                           has the meaning given to it in the introduction
                                 to this Merger Agreement, paragraph 1.6;

NEW INVESTORS                    has the meaning given to it in clause 6.1 of
                                 this Merger Agreement;

NON-COMPETE PERIOD               has the meaning given to it in clause 13.1.1 of
                                 this Merger Agreement;

NORWEGIAN STOCKBROKERS           means the Norwegian Securities Dealers
ASSOCIATION                      Association and its subsidiary, the Norwegian
                                 Stockbrokers Information services (FINFO),
                                 which operates a trading support system for
                                 unlisted shares (The OTC-system) for the
                                 benefit of its members;

NOTARY                           means Mr. T.P. van Duuren, civil law notary at
                                 Clifford Chance LLP in Amsterdam;

NOTARY ACCOUNT                   means the third party account set out in the
                                 Notary Letter;


                                       28


NOTARY LETTER                    means the letter detailing the (re-)pay went
                                 investors to the Notary;

OFFERING SHARES                  has the meaning given to it in clause 4.1 of
                                 this Merger Agreement;

OTC                              has the meaning given to it in recital (D) of
                                 this Merger Agreement;

PARTIES                          has the meaning given to it in the introduction
                                 to this Merger Agreement and a Party means any
                                 of them;

PIK                              FACILITY AGREEMENT means USD 65 million Pik
                                 facility agreement between, amongst others,
                                 Lehman Brothers and PIKCo dated on or about the
                                 date hereof;

PIK                              LENDERS means the financial institutions which
                                 are from time to time a party to the PIK
                                 Facility Agreement as a Lender (as defined
                                 therein);

PIK LOAN                         means the PIK Facility Agreement between PIKCo,
                                 Bayerische Hypo- und Vereinsbank AG, London
                                 Branch, Lehman Brothers International (Europe)
                                 as arrangers and bookrunners, Lehman Brothers
                                 International (Europe) as Agent, Lehman
                                 Brothers International (Europe) as Security
                                 Agent and the Original Lenders as listed
                                 therein;

PIKCo                            means Delphi Acquisition Holding B.V., a
                                 private company with limited liability
                                 (BESLOTEN VENNOOTSCHAP MET BEPERKTE
                                 AANSPRAKELIJKHEID) incorporated under the laws
                                 of The Netherlands, having its registered
                                 office at Lage Mosten 15, 4822 NJ Breda, The
                                 Netherlands, and being registered with the
                                 Chamber of Commerce in Amsterdam, The
                                 Netherlands, under file number 20131044;

PLACEMENT MANAGERS               has the meaning given to it in clause 6.3 of
                                 this Merger Agreement;

PRIMARY OFFERING SHARES          has the meaning given to it in clause 6.2 of
                                 this Merger Agreement;

PRIVATE PLACEMENT                has the meaning given to it in clause 4.1 of
                                 this Merger Agreement;

PRIVATE PLACEMENT                has the meaning given to it in SCHEDULE 3
COMPLETION DATE                  (Private Placement);

PROPOSED LISTING                 has the meaning given to it in recital (H) of
                                 this Merger Agreement;

CONSIDERATION SHARES             has the meaning given to it in the Delphi SPA;

REFUND GUARANTEES                means the guarantees issued to the ShipCo's in
                                 relation to refund of instalments paid under
                                 the Conversion Contracts;

SEALIFT                          has the meaning given to it in the introduction
                                 to this Merger Agreement, paragraph 1.3;


                                       29


SEALIFT                          BONDS means the FRN Sealift Ltd. Senior Secured
                                 Callable Bonds issued by Sealift under a loan
                                 agreement dated 8 February 2007;

SEALIFT BUSINESS                 Means the business as conducted by Sealift
                                 including the ShipCo's and the Shipping Assets;

SEALIFT DUE DILIGENCE            has the meaning given to it in clause 11.1.1 of
INVESTIGATION                    this Merger Agreement;

SEALIFT GROUP COMPANIES          means Sealift and its Subsidiaries from time to
                                 time and Sealift Group Company means any of
                                 them;

SEALIFT PRESS RELEASE            means the press release in the Agreed Form to
                                 be issued by Sealift after Signing;

SEALIFT SHAREHOLDERS             means the Agreed Form shareholders agreement of
AGREEMENT                        even date herewith, between the Parties to this
                                 Merger Agreement except for Capricorn,
                                 Sjokonsult, Neptun and the Delphi Foundation;

SEALIFT VESSELS                  has the meaning given to it in recital (C) and
                                 further details of which are set out in
                                 SCHEDULE 10 (Shipping Assets);

SECONDARY OFFERING SHARES        Has the meaning set out in clause 6.2;

SECOND SUPPLEMENTAL              means the supplemental purchase agreement in
PURCHASE AGREEMENT               the form of SCHEDULE 11 (Second Supplemental
                                 Purchase Agreement);

SENIOR FACILITIES                means the USD 1,100 million facility agreement
AGREEMENT                        between, amongst others, Lehman Brothers and
                                 BIDCo dated on or about the date hereof;

SENIOR SEALIFT LOAN              means the loan that was made available to
                                 Sealift under the Senior Sealift Loan
                                 Agreement;

SENIOR SEALIFT LOAN means the Sealift USD 240 million delayed draw AGREEMENT
term loan facility agreement dated 15 March
                                 2007;

SHIPCo                           means either Front Target Inc., Front Traveller
                                 Inc., Granite Shipping Company Limited or
                                 Quadrant Marine Inc or Southwest Tankers Inc or
                                 West Tankers Inc, as the context may require
                                 and "OWNERS" means all of them;

SHIPCo SPA                       means the agreement for the sale and purchase
                                 of all the issued shares in Front Target Inc.,
                                 Front Traveller Inc., Granite Shipping Company
                                 Limited, West Tankers Inc., Southwest Tankers
                                 Inc. and Quadrant Marine Inc. entered into on
                                 the date of this Merger Agreement by and
                                 between Sealift as seller and Dockwise
                                 Transport B.V. as buyer, all in the Agreed
                                 Form;

SHIPCo'S TRANSFER                has the meaning given to it in recital (F) of
TRANSACTION                      this Merger Agreement;


                                       30


SHIPPING                         ASSETS means the legal and beneficial interests
                                 the Owners have in each of the Sealift Vessels
                                 and the Shipping Documents as set out in
                                 SCHEDULE 10 (Shipping Assets);

SHIPPING DOCUMENT                means the Conversion Contracts, the Conversion
                                 Options, the Bareboat Charters, the Management
                                 Agreements and the Refund Guarantees;

SIGNING                          has the meaning given to it in clause 7.1;

SJOKONSULT                       has the meaning given to it in the introduction
                                 to this Merger Agreement, paragraph 1.8;

STOP DATE                        has the meaning given to it in clause 8.4 of
                                 this Merger Agreement;

SUBSCRIPTION AGREEMENT           means the Agreed Form subscription agreement
                                 issued in connection with the Private
                                 Placement;

SUBSIDIARIES                     has the meaning given to it in clause 1 of the
                                 Delphi SPA;

TRANSACTION                      has the meaning given to it in recital (G);

TRANSACTION                      DOCUMENTS means the Merger Agreement, the
                                 Delphi SPA, the Commitment Letter, the Notary
                                 Letter, the Frederiksen Non-Compete
                                 Undertaking, the Sealift Shareholders
                                 Agreement, the ShipCo SPA and the Board
                                 Resolution; and

WARRANTIES                       means the warranties given by Frontline and
                                 Sealift to the Delphi Shareholders set out in
                                 SCHEDULE 8 (Warranties) of this Merger
                                 Agreement.


                                       31


                                   SCHEDULE 3

                                PRIVATE PLACEMENT

Immediately following Signing:

1.   Frontline will issue the Frontline Press Release.

2.   Sealift will issue the Sealift Press Release.

3.   Within 48 hours of the date hereof, the Placement Managers will have
     informed the Parties of the number of Offering Shares the Placement
     Managers are able to place with New Investors (subject to Merger
     Completion).

4.   Upon receipt of the information referred to in 3 above, the allotment
     decisions will be made in accordance with the provisions of the
     Subscription Agreement.

5.   Completion of the Private Placement shall take place no later than on 11
     May 2007 (the "PRIVATE PLACEMENT COMPLETION DATE").


                                       32


                                   SCHEDULE 4

                                BOARD RESOLUTION

                                  SEALIFT LTD.

The undersigned, being all the Directors of Sealift Ltd., a company incorporated
in the Islands of Bermuda (the "COMPANY") pursuant to Bye-Law 104 of the
Company's Bye-laws, HEREBY ADOPT the resolutions set out below.

These Unanimous Written Resolutions may be executed in counterparts, and a copy
shall be inserted in the Company's Minute Book. Any action taken herein shall be
of the same force and effect as if adopted at a duly convened meeting of the
Board of Directors of the Company.

1. ELECTION AND APPOINTMENT OF OFFICERS AND RESIDENT REPRESENTATIVE

     WHEREAS it is noted that it is desirous to appoint the persons set out
     below as Directors of the Company with effect from Merger Completing as
     defined in the Morgan Agreement.

It is HEREBY RESOLVED that:-

     Andre Goedee, Mark Dickinson, Stefan Malfliet and Hans Middelthon be
     elected or appointed from Merger Completion as defined in the Merger
     Agreement to hold office until election of the next Board of Directors or
     until their respective successors are elected or appointed:

2. THE TRANSACTION DOCUMENTS

     WHEREAS it is proposed that the Company shall entand er into a merger
     agreement to be made between, inter alia, the Company, Frontline Ltd., the
     3i Investors (as defined therein), Stichting Shareholding Delphi, Stichting
     Management Sealift, Neptun Heavy Lift AS, Capricorn Investment AS and
     Sjokonsult AS in order to effect the merger of the business of the Company
     with the business of Delphi Acquisition Holding S.A. ("DELPHI") on the
     terms and conditions contained therein (the "MERGER AGREEMENT");

     WHEREAS in connection with the Merger Agreement the Company shall enter
     into an agreement regarding the sale and purchase of shares, convertible
     bonds, loan notes, depositary receipts over shares, depositary receipts
     over convertible bonds and depositary receipts over loan notes in Delphi to
     be made between, inter alia, the Company, the 3i Investors (as defined
     therein), Stichting Management Seal, Neptune Heavy Lift AS, Capricorn
     Investment AS and Sjokonsult AS (the "DELPHI SPA");

     WHEREAS in connection with the issuance of shares in the Company as
     consideration for the above it is intended that the Company will also enter
     into several subscription agreements for the private placement of shares in
     the Company (the "SUBSCRIPTION AGREEMENTS") and a shareholders agreement to
     be made between, inter alia, the Company, Frontline Ltd. and the Delphi
     Shareholders (as defined in the Merger Agreement) (the "SHAREHOLDERS
     AGREEMENT");


                                       33


     WHEREAS the Company owns all the issued and outstanding shares in Front
     Target Inc., Front Traveller Inc., Granite Shipping Company Limited, West
     Tankers Inc., Southwest Tankers Inc., and Quadrant Marine Inc. (the "SHIPCO
     SHARES"), it is intended that the Company will enter into a sale and
     purchase agreement to sell the Shipco Shares to Dockwise Transport B.V.
     (the "SHIPCO SPA")

     The Merger Agreement, the Delphi SPA, the Shareholders Agreement the
     Private Placement Agreements and the Shipco SPA are each individually
     referred to as a "TRANSACTION DOCUMENT" and collectively as the
     "TRANSACTION DOCUMENTS");

     WHEREAS the Board has carefully reviewed the contents and effect and the
     terms of each of the Transaction Documents and all the documents referred
     to in the Merger Agreement and the transactions contemplated therein;

     WHEREAS the Combined Business, as defined in the Merger Agreement, has been
     valued at 2.062 billion USD on a cash and debt free basis and accordngly,
     the Purchase Price (as defined in the Delphi SPA) has been negotiated at
     arms length and in good faith;

     WHEREAS the execution and delivery by or on behalf of the Company of the
     Transaction Documents and the exercise by the Company of its rights and the
     performance by the Company of its obligations thereunder would materially
     benefit the Company and would be for the purpose of carrying on its
     business.

     WHEREAS no Director has, directly or indirectly, any interest in the
     Transaction Documents or the arrangements relating thereto, which he is
     required by the Memorandum of Association or Bye-Laws of the Company or by
     statute or otherwise to disclose or is for any reason disqualified from
     voting pursuant to these unanimous written resolutions of the Board except
     for the options and remuneration packages negotiated for this transaction;

     WHEREAS neither the execution and delivery by or on behalf of the Company
     of the Transaction Documents to which the Company will be a party nor the
     exercise by the Company of any of its rights or the performance by the
     Company of any of its obligations thereunder would result in any breach of
     any restriction imposed by law, the Memorandum of Association or Bye-Laws
     of the Company or any agreement to which the Company is a party or by which
     the Company is bound;

It is HEREBY RESOLVED that:-

     the issuance of the Primary Offering Shares (as defined in the Merger
     Agreement) and the issuance of the Consideration Shares (as defined in the
     Delphi SPA), in each cash credited as fully paid up, are hereby approved as
     being in the best interests of the Company and the actions of the
     Directors, Officers and Agents of the Company to date in connection
     therewith be and are hereby approved, ratified and confirmed;

     the transactions contemplated in the Transaction Documents are hereby
     approved as being in the best interests of the Company and the actions of
     the directors,


                                       34


     officers and agents of the Company to date in connection therewith are
     hereby approved, ratified and confirmed;

     the actions of the Directors, Officers and agents of the Company to date in
     connection with the aforementioned transactions be and are hereby approved
     and the entry by the Company into the Transaction Documents and all
     transactions contemplated therein is hereby approved and retified;

     the terms and conditions (so far as they concern the Company) of each of
     the Transaction Documents and the execution and delivery by or on behalf of
     the Company of each Transaction Document in such form or with such
     amendments thereto as the person or persons executing the same pursuant to
     the authorities conferred by the following resolutions may in his or their
     absolute discretion think fit, and the exercise by the Company of its
     rights and the performance by the Company of its obligations thereunder be
     and are hereby approved;

     each of the Directors, including the director appointed as per the
     resolutions above, (each an "AUTHORISED SIGNATORY"), be and is severally
     authorised to sign and deliver on behalf of the Company each of the
     Transaction Documents, in the forms of the drafts reviewed by the Directors
     or with such amendments thereto as such Authorised Signatory may in his
     absolute discretion think fit, the exercise of such discretion to be
     conclusively evidenced by the Authorised Signatory's execution thereof;

     each Authorised Signatory be and is hereby severally authorised to do all
     acts and things so as to carry into effect the purposes of the foregoing
     resolutions and to sign and deliver on behalf of the Company any and all
     documents which may be required pursuant to or in connection with the
     Transaction Documents and to give any and all notices, acknowledgements or
     undertakings on behalf of the Company in connection with the Transaction
     Documents, in each case in such manner or form as such Authorised Signatory
     may in his absolute discretion think fit, the exercise of such discretion
     to be conclusively evidenced by his execution thereof;

     with respect to documents to be executed as deeds (if any), each Authorised
     Signatory and Attorney be and is hereby severally authorized in respect of
     any Transaction Document (or any such other document as may be requisite or
     appropriate in furtherance of the exercise of the Company's rights or
     performance of the Company's obligations thereunder), to execute under the
     Company's Common Seal and deliver same on behalf of the Company, in such
     form as such person may in his or her absolute discretion think fit, the
     exercise of such discretion to be conclusively evidenced by his execution
     thereof;

     with respect to documents requiring execution only under hand, each
     Authorised Signatory be and is hereby severally authorized in respect of
     any Transaction Document (or any such other document as may be requisite or
     appropriate in furtherance of the exercise of the Company's rights or
     performance of the


                                       35


     Company's obligations thereunder) that does not require execution as a
     deed, to execute under hand and deliver same in such form as such person
     may in his or her absolute discretion think fit, the exercise of such
     discretion to be conclusively evidenced by his execution thereof;

     each of the Secretary, the Assistant Secretary, the Resident Representative
     and the Assistant Representative of the Company be and is hereby severally
     authorized to issue a power or powers of attorney under the Common Seal of
     the Company authorizing any or all of the Authorized Signatories as
     attorneys-in-fact of the Company (each an "ATTORNEY" and together, the
     "ATTORNEYS") and delegating to the Attorneys the powers and discretions
     vested in the Authorised Signatories by virtue of the foregoing
     resolutions, such power or powers of attorney to be in such form as the
     individual or individuals acting may in his or their discretion determine,
     the exercise of such discretion to be conclusively evidenced by their
     execution thereof;

     each of the Directors, the Secretary or the Assistant Secretary of the
     Company be and is hereby authorised;


                                       36


                                   SCHEDULE 5

                               DEBT RESTRUCTURING

1.   Bidco has notified Lehman Brothers International (Europe) in accordance
     with the terms of the Commitment Letter, that signing of the Facility
     Agreement is required to take place on the date of Completion on terms
     approved as of the date hereof.

2.   The Bond Trustee has notified Sealift in writing that the ShipCo Transfer
     Transactions constitutes a mandatory prepayment event in accordance with
     the terms of the Sealift Bonds.

3.   On the date hereof:

3.1  Sealift shall notify Nordea Bank Norge ASA ("NORDEA") as agent under the
     Senior Sealift Loan Agreement that the Senior Sealift Loan will voluntarily
     be repaid by Sealift on Merger Completion.

3.2  BidCo shall notify Fortis Bank S.A. / N.V. (UK Brands) as agent under the
     Existing Facility Agreements that the Existing Facilities will voluntarily
     be prepaid by BidCo on Merger Completion.

4.   Prior to the Merger Completion Date the appropriate parties shall enter
     into the and Notary Letter.

5.   On the Merger Completion Date:

5.1  Bidco, PIKCo and Lehman Brothers as the Agent will enter into the
     Facilities Agreements.

5.2  The lenders under the Facilities Agreements will make the funding available
     to the Notary Account for release in accordance with the terms of the
     Notary Letter upon prepayment of the conditions precedent as agreed
     therein.

5.3 Sealift will issue to the Bond Trustee the Mandatory Prepayment Notice.

6.   Within 3 Business Days of Merger Completion Sealift will repay the Sealift
     Senior Facility and procure the release of first lien security by Nordea as
     security agent under the Senior Sealift Loan Agreement.

7.   On the Mandatory Bond Prepayment Date, Sealift will repay the Sealift Bonds
     together with the mandatory prepayment amount.

8.   Following Merger Completion, BidCo, PIKCo and the ShipCo's will enter into
     the relevant further security documents in accordance with the terms of the
     Facility Agreements.


                                       37


                                   SCHEDULE 6

                           SHIPCO TRANSFER TRANSACTION

1. On the Merger Completion Date:

1.1  Sealift and Dockwise Transport B.V. shall procure the transfer of the
     ShipCo's in accordance with the ShipCo SPA.

1.2  Frontline agrees to the assignment by Sealift or ShipCo of any and all
     rights and the transfer of any and all obligations under any Shipping
     Document to any other direct or indirect wholly owned subsidiary of
     Sealift.

1.3  The time charter contracts in relation to the Granite and Marble will be
     replaced by bareboat charter contracts in the Agreed Form:

     Rate: USD 12.500 per day

     Start date: Merger Completion

     End date: 15 March 2008 (Granite) or 15 April 2008 (Marble).

     If delivery date agreed with Cosco is later than 15 March 2008 (Granite) or
     15 April 2008 (Marble) the bareboat contract shall terminate on the earlier
     of such delivery date and 15 April 2008 (Granite) and 15 May 2008 (Marble).

1.4  Frontline confirms that prior to the Merger Completion Date the ShipCo
     Transfer Transaction has been disclosed to the insurers and the lead
     underwriters have confirmed that all the insurance policies disclosed as
     part of the Disclosed Information wi11 continue in full force and effect
     and on the same terms and conditions following the completion of the ShipCo
     Transfer Transaction. Frontline confirms that with effect from the date
     hereof it will continue to maintain in full force and effect each of the
     insurance policies disclosed as part of the Disclosed Information until the
     earlier of 15 January 2008 and such time as the Company gives written
     notice that it has replaced such policies on terms and conditions
     satisfactory to the Company; it being understood that the relevant
     premiums, to the extent they relate to the relevant Shipco Vessels, will be
     recharged at cost to the relevant Shipco in accordance with consistent past
     practice.

1.5  Frontline confirms that each ShipCo is and will remain the sole loss payee
     in relation to any insurance policies relating to the relevant Sealift
     Vessel owned by it.


                                       38


                                   SCHEDULE 7

                              DISCLOSED INFORMATION

1. OWNERSHIP OF VESSELS

1.1  Purchase Agreement between Frontline and Sealift dated 30 January 2007,
     governed by Norwegian Law

1.2  Supplemental Agreement to the Purchase Agreement, between Sealift, the
     Owners and Frontline dated 15 March 2007, governed by Norwegian Law

1.3  Certificates of Ownership for each Vessel

2. CHARTERS

2.1  Bareboat Charter re "Front Target" between Front Target Inc. and Key
     Chartering Corp. dated 21 March 2007, governed by English Law

2.2  Bareboat Charter re "Front Traveller" between Front Traveller Inc. and Key
     Chartering Corp. dated 21 March 2007, governed by English Law

2.3  Bareboat Charter re "Front Comor" between West Tankers Inc. and Key
     Chartering Corp. dated 21 March 2007, governed by English Law

2.4  Letter of Intent to Contract Heavy Lift Vessel dated 23 March 2007

3. MANAGEMENT OF VESSELS

3.1  Addendum 1 to the Administrative Services Agreement, between Sealift,
     Frontline Management and the Owners dated 21 March 2007, governed by
     Norwegian Law

3.2  Technical Ship Management Contract between Granite Shipping Company Ltd.
     and Frontline Management dated 21 March 2007, governed by English Law

3.3  Technical Ship Management Contract between Quadrant Marine Inc. and
     Frontline Management dated 21 March 2007, governed by English Law

3.4  Administrative Services Agreement between Sealift and Frontline dated
     27 February 2007, governed by Norwegian Law

3.5  Commercial Management Agreement between Quadrant Marine Inc. and Frontline
     Management dated 21 March 2007, governed by English Law

  3.6 Commercial Management Agreement between Granite Shipping Company Limited
      and Frontline Management dated 21 March 2007, governed by English Law

4. CONVERSION

4.1  Heavylift Conversion Schedule dated 22 March 2007

4.2  Conversion Contract re "Front Target" between Front Target Inc. and Cosco
     (Nantong) Shipyard Co. Ltd. dated 11 December 2006, governed by English Law


                                       39


4.3  Conversion Contract re "Front Traveller" between Front Traveller Inc. and
     Cosco (Zhoushan) Shipyard Co. Ltd. dated 18 January 2007, governed by
     English Law

4.4  Conversion Contract re "Front Transporter" between Front Transporter Inc.
     and Cosco (Nantong) Shipyard Co. Ltd. 1 June 2006, governed by English Law

4.5  Conversion Contract re "Front Comor" between West Tankers Inc. and Cosco
     (Nantong) Shipyard Co. Ltd. dated 18 January 2007, governed by English Law

4.6  Novation Agreement between Front Transporter Inc., Southwest Tankers Inc.
     and Cosco (Nantong) Shipyard Co. Ltd. dated 20 January 2007, governed by
     English Law

4.7  Heads of Agreement of Conversion between Ship Finance International Ltd.
     and Cosco Shipyard group Co. Ltd dated 22 February 2006, governed by
     English Law

4.8  Novation of Option Agreement between Cosco Shipyard group Co. Ltd., Ship
     Finance International Ltd and Sealift dated 18 January 2007, governed by
     English Law

4.9  Option Agreement between Cosco Shipyard group Co. Ltd. and Ship Finance
     International Ltd. dated 1 June 2006, governed by English Law

4.10 Draft conversion contract to be agreed between Granite Shipping Company
     Limited and Cosco (Zhoushan) Shipyard Co. Ltd for the conversion of "Front
     Granite" (although the draft refers to 'Front Traveller Inc.' and "Front
     Traveller" it was disclosed as relating to "Front Granite"

4.11 Draft conversion contract to be agreed between Quadrant Marine Inc. and
     Cosco (Guangzhou) Shipyard Co. Ltd for the conversion of "Marble" (although
     the draft refers to 'Front Traveller Inc.' and "Front Traveller" it was
     disclosed as relating to "Marble"

5. CLASSIFICATION

     Classification Certificates relating to each Vessel dated 15 February 2007.

6. CORPORATE

6.1  Sealift

6.2  Sealift Bye-Laws, dated 15 January 2007

6.3  Sealift Equity Offering Presentation dated January 2007

6.4  Sealift Certificate of Incorporation, dated 11 January 2007

6.5  Incorporation of Sealift - SGM minutes dated 15 January 2007

6.6  Board minutes and resolutions Sealift dated 15 January 2007

6.7  Board minutes Sealift dated 24 January 2007

6.8  Board minutes Sealift dated 12 February 2007

6.9  Board minutes Sealift dated 14 February 2007(1)


                                       40


6.10 Board minutes Sealift dated 14 February 2007(2)

6.11 Board minutes Sealift dated 21 March 2007

6.12 Shareholders written resolution dated 24 January 2007

6.13 Subsidiaries

6.14 Incorporation documentation, dated 23 December 2002 - Front Target Inc.

6.15 Incorporation documentation, dated 23 December 2002 - Front Traveller Inc.

6.16 Incorporation documentation, dated 29 May 1991 - Granite Shipping Company
     Limited.

6.17 Incorporation documentation, dated 2 December 1991 - Quadrant Marine Inc.

6.18 Incorporation documentation, dated 23 February 1989 - Southwest Tankers
     Inc.

6.19 Incorporation documentation, dated 23 February 1989 - West Tankers Inc.

6.20 Board resolutions re Security, dated 14 February 2007 - Granite Shipping
     Company Limited

6.21 Board resolutions re Corporate matters and Documentation, dated 14 February
     2007 - Granite Shipping Company Limited.

6.22 Board resolutions re Security, dated 14 February 2007 - Southwest Tankers
     Inc.

6.23 Board resolutions re Corporate matters and Documentation, dated 14 February
     2007 - Southwest Tankers Inc.

6.24 Board resolutions re Security, dated 14 February 2007 - Front Target Inc.

6.25 Board resolutions re Corporate matters and Documentation, dated 14 February
     2007 - Front Target Inc.

6.26 Board resolutions re Security, dated 14 February 2007 - West Tankers Inc.

6.27 Board resolutions re Corporate matters and Documentation, dated 14 February
     2007 - West Tankers Inc.

6.28 Board resolutions re Security, dated 14 February 2007 - Quadrant Marine
     Inc.

6.29 Board resolutions re Corporate matters and Documentation, dated 14 February
     2007 - Quadrant Marine Inc.

6.30 Board resolutions re Security, dated 14 February 2007 - Front Traveller
     Inc.

6.31 Board resolutions re Corporate matters and Documentation, dated 14 February
     2007 - Front Traveller Inc.

6.32 Board resolutions and POAs re the financing, dated 16 March 2007 - Front
     Target Inc., Quadrant Marine Inc. and Granite Shipping Company Limited


                                       41


6.33 Board resolutions and POAs re the financing, dated 16 March 2007 - West
     Tankers Inc, Front Target Inc. and Southwest Tankers Inc.

6.34 Written resolutions of the Shareholders of the Owners dated 19 March 2007

6.35 Written resolutions of the Shareholders of the Owners dated 15 February
     2007

6.36 Board minutes of the Owners dated 18 April 2007

6.37 Board minutes - incomplete

6.38 Commercial register extract dated 21 March 2007 - Sealift Management B.V.

6.39 Articles of Sealift Management B.V. dated 20 February 2007

6.40 Share register of Sealift Management B.V. dated 20 February 2007

6.41 Share certificates of the Owners dated 21 March 2007

6.42 List of Directors and Officers of the Owners, undated

6.43 Register of members of the Owners, last updated 21 March 2007

6.44 OTC

6.45 Registrar Agreement between Nordea and Sealift, governed by Norwegian Law

6.46 Confirmation letter from Norwegian Stockbrokers Association dated 30
     January 2007

6.47 Agreement on Distribution of Price Sensitive Information between Sealift
     and Norwegian Stockbrokers' Association dated 24 January 2007, governed by
     Norwegian Law

6.48 Branch Register Agreement between Sealift and Nordea dated 24 January 2007,
     governed by Norwegian Law

6.49 Permits

6.50 Correspondence with Bermuda Monetary Authority

6.51 Exemption from the Companies Act dated 19 January 2007

6.52 Ministry of Finance - exemption under the 1966 Act dated 16 January 2007

7. INSURANCES

7.1  Company Liability Insurance

     7.1.1 Frontline - Directors and Officers, Company Liability and Securities
           Claims Entity Insurance, governed by Norwegian Law

     7.1.2 Endorsement no. 7 - Endorsement of Sealift as Additional Named
           Company under Frontline - Company Liability and Securities Claims
           Entity Insurance


                                       42


     7.1.3  Frontline - Directors and Officers, Company Liability and Securities
            Claims Entity Insurance - Excess Policy, governed by Norwegian Law

7.2  Insurance of Vessels

     7.2.1  Assured Mortgagees Sealift

     7.2.2  Hull and Machinery Insurance document dated 2 January 2006

     7.2.3  Schedule of Insurances per Vessel dated 20 February 2007

     7.2.4  Schedule of Insurance claims dated 16 February 2007

     7.2.5  Certificate of Entry - "Front Target" - effective date 20 February
            2007

     7.2.6  Certificate of Entry - "Front Traveller" - effective date 20
            February 2007

     7.2.7  Certificate of Entry - "Front Granite" - effective date 20 February
            2007

     7.2.8  Certificate of Entry - "Marble" - effective date 20 February 2007

     7.2.9  Certificate of Entry - "Front Sunda"- effective date 20 February
            2007

     7.2.10 Certificate of Entry - "Front Comor" - effective date 20 February
            2007

8. LOAN DOCUMENTS AND SECURITY

8.1  Loan Agreements & Guarantees

8.2  Commitment Letter from Nordea and DNB Nor to Sealift dated 7 February 2007

8.3  Coordination Agreement between Nordea, Norsk Tillitsmann and Sealift dated
     15 March 2007, governed by Norwegian Law

8.4  $240m Delayed Draw Term Loan Facility Agreement between Sealift, the Owners
     and Nordea and DNB Nor dated 15 March 2007, governed by Norwegian Law (the
     "$240m Loan")

8.5  Postponement of Payment of Obligations Agreement between Sealift and
     Frontline dated 21 March 2007

8.6  Letter Agreement Between Nordea and Sealift dated 21 March 2007, governed
     by Norwegian Law

8.7  Frontline Guarantee for obligations of Sealift in favour of Nordea dated 21
     March 2007, governed by Norwegian Law

8.8  Guarantee by Frontline in favour of Target, Traveller and West Tankers
     dated 21 March 2007, governed by Norwegian Law

8.9  Loan Trustee Fees between Sealift and Norsk Tillitsmann dated 9 February
     2007

8.10 Sealift Bond Presentation re Bond Issue dated January 2007


                                       43


8.11 Bond Loan Agreement between Sealift and Norsk Tillitsmann dated 8 February
     2007, governed by Norwegian Law (the "Bond Loan")

8.12 Letter from Nordea confirming a drawdown under the MUSD 240 facility and a
     fax confirmation from the Loan Trustee stating the interest of the bond
     loan for the first interest period

8.13 Security

8.14 First Preferred Mortgage issued by Front Target Inc. to Nordea in respect
     of "Front Target" dated 20 March 2007, governed by the Laws of the Republic
     of the Marshall Islands

8.15 First Preferred Mortgage issued by Front Traveller Inc. to Nordea in
     respect of "Front Traveller" dated 20 March 2007, governed by the Laws of
     the Republic of the Marshall Islands

8.16 First Preferred Mortgage issued by Granite Shipping Company Limited to
     Nordea in respect of "Front Granite" dated 20 March 2007, governed by the
     Laws of the Republic of the Marshall Islands

8.17 First Preferred Mortgage issued by Southwest Tankers Inc. to Nordea in
     respect of "Front Sunda" dated 20 March 2007, governed by the Laws of the
     Republic of the Marshall Islands

8.18 First Preferred Mortgage issued by West Tankers Inc. to Nordea in respect
     of "Front Comor" dated 20 March 2007, governed by the Laws of the Republic
     of the Marshall Islands

8.19 Registration of Mortgage - "Marble", dated 21 March 2007

8.20 Second Preferred Mortgage issued by Front Target Inc. to Norsk Tillitsmann
     in respect of "Front Target" dated 20 March 2007, governed by the Laws of
     the Republic of the Marshall Islands

8.21 Second Preferred Mortgage issued by Front Traveller Inc. to Norsk
     Tillitsmann in respect of "Front Traveller" dated 20 March 2007, governed
     by the Laws of the Republic of the Marshall Islands

8.22 Second Preferred Mortgage issued by Granite Shipping Company Limited to
     Norsk Tillitsmann in respect of "Front Granite" dated 20 March 2007,
     governed by the Laws of the Republic of the Marshall Islands

8.23 Second Preferred Mortgage issued by Southwest Tankers Inc. to Norsk
     Tillitsmann in respect of "Front Sunda" dated 20 March 2007, governed by
     the Laws of the Republic of the Marshall Islands

8.24 Second Preferred Mortgage issued by West Tankers Inc. to Norsk Tillitsmann
     in respect of "Front Comor" dated 20 March 2007 governed, by the Laws of
     the Republic of the Marshall Islands


                                       44


8.25 Mortgage Deed of Covenant between Quadrant Marine Inc. and Norsk
     Tillitsmann dated 21 March 2007, governed by Bahamian Law

8.26 Second Priority Assignment of Insurances between Front Target Inc. and
     Norsk Tillitsmann dated 19 March 2007, governed by Norwegian Law

8.27 Second Priority Assignment of Insurances between Front Traveller Inc. and
     Norsk Tillitsmann dated 19 March 2007, governed by Norwegian Law

 8.28 Second Priority Assignment of Insurances between Granite Shipping Company
    Limited and Norsk Tillitsmann dated 19 March 2007, governed by Norwegian
                                       Law

8.29 Second Priority Assignment of Insurances between Quadrant Marine Inc. and
     Norsk Tillitsmann dated 19 March 2007, governed by Norwegian Law

8.30 Second Priority Assignment of Insurances between Southwest Tankers Inc. and
     Norsk Tillitsmann dated 19 March 2007, governed by Norwegian Law

8.31 Second Priority Assignment of Insurances between West Tankers Inc. and
     Norsk Tillitsmann dated 19 March 2007, governed by Norwegian Law

8.32 Pledge of Shares between Sealift and Norsk Tillitsmann dated 19 March 2007,
     governed by Norwegian Law

8.33 Refund guarantees in favour of Southwest Tankers Inc. (third instalment),
     Front Transporter Inc. (second and third instalment) and Front Target Inc.
     (first instalment)

8.34 Guarantee between Front Target Inc. and Norsk Tillitsmann dated 19 March
     2007, governed by Norwegian Law

8.35 Guarantee between Front Traveller Inc. and Norsk Tillitsmann dated 19 March
     2007, governed by Norwegian Law

8.36 Guarantee between Quadrant Marine Inc. and Norsk Tillitsmann dated 19 March
     2007, governed by Norwegian Law

8.37 Guarantee between Southwest Tankers Inc. and Norsk Tillitsmann dated 19
     March 2007, governed by Norwegian Law

8.38 Guarantee between West Tankers Inc. and Norsk Tillitsmann dated 19 March
     2007, governed by Norwegian Law

8.39 Guarantee between Granite Shipping Company Ltd. and Norsk Tillitsmann dated
     19 March 2007

8.40 Second Priority Assignment Deed of Purchase Agreement, between Sealift and
     Norsk Tillitsmann dated 21 March 2007, governed by English Law

 8.41 Account Charge between Front Target Inc. and Nordea dated 21 March 2007,
                            governed by Norwegian Law


                                       45


8.42 Account Charge between Front Traveller Inc. and Nordea dated 21 March 2007,
     governed by Norwegian Law

8.43 Account Charge between Granite Shipping Company Limited and Nordea dated
     21 March 2007, governed by Norwegian Law

8.44 Account Charge between Quadrant Marine Inc. and Nordea dated 21 March 2007,
     governed by Norwegian Law

8.45 Account Charge between Southwest Tankers Inc. and Nordea dated 21 March
     2007, governed by Norwegian Law

 8.46 Account Charge between West Tankers Inc. and Nordea dated 21 March 2007,
                            governed by Norwegian Law

8.47 General Assignment of Earning and Insurances between Front Target Inc. and
              Nordea dated 21 March 2007, governed by Norwegian Law

8.48 General Assignment of Earning and Insurances between Front Traveller Inc.
     and Nordea dated 21 March 2007, governed by Norwegian Law

8.49 General Assignment of Earning and Insurances between Granite Shipping
     Company Limited and Nordea dated 21 March 2007, governed by Norwegian Law

8.50 General Assignment of Earning and Insurances between Quadrant Marine Inc.
     and Nordea dated 21 March 2007, governed by Norwegian Law

8.51 General Assignment of Earning and Insurances between Southwest Tankers Inc.
     and Nordea dated 21 March 2007, governed by Norwegian Law

8.52 General Assignment of Earning and Insurances between West Tankers Inc. and
     Nordea dated 21 March 2007, governed by Norwegian Law

8.53 Assignment of Conversion Contract and Refund Guarantees -"Front Target"-
     between Front Target Inc. and Nordea, governed by English Law

8.54 Assignment of Conversion Contract and Refund Guarantees -"Front Traveller"-
     between Front Traveller Inc. and Nordea, governed by English Law

8.55 Assignment of Conversion Contract and Refund Guarantees -"Front Sunda"-
     between Southwest Tankers Inc. and Nordea, governed by English Law

8.56 Assignment of Conversion Contract and Refund Guarantees -"Front Comor"-
     between West Tankers Inc. and Nordea, governed by English Law

8.57 Assignment Deed - Bareboat re "Front Target"- between Front Target Inc. and
     Nordea dated 21 March 2007, governed by English Law

8.58 Assignment Deed - Bareboat re "Front Traveller"- between Front Traveller
     Inc. and Nordea dated 21 March 2007, governed by English Law


                                       46


8.59 Assignment Deed - Bareboat re "Front Comor"- between West Tankers Inc. and
     Nordea dated 21 March 2007, governed by English Law

8.60 Assignment Deed - Purchase Agreement - between Sealift and Nordea dated
     21 March 2007, governed by English Law

8.61 Assignment Deed - Option Agreement - between Sealift and Nordea dated
     21 March 2007, governed by English Law

8.62 Pledge of Shares between Sealift and Nordea dated 21 March 2007, governed
     by Norwegian Law

8.63 Mortgage Deed of Covenant between Quadrant Marine Inc. and Nordea dated
     21 March 2007

8.64 Account Charge between Sealift and Nordea dated 21 March 2007, governed by
     Norwegian Law

9. FINANCIAL INFORMATION

9.1  Payment Schedule under the $240m Loan

9.2  Payment Schedule under the Bond Loan

9.3  Unaudited Consolidated First Quarter Report and Accounts for Sealift

9.4  Sealift Cashflow scenarios

The Refund Guarantees in relation to the first, second and third instalments
relating to the Front Sunda will be replaced and until then the next set of
instalments due to Cosco will not be paid by Frontline.


                                       47


                                   SCHEDULE 8

                                   WARRANTIES

1. POWER AND AUTHORITY

1.1  Frontline and Sealift each have the requisite capacity, power and authority
     to enter into and to perform this Merger Agreement.

1.2  The signature of and the compliance with the terms of this Merger Agreement
     does not and will not conflict with or constitute a default under any
     provision of:

     any agreement or instrument to which either Frontline or Sealift is a
     party; or

     the constitutional and corporate documents of either Frontline or Sealift.

     the laws of Bermuda.

2. THE EXISTING SHARES

2.1  The Existing Shares comprise all of the issued shares of Sealift and are
     fully paid up, free of further capital contribution obligations.

2.2  Frontline is the sole legal and beneficial owner of 30 million of the 90
     million the Existing Shares.

2.3  There is no Encumbrance, and there is no agreement, arrangement or
     obligation to create or give an Encumbrance, in relation to any of the
     unissued shares in the capital of Sealift.

2.4  Other than this Merger Agreement, there is no agreement, arrangement or
     obligation requiring the issue, transfer, repurchase, redemption or
     repayment of, or the grant to a person of the right (conditional or not) to
     require the issue, transfer, redemption or repayment of, a share in the
     capital of Sealift (including, without limitation, an option or right of
     pre-emption or conversion).

3. SHIPPING

3.1  Binding Agreements

     3.1.1 The obligations of each ShipCo under each Shipping Document are, or
           when the relevant document is executed will be, enforceable in
           accordance with their terms.

3.2  Shipping Assets

     3.2.1 Each of the Shipping Assets is owned both legally and beneficially by
           the relevant ShipCo as set out in SCHEDULE 10 (Shipping Assets) and
           each of those Shipping Assets capable of possession is in the
           possession or under the control of the relevant ShipCo.

     3.2.2 Except for statutory maritime liens arising in the ordinary course of
           business and subject to the due repayment of the Senior Sealift Loan
           and the Sealift Bonds there is no Encumbrance over or affecting all
           or part of the Shipping


                                       48


          Assets which will subsist after completion of the Debt Restructuring
          and no ShipCo is a party to any agreement or commitment to give or
          create any and so far as Frontline and Sealift are aware, no claim has
          been made by any person to be entitled to any.

3.3  Conversion Contracts, Options and Refund Guarantees

      3.3.1 Complete and accurate copies of all Conversion Contracts, Conversion
            Options and Refund Guarantees have been disclosed as part of the
            Disclosed Information.

      3.3.2 Each of the Conversion Contracts and Conversion Options was properly
            executed by the relevant ShipCo and, so far as Frontline and Sealift
            are aware, by the respective counterparties, and has not been
            terminated and neither Frontline nor Sealift are aware of any
            breach, invalidity, or grounds for determination, rescission,
            avoidance or repudiation of any Conversion Contract or Conversion
            Option.

      3.3.3 Subject to the due repayment of the Senior Sealift Loan and the
            Sealift Bonds, there is no Encumbrance over or affecting all or part
            of the ShipCos' rights under the Conversion Contracts or the
            Conversion Options which will subsist after Completion and no ShipCo
            is a party to any agreement or commitment to give or create any and,
            so far as Frontline and Sealift are aware, no claim has been made by
            any person to be entitled to any.

      3.3.4 So far as Frontline and Sealift are aware, each of the Refund
            Guarantees was properly executed by the Refund Guarantor, and has
            not been terminated and neither Frontline nor Sealift are aware of
            any breach, invalidity, or grounds for determination, rescission,
            avoidance or repudiation of any Refund Guaranteeprovided, however,
            that the Refund Guarantees received will be reissued to take into
            account the novation of the Conversion Contract relevant to M/T
            "Front Sunda" having been novated to Southwest Tankers Inc. from
            Front Transporter Inc. and the revised text thereof agreed with
            Nordea as agent for the lenders to the Senior Sealift Loan.

      3.3.5 There is no Encumbrance over or affecting all or part of the
            ShipCos' rights under the Refund Guarantee which will subsist after
            Completion and no ShipCo is a party to any agreement or commitment
            to give or create any and, so far as Frontline and Sealift are
            aware, no claim has been made by any person to be entitled to any.

      3.3.6 The agreed schedule for delivery of the first four Sealift Vessels
            to Cosco for the conversion works to be undertaken pursuant to the
            Conversion Contracts and for the redelivery of each such Sealift
            Vessel to the relevant ShipCo following completion of such works is
            as included in the Disclosed Information.

3.4   The Sealift Vessels

      3.4.1 So far as Frontline and Sealift are aware, each of the Sealift
            Vessels currently holds all material certificates, licences or
            authorisations required to enable such


                                       49


            Sealift Vessel to carry out its operations in the jurisdiction in
            which it is registered and all jurisdictions in which it currently
            trades subject only to such certificates lapsing during actual
            conversion of a Sealift Vessel pursuant to the Conversion Contracts.

      3.4.2 So far as Frontline and Sealift are aware, each of the Sealift
            Vessels is presently permanently registered at its place of registry
            and all fees of such registry have been paid.

      3.4.3 Neither Frontline or Sealift has received any notice that any
            Sealift Vessel is or is likely to be subject to any claim, to
            forfeiture, arrest, other detention, seizure, confiscation or other
            requisition and neither Frontline nor Sealift are aware of any
            circumstances which might give rise to any such claim, forfeiture,
            arrest, other detention, seizure, confiscation or other requisition.

4. INSURANCES

4.1   All premiums, calls or other sums payable in respect of the insurances for
      the Sealift Vessels have been paid.

4.2   All material facts disclosable to insurers have been disclosed, including
      the planned conversion of each of the Sealift Vessels.

5. GENERAL

5.1   The Disclosed Information contains all information relating to (i) the
      business and affairs of Sealift and each Sealift Group Company and that is
      material in the context of the Transaction and (ii) any arrangement
      between Frontline, any director or shareholder of Frontline and Sealift
      has been disclosed to the Delphi Shareholders.

5.2   Sealift has obtained all necessary consents and complied with all
      requirements in relation to all statutes and regulations including but not
      limited to the Bermuda Monetary Authority, exchange control and foreign
      currency regulations. Sealift and each Sealift Group Company has at all
      times complied and continues to comply with such statutes and regulations
      governing each company in the country of its incorporation. Sealift or any
      Sealift Group Company is not under any obligation, contractual or
      otherwise, to request or obtain the consent of any person, and no permits,
      licenses, certifications, authorisations or approvals of or notifications
      to, any government or governmental agency, board, commission or authority
      are required to be obtained by Sealift or any Sealift Group Company in
      connection with the execution, delivery or performance by Sealift of this
      Merger Agreement or the completion of the Transaction.


                                       50


                                   SCHEDULE 9

                             INTENTIALLY LEFT BLANC


                                       51


                                   SCHEDULE 10

                                 SHIPPING ASSETS

A. VESSELS

1. NAME OF VESSEL: MARBLE

      SEALIFT SHIPCO OF VESSEL:   Quadrant Marine Inc

      FLAG OF VESSEL:             Bahamas

2. NAME OF VESSEL: FRONT GRANITE

      SEALIFT SHIPCO OF VESSEL:   Granite Shipping Company Limited

      FLAG OF VESSEL:             Marshall Islands

3. NAME OF VESSEL: FRONT TARGET

      SEALIFT SHIPCO OF VESSEL:   Front Target Inc.

      FLAG OF VESSEL:             Marshall Islands

10. NAME OF VESSEL: FRONT SUNDA

      SEALIFT SHIPCO OF VESSEL:   Southwest Tankers Inc.

      FLAG OF VESSEL:             Marshall Islands

11. NAME OF VESSEL: FRONT COMOR

      SEALIFT SHIPCO OF VESSEL:   West Tankers Inc.

      FLAG OF VESSEL:             Marshall Islands

12. NAME OF VESSEL: FRONT TRAVELLER

      SEALIFT SHIPCO OF VESSEL:   Front Traveller Inc.

      FLAG OF VESSEL:             Marshall Islands

B. SHIPPING DOCUMENTS

1. Conversion Contracts

2. Conversion Options

3. Bareboat Charters

4. Management Agreements

5. Refund Guarantees

13. Post-Redelivery Shipping Documents


                                       52


                                   SCHEDULE 11

                     SECOND SUPPLEMENTAL PURCHASE AGREEMENT

This supplemental agreement (the "AGREEMENT") is entered into on this [___] day
                                 of [___] 2007

BETWEEN:

1. SEALIFT LTD. ("SEALIFT");

2. SOUTHWEST TANKERS INC. ("SOUTHWEST");

3. FRONT TARGET INC. ("FRONT TARGET");

4. FRONT TRAVELLER INC. ("FRONT TRAVELLER");

5. WEST TANKERS INC. ("WEST");

6. GRANITE SHIPPING COMPANY LTD. ("GRANITE");

7. QUADRANT MARINE INC. ("QUADRANT")

(Southwest, Front Target, Front Traveller, West, Granite and Quadrant
hereinafter collectively referred to as the "OWNERS" and, individually, as an
"OWNER")

8. FRONTLINE LTD. ("FRONTLINE")

(Sealift and the Owners on the one hand and Frontline on the other hand are
hereinafter collectively referred to as the "PARTIES" and, individually, as a
"PARTY").

WHEREAS:

(A)  On 30 January, 2007, Frontline and Sealift entered into a purchase
     agreement setting forth the terms and conditions upon and subject to which
     Sealift acquired, INTER ALIA, all of the shares in the Owners from
     Frontline (the "ORIGINAL PURCHASE AGREEMENT");

On 15 March 2007 the Parties entered into a supplemental agreement supplementing
certain terms of the Original Purchase Agreement (the "SUPPLEMENTAL AGREEMENT")
(together with the Original Purchase Agreement, referred to as the "PURCHASE
AGREEMENT"); and

The Parties wish to supplement the terms of the Purchase Agreement in respect of
a number of issues.

NOW THEREFORE, it is hereby, agreed as follows:

1.   Terms defined in the Purchase Agreement shall, when used herein in
     capitalised form, have the same meaning as attributed to them in the
     Purchase Agreement.

2.   Clause 8.1.6 of the Original Purchase Agreement shall be supplemented for
     the avoidance of doubt so that:

     (i)  notwithstanding any of the terms in said Clause 8.1.6 or elsewhere in
          the Purchase Agreement, Frontline shall indemnify each Owner against
          all costs incurred by such Owner as a result of Frontline not paying
          any claim which


                                       53


            such Owner is obliged to pay under the terms of the relevant
            Conversion Contract or any repair contract entered into by such
            Owner with Cosco;

      (ii)  Frontline shall be responsible for the repair costs of each
            Conversion Vessel and in Clause 8.1.6 all references to "conversion
            costs" shall be construed so that this term includes such costs
            incurred as a result of a repair contract being entered into by
            Frontline (on behalf of the relevant Owner) with the relevant Yard
            pursuant to Clause 10.8 of such Conversion Contract.

     3.   Clause 8.1.5 of the Original Purchase Agreement shall be amended so
          that the final sentence is deleted and the clause is supplemented by
          the following:

      (i)   Sealift shall have the right to assign two representatives to the
            supervision team for Front Sunda, Front Target, Front Traveller and
            Front Comor, one of which shall have engine room expertise and the
            other deck expertise;

      (ii)  the Sealift representatives shall have full access to information
            and documentation provided by Cosco to the supervision teams, as
            well as all documentation related to the Conversion Vessels as is
            being prepared by the supervision teams or circulated among its
            members;

      (iii) the Sealift representatives shall have the right to attend all
            inspections, testing of equipment, sea trials and review of sea
            trial documentation;

      (iv)  the Sealift representatives shall work with the other members of the
            supervision team with the objective of resolving all technical
            issues in the best interests of the Owners and in the case of
            disagreement between the Sealift representatives and the other
            members of the supervision team, the views of the Sealift
            representatives shall be given in writing to the leader of the
            supervision team; and

     Frontline shall procure that the Seatrials include operational trials
     (including ballasting and de-ballasting trials) in the presence of the
     Sealift representatives.

4.   Clause 8.1.9 of the Original Purchase Agreement and Clause 2 of the
     Supplemental Agreement shall be amended so that the agreed redelivery dates
     are as follows:

     Front Sunda:     30 April 2007
     Front Target:    30 September 2007
     Front Traveller: 31 January 2008
     Front Comor:     31 May 2008

5.   This Agreement shall become effective immediately upon Merger Completion.

6.   This Agreement shall be considered null and void if Merger Completion has
     not occurred prior to 12 May 2007.

7.   The Parties agree that the provisions of Clauses 14 and 17 of the Original
     Purchase Agreement shall apply to this Agreement as well.

     For and on behalf of                           For and on behalf of


                                       54


     SEALIFT LTD.                       SOUTHWEST TANKERS INC.

     For and on behalf of               For and on behalf of
     FRONT TARGET INC.                  FRONT TRAVELLER INC.

     For and on behalf of               For and on behalf of
     WEST TANKER INC.                   GRANITE SHIPPING COMPANY LTD.

     For and on behalf of               For and on behalf of
     QUADRANT MARINE INC.               FRONTLINE LTD.


                                       55

EX-4.14

                                                                    Exhibit 4.14

CLIFFORD                                            CLIFFORD CHANCE LLP
CHANCE                                              ADVOCATEN SOLICITORS NOTARIS
                                                    BELASTINGADVISEURS

                                                                  EXECUTION COPY

                             3i EUROPARTNERS Va L.P.

                             3i EUROPARTNERS Vb L.P.

                     3i PAN EUROPEAN BUY-OUTS 2006-08A L.P.

                     3i PAN EUROPEAN BUY-OUTS 2006-08B L.P.

                     3i PAN EUROPEAN BUY-OUTS 2006-08C L.P.

                          3i GLOBAL GROWTH 2006-08 L.P.

                       3i PAN-EUROPEAN GROWTH 2006-08 L.P.

                   PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 L.P.

                   PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 FCPR

              PAN-EUROPEAN BUYOUTS (NORDIC) CO-INVEST 2006-08 L.P.

              PAN-EUROPEAN BUYOUTS (DUTCH) A CO-INVEST 2006-08 L.P.

                      GLOBAL GROWTH CO-INVEST 2006-08 L.P.

                     OIL, GAS & POWER CO-INVEST 2006-08 L.P.

                            STICHTING MANAGEMENT SEAL

                                  FRONTLINE LTD

                                       AND

                                   SEALIFT LTD

                                   ----------

                             SHAREHOLDERS' AGREEMENT
                             RELATING TO SEALIFT LTD

                               DATED 27 APRIL 2007

                                   ----------


                                    CONTENTS

CLAUSE                                                                      PAGE

1.    Interpretation                                                          6
2.    The Shares                                                              6
3.    Condition Precedent; Completion                                         6
4.    Erisa                                                                   7
5.    The Board And Its Proceedings                                           8
6.    Proceedings Of The General Meeting                                     11
7.    Conduct Of Business And Reporting                                      12
8.    Target Warranties And Indemnities                                      13
9.    Business Plan And Financial Year                                       14
10.   Transfers                                                              15
11.   Exit                                                                   16
12.   Tag Along Rights                                                       17
13.   Termination Of Agreement                                               18
14.   3i Investors' Rights                                                   18
15.   Bye-Laws                                                               18
16.   General                                                                18
17.   Applicable Law And Dispute Resolution                                  20
Schedule 1   : Interpretation                                                24
Schedule 2   : Shareholdings                                                 30
Schedule 3   : Reserved Matters                                              31
Schedule 4   : Form Of Deed Of Adherence                                     34
Schedule 5   : Continuing Obligations                                        36
Schedule 6   : Completion Certificate                                        40


                                        2


AGREED FORM DOCUMENTS

(1) Bye-Laws of the Company (2) Electronic Financial Report (3) Sample
Management Accounts


                                        3


THIS AGREEMENT (the "AGREEMENT") is made on 27 April 2007

BETWEEN:

(1)  3i EUROPARTNERS Va L.P., a limited partnership registered under the Limited
     Partnerships Act 1907 (registered number LP011419), with its registered
     office at 16 Palace Street, London SW1E 5JD, England ("3i EUROPARTNERS
     Va"), acting by its manager, 3i Investments plc (registered number
     3975789), with its registered office at 16 Palace Street, London SW1E 5JD,
     England ("3i INVESTMENTS");

(2)  3i EUROPARTNERS Vb L.P., a limited partnership registered under the Limited
     Partnerships Act 1907 (registered number LP011420), with its registered
     office at 16 Palace Street, London SW1E 5JD, England ("3i EUROPARTNERS
     Vb"), acting by its manager, 3i Investments;

(3)  3i PAN EUROPEAN BUY-OUTS 2006-08A L.P., a limited partnership registered
     under the Limited Partnerships Act 1907 (registered number LP011276), with
     its registered office at 16 Palace Street, London SW1E 5JD, England ("3i
     PAN EUROPEAN A"), acting by its manager, 3i Investments;

(4)  3i PAN EUROPEAN BUY-OUTS 2006-O8B L.P., a limited partnership registered
     under the Limited Partnerships Act 1907 (registered number LP011277), with
     its registered office at 16 Palace Street, London SW1E 5JD, England ("3i
     PAN EUROPEAN B"), acting by its manager, 3i Investments;

(5)  3i PAN EUROPEAN BUY-OUTS 2006-08C L.P., a limited partnership registered
     under the Limited Partnerships Act 1907 (registered number LP011278), with
     its registered office at 16 Palace Street, London SW1E 5JD, England ("3i
     PAN EUROPEAN C"), acting by its manager, 3i Investments;

(6)  3i GLOBAL GROWTH 2006-08 L.P., a limited partnership registered under the
     Limited Partnerships Act 1907 (registered number LP011318), with its
     registered office at 16 Palace Street, London SW1E 5JD, England ("3i GLOBAL
     GROWTH"), acting by its manager, 3i Investments;

(7)  3i PAN-EUROPEAN GROWTH 2006-08 L.P., a limited partnership registered under
     the Limited Partnerships Act 1907 (registered number LP011320), with its
     registered office at 16 Palace Street, London SW1E 5JD, England ("3i
     PAN-EUROPEAN GROWTH"), acting by its manager, 3i Investments;

(8)  PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 L.P., a limited partnership
     registered under the Limited Partnerships Act 1907 (registered number
     LP011279), with its registered office at 16 Palace Street, London SW1E 5JD,
     England ("PAN-EUROPEAN CO-INVEST"), acting by its manager, 3i Investments;

(9)  PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 FCPR, a FONDS COMMUNS DE PLACEMENT A
     RISQUE formed under the laws of France, with its registered office at 3,
     rue Paul Cezanne, 75008 Paris, France ("PAN-EUROPEAN CO-INVEST FRANCE"),
     acting by its manager, "3i Gestion S.A.;


                                        4


(10) PAN-EUROPEAN BUYOUTS (NORDIC) CO-INVEST 2006-08 L.P., a limited partnership
     registered under the Limited Partnerships Act 1907 (registered number
     LP011553), with its registered office at 16 Palace Street, London SW1E 5JD,
     England ("PAN-EUROPEAN (NORDIC) CO-INVEST"), acting by its manager, 3i
     Investments;

(11) PAN EUROPEAN BUYOUTS (DUTCH) A CO-INVEST 2006-08 L.P., a limited
     partnership registered under the Limited Partnerships Act 1907, with
     registered number LP011874, and having its registered office at 16 Palace
     Street, London, SW1E 5JD, United Kingdom ("PAN-EUROPEAN (DUTCH)
     CO-INVEST"), acting by its manager, 3i Investments;

(12) GLOBAL GROWTH CO-INVEST 2006-08 L.P., a limited partnership registered
     under the laws of Jersey (registered number LP760), with its registered
     office at 22 Grenville Street, St. Helier, Jersey ("GLOBAL GROWTH
     CO-INVEST"), acting by its manager, 3i Investments;

(13) OIL, GAS & POWER CO-INVEST 2006-08 L.P., a limited partnership registered
     under the Limited Partnerships Act 1907 (registered number LP011321), with
     its registered office at 16 Palace Street, London SW1E 5JD, England ("OIL,
     GAS & POWER CO-INVEST"), acting by its manager, 3i Investments;

(14) STICHTING MANAGEMENT SEAL, a foundation (STICHTING) incorporated under the
     laws of The Netherlands, with its registered office at Lage Mosten 15, 4822
     NJ Breda, The Netherlands, and being registered with the commercial
     register in West-Brabant, The Netherlands (the "STICHTING");

(15) FRONTLINE LTD, a company incorporated under the laws of Bermuda, with its
     registered office at PO Box HM 1593, Par-la-Ville Place, 14 Par-la-Ville
     Road, Hamilton HM 08, Bermuda, Company No. 17460 and being listed on the
     Oslo Stock Exchange and the New York Stock Exchange ("FRONTLINE"); and

(16) SEALIFT LTD, a company incorporated under the laws of Bermuda, with its
     registered office at PO Box HM 1593, Par-la-Ville Place, 14 Par-la-Ville
     Road, Hamilton HM 08, Bermuda, Company No. 39466 (the "COMPANY").

The parties to this Agreement are hereinafter collectively referred to as the
"PARTIES" and each individually as a "PARTY". The Parties referred to under (1)
to (13) are hereinafter collectively referred to as the "3i INVESTORS" and each
individually as a "3i INVESTOR".

WHEREAS:

(A)  As at the date hereof, Frontline holds 33,3% of the shares in the capital
     of the Company;

(B)  On or around the date hereof, certain of the Parties and certain other
     persons entered into a merger agreement (the "MERGER AGREEMENT") and a sale
     and purchase agreement (the "SPA") pursuant to which INTER ALIA the 3i
     Investors will sell their shares and convertible bonds issued by Delphi to
     the Company in consideration for the issue by the Company of shares in its
     capital to the 3i Investors in the capacity as sellers under the SPA;

(C)  The Parties wish to enter into this Agreement for the purposes of
     regulating certain aspects of the affairs of the Company, on the terms and
     under the conditions set forth in this Agreement.


                                        5


IT IS AGREED as follows:

1. INTERPRETATION

1.1  In addition to terms defined elsewhere in this Agreement, the definitions
     and other provisions in Schedule 1 (INTERPRETATION) apply throughout this
     Agreement unless the contrary intention appears.

1.2  In this Agreement, unless the contrary intention appears, a reference to a
     recital, clause, Schedule or Annex is a reference to a recital, clause,
     schedule or annex of this Agreement. The Schedules or Annexes are an
     integral part of this Agreement.

1.3  The headings in this Agreement do not affect its interpretation.

2. THE SHARES

2.1  Upon completion of the Private Placement and the Merger Completion (both as
     defined in the Merger Agreement) having taken place, the Shares held by the
     Parties shall be as set out in Schedule 2 (Shareholdings). The remaining
     Shares are held by third party shareholders not party to this Agreement.

2.2  The Parties other than the Company, as the holders of Shares, will have all
     voting and other rights attaching to the Shares as set out in this
     Agreement, the Bye-Laws and under the laws and regulations governing the
     Company and the Shares.

2.3  The Parties acknowledge and agree that if the Board or the General Meeting
     (whichever is authorised to so resolve) resolves to issue additional Shares
     or other equity or debt instruments to finance additional capital
     requirements of the Group, to make add-on investments or for other reasons,
     then each Shareholder shall be entitled to participate in such additional
     issuance (the "ISSUANCE") in the same proportion as the Shareholders hold
     Shares at the time of the Issuance. For the avoidance of doubt, the
     Shareholders shall only be entitled to participate in all of the
     instruments issued at the time of the Issuance and not in part thereof,
     regardless of whether they held these instruments prior to the date of the
     Issuance. Each Shareholder hereby acknowledges and agrees that it will be
     diluted if it resolves not to participate in the Issuance and that its
     above and statutory pre-emptive rights (if any) may be excluded if it
     resolves not to participate.

3. CONDITION PRECEDENT; COMPLETION

3.1  Except for the provisions of clause 1 (INTERPRETATION), this clause 3 and
     clauses 16 (GENERAL) and 17 (APPLICABLE LAW AND DISPUTE RESOLUTION), as
     well as the provisions of Schedule 1 (INTERPRETATION), which are of
     immediate effect, the provisions of and transactions contemplated in this
     Agreement are subject to and conditional on receipt by each Party of a duly
     executed Completion Certificate (the "CONDITION").

3.2  If the Condition is fulfilled or waived on the Merger Completion Date, the
     Parties shall procure that the composition of the Board shall be changed,
     such that its composition shall be in accordance with clause 5.2 on that
     date.


                                        6


3.3  If the Condition is not fulfilled or waived on or before that date, except
     for the provisions of clause 1 (INTERPRETATION), this clause 3 and clauses
     16 (GENERAL) and 17 (APPLICABLE LAW AND DISPUTE RESOLUTION), as well as the
     provisions of Schedule 1 (INTERPRETATION), all the other clauses of this
     Agreement shall lapse and cease to have effect; but

     3.3.1 the lapsing of those provisions shall not affect any rights or
           liabilities of any Party in respect of damages for non-performance of
           any obligation under this agreement falling due for performance prior
           to such lapse; and

     3.3.2 no Party shall make (or permit any person to make) any announcement
           concerning this Agreement or any ancillary matter without the prior
           written consent of the 3i Investors and Frontline.

4.   ERISA

4.1  The Parties acknowledge that each of the ERISA Funds (at the date of this
     Agreement being 3i Europartners Va and 3i Europartners Vb) has limited
     partners which are entities governed in the United States of America by
     ERISA. In order to permit each ERISA Fund to treat the Company as a
     "venture capital operating company" ("VCOC") for the purposes of ERISA, for
     so long as any ERISA Fund or its nominee holds any Shares in the capital of
     the Company:

     4.1.1 that ERISA Fund may at any time by notice to the Company (i) nominate
           for appointment and removal any person to be a Director and (ii)
           appoint any person to be an Observer, and may similarly remove from
           office any such person and appoint another in his place, all in
           accordance with clause 5 and the Bye-Laws, and the Parties shall use
           their respective best endeavours to procure that the members of the
           Board co-opt such nominees in such capacity and the Shareholders
           shall vote their Shares at the next General Meeting to confirm the
           same;

     4.1.2 none of the decisions set out in Part 1 of Schedule 3 (RESERVED
           MATTERS) can be taken without the approval of the Director appointed
           by that ERISA Fund;

     4.1.3 none of the decisions set out in Part 2 of Schedule 3 (RESERVED
           MATTERS) can be taken without the approval of that ERISA Fund; and

     4.1.4 that ERISA Fund shall have the right to (i) receive upon reasonable
           written request to the Company the information set forth in clause
           7.2 and Schedule 5 (CONTINUING OBLIGATIONS), (ii) meet with such
           management or personnel of the Group as may reasonably be designated
           by it, upon reasonable notice to the Company, for the purpose of
           consulting with and advising and influencing management, obtaining
           information regarding the business and prospects of the Group or
           expressing the views of that ERISA Fund on such matters, and (iii)
           visit and inspect any of the offices and properties of any member of
           the Group and inspect and copy the books and records of that member
           of the Group, upon reasonable notice to the Company.

4.2  The Parties shall not permit anything to be done that may prejudice the
     treatment by any ERISA Fund of the Company as a VCOC.


                                        7


4.3  If any ERISA Fund notifies the Company (supported by a copy of legal advice
     to that effect received from appropriately qualified lawyers) that the
     provisions of clause 4.1 should be amended to preserve the qualification of
     that ERISA Fund as a VCOC, or otherwise to ensure that the assets of that
     ERISA Fund are not considered "plan assets" of the ERISA Fund for the
     purposes of ERISA, the Parties will agree and make any necessary amendments
     to the Agreement provided that the amendments do not result in a material
     adverse effect on the operations, business and prospects of any member of
     the Group, materially change the rights, liabilities or obligations of any
     of the Parties or materially affect the value of the Shares.

5. THE BOARD AND ITS PROCEEDINGS

     COMPOSITION AND APPOINTMENTS

5.1  The Company shall have a Board, which is responsible for the management of
     the business of the Company and attending to all other matters entrusted to
     the Board in the Bye-Laws or by operation of law. The members of the Board
     shall at all times act in the interest of the Company. In performing its
     task, the Board may exercise all the powers of the Company save to the
     extent specifically provided as otherwise provided in this Agreement, the
     Bye-Laws or the Bermuda Companies Act.

5.2  The Shareholders shall exercise their voting powers such that the members
     of the Board shall be appointed and removed from office by the Board and/or
     General Meeting (as applicable according to the Bye-Laws) as follows:

     5.2.1 the CEO and CFO from time to time shall each be a Director;

     5.2.2 the 3i Investors (by majority vote) shall be entitled by notice in
           writing to the Company to present candidates for the appointment or
           replacement of up to two (2) Directors;

     5.2.3 Frontline shall be entitled by notice in writing to the Company to
           present candidates for the appointment or replacement of one (1)
           Director; and

     5.2.4 each ERISA Fund shall be entitled by notice in writing to the Company
           to present candidates for the appointment or replacement of one (1)
           Director.

5.3  The 3i Investors and Frontline agree that the Board shall be expanded with
     two (2) as yet unknown independent directors whose identity, qualifications
     and experience is mutually acceptable to the 3i Investors and Frontline.

5.4  The members of the Board shall, from amongst their midst, appoint the
     Chairman.

5.5  The Board may represent the Company; in addition, any two (2) Directors
     shall be jointly authorised to represent the Company towards third parties,
     provided that such two (2) Directors may not both have been appointed
     pursuant to clause 5.2.1, 5.2.2 or 5.2.4 (as the case may be).

5.6  With respect to the appointments and removals from office referred to in
     clause 5.2, the Shareholders agree to vote in favour of one (1) of the
     candidates nominated by the Party or Parties entitled to make a nomination
     pursuant to that clause.


                                        8


5.7  The Directors appointed pursuant to clauses 5.2.2, 5.2.3 and, if the Board
     so decides also the Directors appointed pursuant to clause 5.2.4, shall be
     entitled to an annual compensation that is customary for a group controlled
     by private equity investors that is of similar type and size of the Group,
     and to reimbursement of reasonable out of pocket expenses.

     CONDUCT OF MEETINGS

5.8  The Board shall meet as often as necessary, and shall also meet at the
     request of any individual Director.

5.9  At least five (5) Business Days' notice, or such shorter period as the
     Chairman may agree to in writing, of each meeting of the Board shall be
     given to each Director and each Observer (if any). The notice shall be
     accompanied by an agenda setting out in such reasonable detail as may be
     practicable the business to be transacted at the meeting. A breach of this
     clause shall not affect the validity of any meeting of the Board that has
     otherwise been validly convened provided that all Directors entitled to
     attend were present or represented.

5.10 Meetings of the Board must as a general rule be held in the country where
     the Company is at that time resident.

5.11 A person to be designated for that purpose by the Chairman shall keep
     minutes of the meetings of the Board. All minutes shall be in the English
     language. The minutes shall be adopted by the Chairman of the Board and
     shall be signed by him as evidence thereof.

     QUORUM

5.12 The quorum at meetings of the Board shall be met when at least half of the
     members of the Board are present or represented, including at least the
     Chairman. If the quorum is not present or represented at a meeting of the
     Board at the time when any business is considered no resolutions may be
     validly adopted. Any member of the Board may require that the meeting be
     reconvened. In a reconvened meeting of the Board, the quorum shall be met
     when at least half of the members of the Board are present or represented.

     RESOLUTIONS

5.13 Unless otherwise agreed in this Agreement and subject to the requirements
     of the Bermuda Companies Act, all resolutions of the Board shall require a
     simple majority of the members of such Board present at the meeting in
     which the quorum requirements set forth in clause 5.12 are met.

5.14 In case of a tied vote the Chairman shall have a casting vote.

5.15 A resolution in writing signed by all members of the Board shall be valid
     and have effect as if it had been passed at a meeting of the Board duly
     convened and held. Such resolution may be contained in one document or in
     several documents, each stating the terms of the resolution accurately and
     signed by one or more of the Directors.

5.16 A meeting of the Board may be held by means of such telephone, electronic
     or other communication facilities as permit all Directors or their
     representatives (some or all of whom may be in different places)
     participating in the meeting to communicate with each other


                                        9


     simultaneously and instantaneously and participation in such meeting shall
     constitute presence in person at such meeting, provided that at the time of
     that meeting a majority of the Directors is in the country where the
     Company is at that time resident.

5.17 A Director or his representative may vote as a Director on any resolution
     concerning any matter in which he has, directly or indirectly, a financial
     or commercial interest, provided that he has disclosed to the other members
     of the Board the nature and extent of such interest, and, if he votes, his
     vote shall be counted and he shall be counted in the quorum when that
     resolution or matter is under consideration.

     RESERVED MATTERS

5.18 The Shareholders shall use their respective reasonable efforts to ensure
     that the Board shall not undertake:

     5.18.1 any of the Reserved Matters as set forth in Part 1 of Schedule 3
            (RESERVED MATTERS), without the Board having resolved upon such
            matter by Qualified Resolution; and

     5.18.2 any of the Reserved Matters as set forth in Part 2 of Schedule 3
            (RESERVED MATTERS), without the prior approval of the General
            Meeting by Qualified Resolution.

5.19 The Parties agree and the Company shall procure that no member of the Group
     shall adopt any resolution or take any action which is a Reserved Matter as
     set forth in Schedule 3 (RESERVED MATTERS) (or a resolution which is
     analogous to or has a substantially similar effect to any of the Reserved
     Matters) without the prior written approval of the Board as its (ultimate)
     shareholder. Clause 5.18 applies MUTATIS MUTANDIS to such approval of the
     Board.

5.20 Where a matter that would otherwise require a Qualified Resolution of the
     Board or the prior approval of the General Meeting under this clause has
     been expressly included in the Business Plan (or any budget) adopted in
     accordance with this Agreement, no further approval shall be required under
     this clause 5.

     ALTERNATE DIRECTORS; OBSERVERS

5.21 Each Director shall be authorised to appoint and remove his own alternate
     director (an "ALTERNATE DIRECTOR") by written notice to the Company. In
     addition, a Director may at any time by written notice to the Company or at
     a Board meeting appoint any person (who need not be a Director) to act as
     his Alternate Director in his place during his absence. If such person is
     not a Director the approval of the Board shall be required for such
     appointment.

5.22 Each ERISA Fund shall be entitled to appoint an observer to the Board (an
     "OBSERVER") by written notice to the Company. Each Party shall use its
     reasonable endeavours to procure that any Observer shall be allowed to
     attend all meetings of the Board, and shall receive any and all information
     that the members of the Board receive, simultaneously with the members of
     the Board. An Observer shall not be entitled to vote on any such meetings,
     but shall be allowed to speak and place items on the agenda for discussion.
     Each ERISA Fund may remove the Observer appointed by it and appoint another
     person in its place. Any Observer shall be reimbursed for its reasonable
     out-of-pocket expenses.


                                       10


6. PROCEEDINGS OF THE GENERAL MEETING

     FREQUENCY OF MEETINGS

6.1  The annual General Meeting shall be held annually within six (6) months of
     the end of each Financial Year.

6.2  Special General Meetings shall be held as often as the Board or one or more
     Shareholders together holding at least 10% of the issued share capital of
     the Company deem necessary.

     AGENDA FOR GENERAL MEETING

6.3  The agenda for the annual General Meeting shall in any event contain the
     following matters:

     6.3.1 the annual report for the previous Financial Year;

     6.3.2 adoption of the Annual Accounts of the previous Financial Year and
           the allocation of the dividends and other distributions (if any);

     6.3.3 discharge of the Directors for their management of the Company
           during the previous Financial Year;

     6.3.4 appointments to any vacancies on the Board; and

     6.3.5 any other proposals put forward for discussion by the Board.

     PLACE OF GENERAL MEETING

6.4  General Meetings shall as a general rule be held in the country where the
     Company is at that time resident, but may not be held in Norway,
     Luxembourg, The Netherlands or the United Kingdom (unless the Company is at
     that time resident there). Notwithstanding the foregoing sentence, a
     General Meeting may be held by means of such telephone, electronic or other
     communication facilities as permit all persons participating in the meeting
     to communicate with each other simultaneously and instantaneously and
     participation in such meeting shall constitute presence in person at such
     meeting, provided that during such meeting the majority of Shareholders may
     not be in Norway, Luxembourg, The Netherlands or the United Kingdom.

     CONDUCT OF MEETINGS

6.5  General Meetings shall be convened by the Board. The convening shall take
     place no later than the eighth day prior to the date of the meeting. The
     notice of the meeting shall state the subject to be dealt with, without
     prejudice to the provisions of the Bye-Laws.

6.6  General Meetings shall be chaired by the Chairman. In his absence, the
     Directors present shall choose a chairman from amongst their midst; if no
     Director is present or willing to act as chairman the General Meeting shall
     appoint its chairman.

6.7  Minutes shall be kept of the proceedings at every General Meeting by a
     secretary to be designated by the Chairman. All minutes shall be in the
     English language. The minutes shall be adopted by the Chairman and shall be
     signed by him as evidence thereof.

     QUORUM


                                       11


6.8  Save as otherwise provided in this Agreement or the Bye-Laws, the quorum at
     any General Meeting shall be constituted by the presence of Shareholders
     (or of their duly appointed agents or attorneys) together holding at least
     33 1/3 % of the voting rights entitled to be exercised at such meeting. The
     said quorum shall be required at all General Meetings. If a quorum is not
     present at a General Meeting at the time when any business is considered no
     resolutions shall be adopted. Any Shareholder may require that the meeting
     be reconvened. At least five (5) calendar days' notice of the reconvened
     meeting shall be given. The quorum for such reconvened meeting is met when
     Shareholders (or their duly appointed agents or attorneys) together holding
     at least 10% of the voting rights entitled to be exercised at such meeting
     are present or represented.

     RESOLUTIONS

6.9  Unless agreed otherwise in this Agreement or in the Bye-Laws, or prescribed
     by mandatory law, all resolutions of the General Meeting shall require a
     simple majority of the Shareholders that are present at the meeting in
     which the quorum requirements set forth in clause 6.8 are met.

6.10 The Shareholders agree that they shall always exercise their vote in
     accordance with the provisions of this Agreement.

7. CONDUCT OF BUSINESS AND REPORTING

     CONTINUING OBLIGATIONS

7.1  The Company undertakes to each of the 3i Investors and Frontline to comply
     with all the obligations set out in Schedule 5 (CONTINUING OBLIGATIONS).

     INFORMATION

7.2  The Company shall procure that Dockwise:

     7.2.1 provides to the Board the information set out in Schedule 5
           (CONTINUING OBLIGATIONS);

     7.2.2 keeps the Board informed of material matters relating to the progress
           of the business of the Group, to such extent and in such form and
           detail as the Board may from time to time reasonably require;

     7.2.3 supplies to the Board such written particulars of any matters
           concerned with and arising out of the activities of the Group as the
           Board may from time to time reasonably require; and

     7.2.4 responds promptly to such enquiries for information as shall be
           reasonably made by the Board.

7.3  The Company shall procure that each member of the Group shall give prompt
     written notice to the Board upon becoming aware of:

     7.3.1 any occurrence (including, without limitation, any third party claim
           or liability, any litigation, arbitration or administrative
           proceedings) which would or would be likely either have a material
           adverse effect on the financial condition of the Group or affect


                                       12


           adversely any Group member's ability to perform its obligations under
           this Agreement, the Finance Documents or any other agreement related
           to this Agreement; or

     7.3.2 any breach or likely breach of the covenants by any Group member
           under this Agreement, the Finance Documents or any other agreement
           related to this Agreement; or

     7.3.3 the realised (year to date) EBITDA and cash flow of the Group for the
           relevant current accounting period shown in the Management Accounts
           at any time being less than ninety per cent. (90%) of the budget
           EBITDA amount or cash flow as shown in the same Management Accounts.

8. TARGET WARRANTIES AND INDEMNITIES

8.1 The Company undertakes and agrees with each 3i Investor and Frontline that:

     8.1.1 BidCo shall, and shall procure that any member of the Group shall,
           enforce or procure to be enforced to their full extent the
           obligations of the Sellers to BidCo under the Target Warranties and
           Indemnities;

     8.1.2 BidCo shall, and shall procure that any member of the Group shall,
           notify the Board in writing promptly upon its becoming aware of any
           material breach or potential material breach of the Target Warranties
           and Indemnities;

     8.1.3 no Acquisition Claim will be commenced, waived, compromised or
           settled without the prior written consent of the Board;

     8.1.4 BidCo shall take, or shall procure that any member of the Group shall
           take, such action as the Board may reasonably require to be taken to
           investigate, conduct, pursue and enforce any actual or potential
           Acquisition Claim;

     8.1.5 BidCo shall procure, at its own cost, the appointment of such legal
           and other professional advisers as the Board may from time to time
           require to act on BidCo's behalf in the conduct and handling of any
           Acquisition Claim;

     8.1.6 BidCo shall keep the Board informed of all material matters relating
           to the progress of any Acquisition Claim to such extent and in such
           form and detail as the Board may from time to time reasonably
           require; and

     8.1.7 BidCo shall supply to the Board such written particulars of any
           matters concerned with or arising out of any actual or potential
           Acquisition Claim and the conduct thereof, as the Board may from time
           to time reasonably require.

8.2  If the Board so decides, the Company shall procure that BidCo shall at its
     own cost allow a person nominated by the Board, the exclusive conduct of
     any Acquisition Claim in BidCo's own name and on its behalf and in such
     manner as that person sees fit.

8.3  If the Company or BidCo fails to comply with any of its obligations under
     this clause, either the 3i Investors or Frontline (whomever does so first)
     shall be entitled to instruct a legal or other professional adviser to
     prepare and submit to the Board, at the cost of the Company or BidCo


                                       13


     (as the case may be), the information that should have been supplied to the
     Board pursuant to this clause. The Company shall (and shall procure that
     all members of the Group shall) give such legal or other professional
     advisers all reasonable access to its books, records, correspondence and
     premises and all reasonable assistance as the legal or other professional
     advisers may request for this purpose and in particular (without prejudice
     to the generality of the foregoing) permit them to take extracts from and
     make copies of any documents and to discuss any matters with any of the
     Group's personnel, officers and advisers.

9. BUSINESS PLAN AND FINANCIAL YEAR

9.1  The Company shall procure that Dockwise prepares and delivers to the Board
     a Business Plan at such time and in such manner that it is ready for
     adoption not less than thirty (30) days before the first day of each
     Financial Year. Adoption of any Business Plan shall require a resolution of
     the Board. Each subsequent Business Plan shall be prepared in conformity
     with the initial Business Plan.

9.2  Each Business Plan shall include:

     9.2.1 a business forecast with respect to the current Financial Year;

     9.2.2 the proposed strategy (including the acquisition strategy with
           details on the possible acquisition target, the synergy options and
           the effect on the Business Plan of these potential acquisitions);

     9.2.3 details of the assumptions used for the matters referred to in
           clauses 9.2.1 and 9.2.2;

     9.2.4 a report on the Company's performance during the current Financial
           Year, which is to include all members of the Group;

     9.2.5 an annual budget for the first Financial Year following the current
           year of the (actual) Business Plan, including:

           (a)  a breakdown of monthly consolidated revenues, operating
                expenses, operating results, net interest expenses and Net
                Profits broken down per country of operation, Subsidiary and
                product group;

           (b)  a breakdown of monthly capital expenditures and cash flow;

           (c)  a breakdown of a projected consolidated balance sheet as at the
                end of the Financial Year and projected profit and loss account
                for the Financial Year;

           (d)  a breakdown of expected funding requirements and the proposed
                methods of meeting those requirements; and

           (e)  a set of key performance indicators ("KPIs"), to be agreed with
                the Board.

     9.2.6 a summary annual budget, consisting of at least a balance sheet,
           profit and loss account, cash flow statement and capital
           expenditures, for each of the second, third and fourth Financial Year
           following the Financial Year of the (actual) Business Plan.


                                       14


9.3  The Company shall procure that Dockwise will, save to the extent the Board
     may during the current year of the (actual) Business Plan agree otherwise,
     implement and execute the Business Plan.

9.4  For the purposes of this Agreement, the first Financial Year of the Company
     shall end on 31 December 2007. After the first Financial Year, all
     Financial Years of the Company will commence on 1 January and end on 31
     December. The financial years of the members of the Group may end on
     different dates. This will not affect the reporting dates set out in this
     clause.

9.5  After the end of each Financial Year, the Annual Accounts shall be audited.
     The consolidated audit of the Group shall be carried out by the Auditors.

9.6  Any Business Plan, the Annual Accounts and the Management Accounts shall at
     all times be expressed in US Dollars.

9.7  All financial information, as described in this clause, shall be in the
     English language unless the Board decides otherwise.

10. TRANSFERS

10.1 Except for Permitted Transfers, each Shareholder agrees it shall not
     Transfer any Shares until the earlier of (i) 30 September 2007 and (ii) the
     completion of a Listing, except with the prior written consent of the 3i
     Investors and Frontline.

10.2 The Parties agree to co-operate and the Shareholders agree to vote in
     favour of:

     10.2.1 any Transfer by any 3i Investor to and from any entity of the 3i
            Group or any 3i Fund; or

     10.2.2 any Transfer to and from a nominee of any 3i Investor;

     in both cases a "PERMITTED TRANSFER" and any person to whom the Shares are
     transferred in accordance with this clause 10.2 a "PERMITTED TRANSFEREE".

10.3 It shall be a condition of any Permitted Transfer that:

     10.3.1 The shareholding by the Permitted Transferee is authorised by the
            Bermuda Registrar of Companies and/or the Bermuda Monetary Authority
            or is subject to an exemption or direction from the Bermuda
            Registrar of Companies and/or the Bermuda Monetary Authority;

     10.3.2 the Permitted Transferee, if not already a Party, enters into an
            undertaking to observe and perform all of the provisions and
            obligations of this Agreement in accordance with the Deed of
            Adherence set out in Schedule 4 (FORM OF DEED OF ADHERENCE), in
            which case this clause shall apply to that Permitted Transferee; and

     10.3.3 all Shares transferred under this clause shall be free from all
            liens, charges and encumbrances and shall carry all rights, benefits
            and advantages attached to them except the right to any dividend
            declared but not paid prior to the date of registration of such
            Permitted Transfer.


                                       15


10.4 The Company is hereby irrevocably authorised to sign the relevant Deed of
     Adherence referred to in clause 10.3.12 on behalf of all other Parties. The
     Company shall inform all other Parties in writing of any deed so executed.
     This clause 10.4 is without prejudice to the continuation of the rights and
     obligations of the original Parties to this Agreement and to any other
     persons who have signed a Deed of Adherence.

10.5 Without prejudice to clauses 10.1 and 10.2, in case a third party (not
     being a 3i Related Party or nominee of any 3i Investor) makes a bonafide
     offer for Shares held by Frontline or any of the 3i Investors and Frontline
     or the relevant 3i Investor is willing to accept that offer, then,
     regardless of whether the third party or the relevant Shareholder initiated
     the offer, each 3i Investor (in the case of the offer being made to
     Frontline) or Frontline (in the case of the offer being made to any 3i
     Investor) shall be given the right to acquire those Shares for the same
     price and terms and conditions as are offered by that third party.

     CONSENT UNDER BYE-LAWS

10.6 To the fullest extent possible under applicable law, the Shareholders
     hereby consent to and waive any right of first refusal in respect of any
     Permitted Transfer as required by the relevant provisions of the Bye-Laws.
     To the extent necessary, the Parties shall take all actions and adopt all
     resolutions reasonably required to give effect to a Permitted Transfer or
     to clause 10.5.

11.  EXIT

11.1 The Parties acknowledge that the Board, on 27 April 2007, has resolved to
     apply for the Listing of the Company with Q3 of 2007 as the target date for
     the first date of trading.

11.2 After the filing of the application, the Parties do not express any view or
     accept any instruction or obligation as to whether the Company shall
     proceed with, cease or withdraw its application to list its Shares on the
     Oslo Stock Exchange.

11.3 The Company will, if the Board so decides:

     11.3.1 appoint, on terms acceptable to the 3i Investors and Frontline, an
            independent financial adviser nominated by the 3i Investors and
            Frontline jointly to advise the Company and its Shareholders or have
            the 3i Investors perform this role;

     11.3.2 assist in the preparation of any information memoranda or prospectus
            necessary or desirable to achieve an Exit.

11.4 The Parties acknowledge and agree that:

     11.4.l on any disposal of Shares in a Listing or a Sale, neither any of the
            3i Investors nor Frontline shall give or be required to give any
            warranty or indemnity to any party, except for a warranty as to full
            legal and beneficial title to its Shares;

     11.4.2 on any disposal of Shares in a Listing, or a Sale, they will use
            their respective best endeavours to ensure that the members of
            senior management of the Group (including in any event the CEO and
            CFO at that time) shall give customary warranties and indemnities
            subject to customary limitations if the 3i Investors so require;


                                       16


     11.4.3 the Shareholders and the Company shall do all things required or
            appropriate to effect the Listing or the Sale in accordance with the
            relevant resolution of the Board and, with respect to a Listing, in
            accordance with the rules of the Oslo Stock Exchange and the
            requirements of the relevant Sponsor(s) engaged in relation thereto,
            or, with respect to a Sale, in accordance with the relevant sale and
            purchase agreement and related agreements entered into in connection
            with such Sale, or with respect to a Refinancing, in accordance with
            the relevant equity and debt documentation entered into in
            connection with such Refinancing.

11.5 The Parties will co-operate and shall do all things required or appropriate
     to procure that the Bye-Laws are amended as necessary or reasonably
     desirable for the purpose of achieving a Listing, including make such
     amendments that the share capital of the member of the Group that is to be
     listed shall be organised so that all its issued shares are of the same
     class, with rights typical of shares in listed companies and that the
     financing of the relevant company is organised in such way as advised by
     the relevant Sponsor(s) engaged in relation to the Listing.

12. TAG ALONG RIGHTS

12.1 Without prejudice to clause 10.2, if at any time prior to expiry of the
     period referred to in clause 10.1 the 3i Investors (together the "TAGGED
     SHAREHOLDERS") or Frontline (the "TAGGED SHAREHOLDER") intend to Transfer
     of any of their Shares to a third party and Frontline or the 3i Investors
     (as the case may be) consent to such Transfer, the other Shareholders
     (together, the "TAGGING SHAREHOLDERS") are entitled to Transfer a
     proportional part (pro rata parte the Shares to be Transferred by the
     Tagged Shareholder(s)) of their Shares at the same rice per Share and
     otherwise on the same terms (but subject to clause 11.3) as the Transfer by
     the Tagged Shareholder(s).

12.2 The Tagged Shareholder(s) shall give notice in writing (a "TAG NOTICE") to
     the Tagging Shareholders, specifying:

     12.2.1 the number of Shares which it intends to Transfer (the "RELEVANT
            SHARES");

     12.2.2 the name(s) of the proposed transferee(s) of the Relevant Shares and
            any person controlling the transferee;

     12.2.3 the main terms of the contemplated Transfer; and

     12.2.4 the proposed date of the Transfer.

12.3 Any Tagging Shareholder who wishes to dispose of a pro rata parte of its
     Shares on the same terms as specified in the Tag Notice shall within twenty
     (20) Business Days of the date of the Tag Notice notify the Tagged
     Shareholder(s) in writing.

12.4 The Tagged Shareholder(s) shall not dispose of the Relevant Shares unless
     it has:

     12.4.1 given a Tag Notice in accordance with clause 12.2 not less than
            twenty (20) Business Days before the proposed disposal; and


                                       17


     12.4.2 procured, on the same terms as contained in the Tag Notice, the
            disposal of (at the discretion of the Tagging Shareholders) a PRO
            RATA part of the Shares of all Tagging Shareholders who have given
            due notice under this clause 12.

13. TERMINATION OF AGREEMENT

     This Agreement shall terminate:

     13.1.1 in respect of all Parties, upon a Listing or Liquidation;

     13.1.2 in respect of a Shareholder, upon that Shareholder ceasing to hold
            any Shares, provided that such Shareholder shall remain bound by the
            provisions in clauses 1 (INTERPRETATION), 16 (GENERAL) and 17
            (APPLICABLE LAW AND DISPUTE RESOLUTION), as well as the provisions
            of Schedule 1 (INTERPRETATION);

     and such person shall thereupon have no further rights or obligations under
     this Agreement, save as provided above and without prejudice to the accrued
     rights of any Party.

14. 3I INVESTORS' RIGHTS

14.1 Save as provided otherwise, each 3i Investor may vote and/or exercise any
     of its rights under this Agreement as it may see fit and in its own
     interest.

14.2 Each 3i Investor may enforce the covenants, warranties and other
     obligations given to it by the Company in this Agreement independently.
     However, each of the 3i Investors will inform the other 3i Investors of its
     intention to enforce the covenants, warranties and other obligations and
     the manner in which these will be enforced.

15. BYE-LAWS

15.1 The Shareholders agree that they shall ensure and vote in favour of the
     inclusion in the Bye-Laws of a provision reflecting that any person who,
     whether alone or jointly with others, acquires 40% or more of the Shares,
     shall be obliged to make an offer for 100% of the issued and outstanding
     share capital of the Company.

15.2 The Shareholders agree that the Bye-Laws, including their respective rights
     and obligations thereunder, shall as between them at any time be
     interpreted and construed in accordance with the provisions of this
     Agreement. If there is a conflict between a provision of this Agreement and
     a provision of the Bye-Laws, the Parties agree, to the extent permitted
     under Bermuda law, to observe the provisions of this Agreement and shall in
     such event, at the first request of any Party (other than the Company),
     amend the Bye-Laws as necessary to effect the full implementation of the
     Agreement in all respects.

16. GENERAL

     APPLICABLE CLAUSES

16.1 Clauses 14 (CONFIDENTIALITY), 15 (NO RECISSION), 16 (WHOLE AGREEMENT), 17
     (LANGUAGE), 19 (ASSIGNMENTS), 20 (NOTICES), 21 (COSTS), 22 (GENERAL), with
     the exception of clause 22.7, 24 (GOVERNING LAW; JURISDICTION), with the
     exception of clause 24.1, and 25 (COUNTERPARTS) of the Merger Agreement
     apply MUTATIS MUTANDIS to this Agreement as if set out in full herein and
     as


                                       18


     if reference therein to "Merger Agreement" is reference to "this Agreement"
     and are to be considered an integral part hereof.

     FURTHER ASSURANCES

16.2 The Parties undertake to each other to execute and perform all such deeds,
     documents, assurances, acts and things and to exercise all powers and
     rights available to them, including the convening of all meetings and the
     giving of all waivers and consents and the passing of all resolutions
     reasonably required to ensure that the Company, the Shareholders and the
     Directors and their representatives (if any) and the Company and all
     members of the Group give effect to the provisions of this Agreement.

     THIRD PARTIES

16.3 A person who is not a Party (for the sake of clarity, all Parties are
     mentioned under the header of this Agreement or may have become a Party
     pursuant to clause 10), other than 3i Investments and 3i Group which will
     be deemed a Party for the purposes of this clause, may not enforce any
     rights under this Agreement.

     INFORMATION

16.4 Any Director, Alternate Director and Observer appointed by (or upon the
     nomination of) the 3i Investors or Frontline (as the case may be) may:

     16.4.1 report to the 3i Investors or Frontline (as the case may be) on the
            affairs of the Group; and

     16.4.2 disclose Confidential Information as he shall reasonably consider
            appropriate to the 3i Investors or Frontline (as the case may be).

16.5 In the ordinary course of the business of the 3i Group, it reviews existing
     investments and new investment proposals and conducts other investments and
     investment management activities. Each 3i Related Party may disclose to and
     use Confidential Information for these purposes in all cases with any other
     3i Related Party.

16.6 The Company consents to each 3i Investor and Frontline publicising
     (including, without limitation, on 3i's or Frontline's (as the case may be)
     website):

     16.6.1 the fact that the 3i Investors or Frontline (as the case may be) are
            Shareholders of the Company; and

     16.6.2 any other information about the Company which is already in the
            public domain (unless the information is in the public domain as a
            result of a breach of this Agreement by a 3i Investor or Frontline
            (as the case may be)).

16.7 The Parties other than the 3i Investors undertake with each 3i Investor
     that they shall not use the name of any member of the 3i Group or any 3i
     Fund in any context whatsoever (except as required by law) or hold itself,
     himself or themselves (as the case may be) out as being connected or
     associated with any member of the 3i Group or any 3i Fund (other than as
     regards


                                       19


     the 3i Investors being Shareholders of the Company) in any manner
     whatsoever without the prior written consent of the relevant 3i Investor.

     NO PARTNERSHIP

16.8 Nothing in this Agreement shall be deemed to constitute a partnership
     between the Parties.

17. APPLICABLE LAW AND DISPUTE RESOLUTION

17.1 This Agreement is governed by and shall be construed in accordance with the
     laws of England and Wales.

                [REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]


                                       20


IN WITNESS WHEREOF this Agreement has been executed by the Parties on the date
first above written.

3i EUROPARTNERS Va L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


3i EUROPARTNERS Vb L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


3i PAN EUROPEAN BUY-OUTS 2006-08A L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


3i PAN EUROPEAN BUY-OUTS 2006-08B L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


3i PAN EUROPEAN BUY-OUTS 2006-08C L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


                                       21


3i GLOBAL GROWTH 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


3i PAN-EUROPEAN GROWTH 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


PAN-EUROPEAN BUYOUTS CO-INVEST 2006-08 FCPR


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Gestion S.A.
By:
Title:


PAN-EUROPEAN BUYOUTS (NORDIC) CO-INVEST 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


PAN-EUROPEAN BUYOUTS (DUTCH) A CO-INVEST 2006-08 LP


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc By:


                                       22


Title:

GLOBAL GROWTH CO-INVEST 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


OIL, GAS & POWER CO-INVEST 2006-08 L.P.


/s/ Illegible
- -----------------------------------------
Acting by its manager, 3i Investments plc
By:
Title:


STICHTING MANAGEMENT SEAL


/s/ Illegible
- -----------------------------------------
By:
Title:


FRONTLINE LTD


/s/ Illegible
- -----------------------------------------
By: Illegible
Title: Attorney-in-fact


                                  SEALIFT LTD


/s/ Illegible
- -------------------------------------
By: Illegible
Title: Attorney-in-fact


                                       23


                           SCHEDULE 1 : INTERPRETATION

1. DEFINITIONS

3i GROUP means 3i Group plc (registered number 1142830) and any Subsidiary or
Holding Company of 3i Group plc and any Subsidiary of such Holding Company;

3i INVESTMENTS means 3i Investments plc (registered number 3975789);

3i INVESTOR means any of 3i Europartners Va, 3i Europartners Vb, 3i Pan European
A, 3i Pan European B, 3i Pan European C, 3i Global Growth, 3i Pan-European
Growth, Pan-European Co-invest, Pan-European Co-invest France, Pan-European
(Nordic) Co-invest, Pan-European (Dutch) Co-invest, Global Growth Co-invest or
Oil, Gas & Power Co-invest, in each case for so long as it remains a Party;

3i RELATED PARTY means (i) any entity of the 3i Group, (ii) any 3i Investor and
any other fund, partnership, investment vehicle or other entity which is managed
or advised by an entity in the 3i Group or its nominees or by other parties
selected by 3i Group, or in which any entity in the 3i Group has a majority
economic interest (a "3i FUND") and (iii) any investor in any 3i Fund;

ACCOUNTING STANDARDS means the accounting policies and principles used and
consistently applied by the Group in accordance with Dutch Generally Accepted
Accounting Principles or International Financial Reporting Standards;

ACQUISITION CLAIM means any claim, compromise, arbitration, litigation or other
legal proceedings, commenced by the Company or its Subsidiaries, in respect of
the Target Warranties and Indemnities;

ACQUISITION DOCUMENTS means (i) the agreement for the sale and purchase of all
of the issued shares in Dockwise dated 22 December 2006 between Heerema
Transport Finance (Luxembourg) S.A., Heavy Transport Holding Denmark APS and
Wilh. Wilhelmsen Netherlands B.V. as sellers (the "SELLERS"), Wilh. Wilhelmsen
ASA and Heerema Holding Construction, Inc as guarantors and BidCo as purchaser
and (ii) the other documents (if any) entered into pursuant thereto or in
connection therewith;

AFFILIATE means, in relation to any person, any Subsidiary or Holding Company of
that person and any other Subsidiary of that Holding Company, provided always
that neither the Company nor any of its Subsidiaries shall be regarded as being
an Affiliate of any Shareholder for the purposes of this Agreement;

AGREED FORM means, in relation to any document, substantially the form of that
document which has been initialled by or on behalf of each Party for the purpose
of identification;

ANNUAL ACCOUNTS means the audited consolidated annual accounts of the Group for
a Financial Year, including the directors' report, the auditors' report and
management letter, the audited or unaudited consolidated or non-consolidated
profit and loss account for the 12-month period prior to the date of the annual
accounts and the audited or unaudited consolidated or non-consolidated balance
sheet as at the date of the annual accounts and the notes thereon;

ALTERNATE DIRECTOR has the meaning given to it in clause 5.20;


                                       24


AUDITOR means any of the external accountants or accountants' firms for the time
being of the Company;

BERMUDA COMPANIES ACT means the Companies Act 1981 (Bermuda), as amended;

BidCo means Delphi Acquisition Holding I B.V., a company incorporated under the
laws of The Netherlands, with its registered office at Lage Mosten 15, 4822 NJ
Breda, The Netherlands, and being registered with the commercial register in
West-Brabant, The Netherlands, under number 34262243;

BOARD means the board of directors of the Company;

BUSINESS DAY means a day (other than a Saturday or Sunday) on which banks are
generally open in The Netherlands, United Kingdom and Norway for normal
business;

BUSINESS PLAN means the business plan in relation to the Group that is to be
prepared as soon as practically possible after the date of this Agreement and
any subsequent business plan to be prepared hereunder;

BYE-LAWS means the articles of association of the Company as they stand at the
date of this Agreement, as they may be amended from time to time;

CEO means the member of the board of directors of Dockwise appointed as chief
executive officer from time to time;

CFO means the member of the board of directors of Dockwise appointed as chief
financial officer of Dockwise;

CHAIRMAN means the chairman of the Board;

CONDITION means the condition precedent as referred to in clause 3.1;

CONFIDENTIAL INFORMATION means any information relating to the business,
strategies, products, objectives, affairs, performance and/or finances of any
member of the Group for the time being confidential to it or to them or treated
by it or them as such and trade secrets (including, without limitation,
technical data and know-how) relating to the business of any member of the Group
or of any of its or their suppliers, clients, distributors or customers;

CONSTITUTIONAL DOCUMENTS means the Bye-Laws, the articles of association,
bye-laws, memorandum and articles or other constitutional documents of the other
members of the Group;

CONTROLLING INTEREST means the ownership by a person and its Subsidiaries and
Holding Companies (and any Subsidiary of such Holding Company) of shares
carrying the rights to exercise more than 50% of the voting rights attached to
the issued and outstanding shares;

DEED OF ADHERENCE means the agreement pursuant to which a new shareholder
(including any Permitted Transferee) agrees and adheres to the terms and
conditions of this Agreement, the Agreed Form of which deed of adherence is
attached as Schedule 4 (FORM OF DEED OF ADHERENCE);

DELPHI means Delphi Acquisition Holding S.A., a company incorporated under the
laws of the Grand Duchy of Luxembourg, with its registered office at 20, rue de
la Poste, L-2346 Luxembourg, Grand


                                       25


Duchy of Luxembourg, and being registered with the Luxembourg Trade and
Companies Register under number B 122.411;

DIRECTOR means any member of the Board;

DOCKWISE means Dockwise Transport N.V., a company incorporated under the laws of
the Netherlands Antilles, with its registered office at Lage Mosten 15, 4822 NJ
Breda, The Netherlands, and being registered with the commercial register in
West-Brabant, The Netherlands, under number 20112806;

ELECTRONIC FINANCIAL REPORT means the electronic financial report in the Agreed
Form (EMAS), setting out certain key financial information relating to Dockwise
extracted from the Management Accounts;

ERISA means the United States of America Employee Retirement Income Security Act
1974, as amended;

ERISA DIRECTOR means any member of the Board appointed or removed from time to
time at the nomination of an ERISA Fund in accordance with clause 5.2.4;

ERISA FUND means any of 3i Europartners Va and 3i Europarters Vb and any other
Investor who from time to time notifies the Company that it or one of its
affiliates is intended to be a VCOC;

EXIT means a Sale, a Listing or a Liquidation;

FINANCE DOCUMENTS means the relevant finance documents relating to the debt
financing of the Group (other than by the Investors), including roll-over
facilities;

FINANCIAL YEAR means a financial year of the Company ending on 31 December, or
any other financial year agreed by the Shareholders pursuant to the provisions
of this Agreement;

GENERAL MEETING means any general meeting of shareholders of the Company save
for the Annual General Meeting;

GROUP means the Company and any of its Subsidiaries from time to time;

HOLDING COMPANY has the meaning set out in this Schedule 1 under the definition
of Subsidiary;

INTELLECTUAL PROPERTY RIGHTS means all copyrights, moral rights, design rights,
trade marks and trade names, service marks, domain names, data base rights,
trade secrets, computer software, including any updates or new releases,
know-how and any other intellectual property rights (whether registered or
unregistered) and all applications for any of them, anywhere in the world, or
otherwise, as the context may require;

INVESTOR means any of the 3i Investors and any Permitted Transferee, in each
case as long as it is a Party;

ISSUANCE has the meaning given to it in clause 2.3;

KPIs means the key performance indicators as set out in clause 9.2.5(e);

LCIA has the meaning given to it in clause 23.2;


                                       26


LIQUIDATION means a voluntary liquidation of the Company in accordance with the
Bye-Laws;

LISTING means the admission to listing of Shares on the Oslo Stock Exchange;

MANAGEMENT ACCOUNTS means the monthly unaudited management accounts of the
Group, consisting of a consolidated profit and loss account for the one-month
period prior to the Management Accounts Date, a consolidated balance sheet as at
the Management Accounts Date, and a cash flow statement as at the Management
Accounts Date;

MANAGEMENT ACCOUNTS DATE means the last date of the relevant calendar month for
which the Management Accounts have been prepared;

MERGER CHART means a chart in such form and detail as the 3i Investors shall
reasonably require from time to time showing the Group's turnover for the last
completed Financial Year broken down by reference to geographic territories;

MERGER COMPLETION has the meaning given to it in the Merger Framework Agreement;

MERGER COMPLETION DATE has the meaning given to it in the Merger Framework
Agreement;

MERGER AGREEMENT has the meaning given to it in Recital (A);

MERGER DOCUMENTS means the Merger Agreement and the other documents entered into
pursuant thereto or in connection therewith (but excluding the Finance
Documents);

NET PROFITS means, in respect of any Financial Year, the audited consolidated
profit of the Group (if any) on an after-tax basis as shown in the audited
consolidated profit and loss account of the Company;

OBSERVER means each person appointed pursuant to clause 5.21;

PARTY means any party that is mentioned in the introduction to this Agreement
and any other person who has agreed to adhere to this Agreement;

PERMITTED TRANSFER has the meaning given to it in clause 10.2;

PERMITTED TRANSFEREE has the meaning given to it in clause 10.2;

QUALIFIED RESOLUTION means a resolution that, in the case of a Qualified
Resolution of the General Meeting, requires a simple majority, including in any
event the affirmative vote of the ERISA Funds, and in the case of a Qualified
Resolution of the Board, requires a simple majority including the affirmative
vote of the ERISA Directors;

REFINANCING means any refinancing of the debt of the Group, in connection with
which all or part of the investments of the Shareholders are repaid, redeemed or
liquidated in whatever way;

RELEVANT SHARES has the meaning given to it in clause 12.2.1;

RESERVED MATTERS means any of the matters referred to in Schedule 3 (RESERVED
MATTERS);


                                       27


SALE means the sale by the 3i Investors and Frontline (whether through a single
transaction or through a series of transactions and whether directly or
indirectly) of a Controlling Interest of the Group or at least the majority of
the assets of the Group;

SHAREHOLDER means any person holding Shares that is also a Party to this
Agreement, and any person to whom Shares are transferred or issued from time to
time (excluding the Company but including any Permitted Transferee) in
accordance with the terms of this Agreement and any applicable Deed of
Adherence;

SHARES means, from time to time, all issued and outstanding ordinary shares in
the share capital of the Company and any other issued shares in the capital of
the Company (or any of them if the context so requires);

SPA has the meaning given to it in Recital (A);

SPONSOR means the bank(s) appointed by the Company to act as its sponsor or
underwriter in connection with its application for a Listing of the Company;

SUBSIDIARY means with respect to any person (the "HOLDING COMPANY"), any other
person of which securities or interests having the power to elect a majority of
that other person's board of directors or other governing body or otherwise
having the power to exercise a majority of the votes in a general meeting of
shareholders (other than securities or interests having that power only upon the
happening of a contingency that has not occurred) are held (or the voting rights
with respect to such securities or interests are controlled by contract or
otherwise) by the Holding Company or one or more of its Subsidiaries;

TAG NOTICE has the meaning given to it in clause 12.2;

TAGGED SHAREHOLDER(s) has the meaning given to it in clause 12.1;

TAGGING SHAREHOLDERS has the meaning given to it in clause 12.1;

TARGET WARRANTIES AND INDEMNITIES means the representations, warranties,
covenants and indemnities given or made to BidCo under the Acquisition
Documents;

TRANSFER means any direct or indirect sale and transfer, or any offer or
contract to sell, or the creation of any interest over, pledge or right of
usufruct, or any option to purchase or otherwise dispose of Shares (or
securities rights or obligations convertible into or exchangeable for Shares);
and

VCOC has the meaning given to it in clause 4.1.

2. GENERAL

2.1  In this Agreement, unless otherwise specified, a reference to:

     2.1.1 a person shall be construed so as to include any individual, firm,
           company, corporation, body corporate, government, governmental
           authority, tax inspector, state or agency of a state or any joint
           venture, association or partnership (whether or not having a separate
           legal personality);


                                       28


                            SCHEDULE 2: SHAREHOLDINGS

Issued share capital 203,990,791 ordinary shares with a nominal value of USD 1
each.

NAME SHAREHOLDER                  NUMBER OF SHARES
- --------------------------------------------------
3i Europartners Va                   12,562,367
3i Europartners Vb                   13,924,912
3i Pan-European A                    20,052,872
3i Pan-European B                     1,522,131
3i Pan-European C                     3,301,554
3i Global Growth                      5,528,126
3i Pan-European Growth                2,764,066
Pan-European Co-invest                  347,088
Pan-European Co-invest France            38,953
Pan-European (Nordic) Co-invest          42,665
Pan-European (Dutch) Co-invest           23,245
Global Growth Co-invest                  13,530
Oil, Gas & Power Co-invest              137,117
Stichting                            12,050,229
Frontline(1)                         34,976,500
- --------------------------------------------------
TOTAL                               107,285,355
- --------------------------------------------------

(1)  This assumes Frontline subscribes for USD 25,000,000 Shares in the
     Secondary Placement.

                                       29


     2.1.2 a company shall be construed so as to include any company,
           corporation or other body corporate or other legal entity, wherever
           and however incorporated or established, and including any legal
           entity or entities into which such company may be merged by means of
           a statutory merger or into which it may be split up or demerged, by
           means of a statutory split-up or demerger;

     2.1.3 a particular agreement or document is (unless the context otherwise
           requires) a reference to the version of such agreement or document
           which is binding and enforceable on the date hereof, as such
           agreement or document may be novated, assigned, amended or
           supplemented from time to time;

     2.1.4 a communication in writing shall be construed so as to include any
           communication in the written form, letter, fax or e-mail;

     2.1.5 times of day are to the local time in the relevant jurisdiction
           unless otherwise stated;

     2.1.6 the singular includes a reference to the plural and VICE VERSA;

     2.1.7 the masculine includes a reference to the feminine and neuter and
           VICE VERSA;

     2.1.8 clauses, Schedules and Annexes are references to clauses of and
           schedules and annexes to this Agreement.

2.2  Where any provision is qualified or phrased by reference to an arm's length
     basis or principle, such qualification or reference shall mean the
     conditions which would have been obtained between comparable, independent
     persons in comparable transactions (taking into account the assets used,
     the responsibilities and risks assumed and the division of benefits between
     the parties) and comparable circumstances (taking into account the times
     and places of performance and the parties' business strategies), thereby
     providing the closest approximation of the workings of the open market.

2.3  Where any obligation is characterised as several, such characterisation
     shall mean that said obligation is separate and individual for each of the
     obligees of such obligation.

2.4  The Schedules and Annexes are an integral part of this Agreement and
     references to this Agreement shall include its Schedules, Appendices and
     Annexes.


                                       29


                           SCHEDULE 2 : SHAREHOLDINGS

Issued share capital 204,506,798 ordinary shares with a nominal value of USD 1
each.

Issued share capital 203,990,791 ordinary shares with a nominal value of USD 1
each.

NAME SHAREHOLDER                  NUMBER OF SHARES
- --------------------------------------------------
3i Europartners Va                   12.562.367
3i Europartners Vb                   13.924.912
3i Pan-European A                    20.052.872
3i Pan-European B                     1.522.131
3i Pan-European C                     3.301.554
3i Global Growth                      5.528.126
3i Pan-European Growth                2.764.066
Pan-European Co-invest                  347.088
Pan-European Co-invest France            38.953
Pan-European (Nordic) Co-invest          42.665
Pan-European (Dutch) Co-invest           23.245
Global Growth Co-invest                  13.530
Oil, Gas & Power Co-invest              137.117
Stichting                            12,050,229
Frontline(1)                         34,976,500
- -------------------------------------------------
TOTAL                               107,285.355
- -------------------------------------------------

(1)  This assumes Frontline subscribes for USD 25,000,000 Shares in the
     Secondary Placement.


                                       30


                          SCHEDULE 3 : RESERVED MATTERS

PART 1

The following actions of the Board regarding any member of the Group or the
Group as a whole shall at all times require a resolution of the Board, unless
expressly included in the Business Plan (or any budget) adopted in accordance
with this Agreement:

(A) CORPORATE AFFAIRS

BUSINESS                         PLAN adopting or amending any Business Plan or
                                 budget (to the extent not included in the
                                 Business Plan), or taking any action materially
                                 inconsistent with such business plan or budget.

ACCOUNTING POLICIES              any modification of the Accounting Standards,
                                 their application by the Group and/or the
                                 format of the Annual Accounts, unless such
                                 change is required by law or by virtue of a new
                                 standard of generally accepted accounting
                                 policies or practices.

ALTERATION                       TO BUSINESS making any material change in the
                                 nature of the Group's businesses, including
                                 entering in new lines of business or in new
                                 geographic areas within existing business
                                 units.

LIQUIDATION                      the passing of any resolution for the
                                 Liquidation of the Company or to technically
                                 liquidate any member of the Group by disposal
                                 of all or substantially all of the assets of
                                 such member of the Group.

BANKRUPTCY                       any application for a member of the Group to be
                                 declared bankrupt or for a suspension of
                                 payments of a member of the Group.

(B) DIRECTORS COMPENSATION AND RELATED PARTY TRANSACTIONS

DIRECTORS                        COMPENSATION granting or modifying the
                                 remuneration or other terms of engagement of
                                 management a director of the Group earning in
                                 excess of USD 100,000 annually.

RELATED                          PARTY TRANSACTIONS entering into any
                                 transaction, agreement or arrangement with or
                                 for the benefit of any Shareholder or other
                                 related party or Affiliate thereof.

(D) MATERIAL EVENTS

LISTING                          the application for a Listing, and the
                                 appointment of professional advisers in
                                 connection therewith.

EQUITY                           TRANSACTIONS acquiring or disposing of any
                                 interest in the share capital or instruments
                                 convertible into or exchangeable for share
                                 capital of any other company or body corporate
                                 for a consideration in excess of USD 1 million.


                                       31


ASSET TRANSACTIONS               the sale, transfer, leasing, licensing or
                                 disposal by a member of the Group (other than
                                 in the ordinary course of trading) of all or a
                                 substantial part of its business, undertaking
                                 or assets whether by a single transaction or
                                 series of transactions, related or not
                                 acquiring or disposing of any asset of the
                                 Group in excess of USD 1 million.

JOINT VENTURES                   forming, entering into, terminating or
                                 withdrawing from any partnership, consortium,
                                 joint venture or any other unincorporated
                                 association carrying on a trade or business or
                                 any other similar arrangement, whether or not
                                 with a view to making a profit.

MATERIAL                         CONTRACTS entering into any agreement or series
                                 of connected agreements under which the
                                 consideration payable is more than USD 2
                                 million or the receivable represents more than
                                 USD 15 million.

FINANCE DOCUMENTS                effecting or permitting to be effected any
                                 variations or amendments to, or waivers or
                                 compromises or releases under or in connection
                                 with, or entering into any agreement
                                 inconsistent with, any of the Finance
                                 Documents.

REFINANCING                      (the making by any member of the Group of any
                                 application or submission of any business plan
                                 to any person with a view to) attracting
                                 additional or substitute financing for the
                                 Group or any part of it other than under the
                                 Finance Documents.


                                       32


PART 2

Unless more stringent majority rules apply under the Bermuda Companies Act or
the Bye-laws, the following resolutions of the General Meeting shall at all
times require a Qualified Resolution of the General Meeting unless expressly
included in the Business Plan (or any budget) adopted in accordance with this
Agreement:

(A) CORPORATE AFFAIRS

CONSTITUTIONAL                   DOCUMENTS any amendment of the Bye-Laws
                                 (including changes to the name and financial
                                 year of the Company).

AUDITOR the appointment or dismissal of the Auditor.

(B) MATERIAL EVENTS

LEGAL                            MERGERS any merger or demerger involving the
                                 Company, other than in relation to an expansion
                                 of the business of the Group by acquisition or
                                 otherwise.


                                       33


                     SCHEDULE 4 : FORM OF DEED OF ADHERENCE

THIS DEED is made on [DATE]

BETWEEN:

(1)  [NAME TRANSFEREE], [DETAILS] (the "NEW SHAREHOLDER");

(2)  [NAME SHAREHOLDER], [DETAILS] (the "ORIGINAL SHAREHOLDER"); and

(3)  SEALIFT LTD, a company incorporated under the laws of Bermuda, with its
     registered office at PO Box HM 1593, Par-la-Ville Place, 14 Par-la-Ville
     Road, Hamilton HM 08, Bermuda, Company No. 39466 (the "COMPANY", for itself
     and on behalf of the "CONTINUING SHAREHOLDERS");

WHEREAS:

(A)  The Original Shareholder and the Continuing Shareholders are parties to a
     shareholders' agreement dated [DATE] 2007 (the "AGREEMENT");

(B)  The New Shareholder proposes to purchase/subscribe for [___] Shares of
     [___] each in the capital of the Company from the Original Shareholder;

(C)  The shareholding by the New Shareholder is authorised by the Bermuda
     Registrar of Companies and/or the Bermuda Monetary Authority or is subject
     to an exemption or direction from the Bermuda Registrar of Companies and/or
     the Bermuda Monetary Authority;

(D)  This Deed is made by the New Shareholder in compliance with the Agreement.

THIS DEED WITNESSES as follows:

1.   The New Shareholder confirms that it has been supplied with a copy of the
     Agreement.

2.   The New Shareholder hereby subscribes for [NUMBER] Shares with a nominal
     value of [_] each in the capital of the Company at a subscription price of
     USD [AMOUNT] per share and agrees to hold the Shares subject to the
     Bye-Laws of the Company.] In consideration of the sum of USD [AMOUNT] paid
     on the date hereof, the Original Shareholder(s) shall forthwith transfer to
     the New Shareholder [NUMBER] Shares together with the right to receive all
     dividends accrued thereon as at the date of transfer subject to the
     Bye-Laws of the Company. Upon execution of the [issue] [transfer]
     instrument, the Company shall register the New Shareholder in the
     shareholders' register as the holder of [NUMBER] Shares.

3.   The New Shareholder undertakes to the Continuing Shareholders to be bound
     by the Agreement in all respects as if the New Shareholder was a Party to
     the Agreement and named in it as a Shareholder and to observe and perform
     all the provisions and obligations of the Agreement applicable to or
     binding on a Shareholder under the Agreement insofar as they fall to be
     observed or performed on or after the date of this Deed.

4.   The Continuing Shareholders undertakes to the New Shareholder to observe
     and perform all the provisions and obligations of the Agreement applicable
     to or binding on a "Shareholder" or a


                                      34


     "Party" under the Agreement and acknowledges that the New Shareholder shall
     be entitled to the rights and benefits of the Agreement as if the New
     Shareholder were named in the Agreement as a Shareholder or a Party with
     effect from the date of this Deed.

5.   This Deed is made for the benefit of (a) the Parties to the Agreement as at
     the date hereof and (b) every other person who after the date of the
     Agreement (and whether before or after the execution of this Deed) assumes
     any rights or obligations under the Agreement or who adheres to it.

6.   The address and fax number of the New Shareholder for the purposes of
     clause 17 of the Agreement is as follows:

Attn:    ________________________

Fax:     ________________________

Address: ________________________

         ------------------------

7.   This Deed is governed by and shall be construed in accordance with the laws
     of Luxembourg.

IN WITNESS WHEREOF this Deed has been executed and delivered on the date first
written above.

[NEW SHAREHOLDER]


- ---------------------------
By:
Title:

[ORIGINAL SHAREHOLDER]


- ---------------------------
By:
Title:

SEALIFT LTD for itself and on behalf of the Continuing Shareholders,


- ---------------------------
By:
Title:


                                       35


                       SCHEDULE 5 : CONTINUING OBLIGATIONS

1. COMPLIANCE WITH BYE-LAWS

The Company shall observe all the provisions of its Bye-Laws and this Agreement
and shall procure the compliance by each member of the Group with the provisions
of its Constitutional Documents.

2. ACCOUNTING RECORDS, ACCOUNTS AND REPORTS

2.1 The Company shall, and shall procure that each member of the Group shall:

     2.1.1 keep proper accounting records and in them make true and complete
           entries of all its dealings and transactions in relation to its
           business; and

     2.1.2 comply with all statutory requirements as to the preparation and
           audit of annual accounts.

2.2  Dockwise shall prepare:

     2.2.1 unaudited monthly Management Accounts of the Group, such accounts:

           (a)  to include a consolidated profit and loss account, balance sheet
                and cash flow statement for the Group broken down according to
                the principal divisions of the Group from time to time;

           (b)  to refer to any material matter occurring in or relating to the
                period in question;

           (c)  to include a comparison of all such information with the
                projections and forecasts in the relevant operating budget
                included in the Business Plan and with the corresponding
                information for the same period in the preceding year and a
                statement of any material variation from the relevant operating
                budget;

           (d)  to itemise all material transactions referred to in the
                statement of projected capital expenditure included in the
                relevant operating budget and entered into by the Group during
                that period;

           (e)  to set out in a separate schedule (in sufficient detail to
                demonstrate the same) the Group's actual performance against the
                limits set out in the Finance Documents;

           (f)  to have been approved by the CFO and one other director of the
                relevant company as evidenced by their signature of the
                accounts;

           (g)  to include a commentary by the management board of Dockwise on
                the state of the business of the Group;

           (h)  to be substantially in the form of the sample Management
                Accounts in the Agreed Form;

           (i)  to include project cash flows for the period up to the end of a
                Financial Year; and


                                       36


           (j)  to include projected profit and loss account for the remainder
                of the then current financial period;

     2.2.2 a report by the management board of Dockwise (which in relation to
           each 12-month period ending on the accounting reference date each
           year, shall include a reconciliation of the Group's actual
           performance to any Business Plan showing variances and giving
           narrative explanation of those variances);

     2.2.3 the Electronic Financial Report;

     2.2.4 the Merger Chart; and

     2.2.5 such other reports as the Board may from time to time reasonably
           require as to any matter relating to the businesses or affairs of the
           Group or to its financial position or assets.

2.3  Dockwise shall ensure that:

     2.3.1 the Annual Accounts and each set of Management Accounts referred to
           in paragraph 2.2 above are prepared, so far as applicable, on the
           same basis as that used in the preparation of the Business Plan and
           in accordance with the Accounting Standards, consistently applied;

     2.3.2 each report prepared under paragraphs 2.2.1, 2.2.2 and 2.2.3 above is
           delivered to the Board within 14 days of the end of each calendar
           month in such format as may be required by the Board;

     2.3.3 the Annual Accounts are delivered to the Board within four months of
           the end of the Financial Year; and

     2.3.4 the Merger Chart prepared under paragraph 2.2.4 above is delivered to
           3i Group plc at such time as the Annual Accounts are delivered.

3. MINUTES

If so requested by the Board, the Company shall make available (not later than
the earliest of (i) the same time the minutes hereinafter mentioned are made
available to any member of the relevant board, (ii) the Business Day before the
next meeting of the relevant board, or (iii) 14 days after the relevant meeting)
to the Board copies of minutes of meetings of the board of any member of the
Group.

4. LICENCES AND CONSENTS

The Company shall take, and shall procure that each other member of the Group
shall take, all reasonable steps to obtain and maintain (and to comply with the
terms of) all governmental and other licences and consents necessary for the
conduct of its business.

5. INSURANCE

5.1  The Company shall, and shall procure that each other member of the Group
     shall at all times keep insured with a reputable insurance office:


                                       37


     5.1.1 all its assets against such risks and in such manner and to such
           extent as accords with good commercial practice with regard to assets
           of the same kind in comparable circumstances;

     5.1.2 itself in respect of any accident, damage, injury, third party loss,
           loss of profits and other risks and to such an extent as accords with
           good commercial practice with regard to a business of the same kind
           as that of the relevant member of the Group; and

     5.1.3 its directors against any liability incurred by them in the lawful
           performance of their duties and, if the CEO and CFO so request,
           against the permanent disability and demise risks of the directors.

5.2  Dockwise shall procure that the Group's insurance and assurance policies
     are reviewed by its insurance brokers at least once every year and that all
     reasonable recommendations made by its brokers in relation to such policies
     are complied with.

6. FINANCE DOCUMENTS

BidCo shall procure that each member of the Group observes in all material
respects the provisions of the Finance Documents and any associated agreements.
BidCo shall deliver to the Board a copy of each notice (including, without
limitation, of a breach of a covenant or other obligation) received under the
Finance Documents and each report delivered by the Group to the relevant
financier under the Finance Documents at the same time as it is delivered to the
parties there under.

7. COMPLIANCE WITH LAWS

Dockwise shall, and shall procure that all other Group members shall, comply in
all material respects with any law, statute, regulation or order of any
governmental authority or of any agency thereof, applicable to the Group and
shall notify the Board of any violation of such law, statute, regulation or
order of any governmental authority or of any agency thereof, which violation in
any respect may materially and adversely affect the business of the Group.

8. EXPANSION OF THE BUSINESS

The Company shall effect, and shall procure that the other members of its Group
effect, any expansion, development or evolution of the Group's business through
the Company or a wholly owned Subsidiary of the Company.

9. ACQUISITION DOCUMENTS

The Company shall, and shall procure that the other members of the Group shall,
enforce or procure to be enforced to their full extent the rights of BidCo under
the Acquisition Documents.

10. INTELLECTUAL PROPERTY RIGHTS

Dockwise shall, and shall procure that the other members of the Group shall,
take all reasonable steps within their respective powers to protect their
Intellectual Property Rights and shall make such patent, registered design,
trade mark and other such applications and effect such renewals or extensions
thereof as are required to keep the same in force.

11. CORPORATE AND SOCIAL RESPONSIBILITY


                                       38


     11.1  Dockwise shall, and shall procure that the other members of the Group
           shall, (i) comply with all applicable environmental laws, regulations
           or directives ("ENVIRONMENTAL LAW"), (ii) maintain all consents,
           permits and licenses required under Environmental Law and (iii)
           notify each Investor as soon as possible if any member of the Group
           any such consents, permits or licenses (whether because they expire,
           are revoked or terminated or otherwise).

     11.2  Dockwise shall, and shall procure that the other members of the Group
           shall, comply with (i) all applicable laws, regulations or directives
           relating to the relationship between the relevant member of the Group
           and its employees, potential employees, trade unions and employee
           representative body and/or the health and safety of its employees and
           (ii) any arrangements between the relevant member of the Group and
           its employees, trade unions and/or employee representative bodies.

12. PROTECTION OF INFORMATION

The Company and Dockwise shall, and each shall procure that the other members of
the Group shall, take all reasonable steps within their respective powers to
protect the Confidential Information.


                                       39


                       SCHEDULE 6 : COMPLETION CERTIFICATE

To:

[All Parties, at their address as referred to in clause 17 (NOTICES)]

COMPLETION CERTIFICATE

Dear Sirs,

The undersigned and certain other parties have entered into an agreement on [__]
2007 concerning their intention of combining their joint interests in heavy lift
shipping and transport activities conducted by Sealift Ltd. and Delphi
Acquisition Holding S.A. and their respective subsidiaries (the "MERGER
AGREEMENT").

Capitalised words if not defined in this certificate shall have the same meaning
as in the Merger Framework Agreement.

For the purpose of and in accordance with clause 8.5 of the Merger Agreement the
undersigned hereby confirms that the Completion Conditions have been fulfilled
or waived in accordance with clause 7.3 of the Merger Agreement and that the
parties to the Shareholders' Agreement are hereby irrevocably and
unconditionally authorised to proceed to completion in accordance with clause 3
of the Shareholders' Agreement. Furthermore, for the avoidance of doubt the
undersigned declares that this certificate is to be considered a "COMPLETION
CERTIFICATE" as defined in clause 3 of the Shareholders' Agreement.

Signed by [either SEALIFT or 3i INVESTMENTS and 3i GESTION, as managers of the
3i Funds],


- --------------------------------

name:

date:


                                       40

EX-4.15

                                                                    Exhibit 4.15

                     SECOND SUPPLEMENTAL PURCHASE AGREEMENT

This supplemental agreement (the "AGREEMENT") is entered into on this 27th day
of April 2007

BETWEEN:

1. SEALIFT LTD. ("SEALIFT");

2. SOUTHWEST TANKERS INC. ("SOUTHWEST");

3. FRONT TARGET INC. ("FRONT TARGET");

4. FRONT TRAVELLER INC. ("FRONT TRAVELLER");

5. WEST TANKERS INC. ("WEST");

6. GRANITE SHIPPING COMPANY LTD. ("GRANITE");

7    QUADRANT MARINE INC. ("QUADRANT")

(Southwest, Front Target, Front Traveller, West, Granite and Quadrant
hereinafter collectively referred to as the "OWNERS" and, individually, as an
"OWNER")

8. FRONTLINE LTD. ("FRONTLINE")

(Sealift and the Owners on the one hand and Frontline on the other hand are
hereinafter collectively referred to as the "PARTIES" and, individually, as a
"PARTY").

WHEREAS:

(A)  On 30 January, 2007, Frontline and Sealift entered into a purchase
     agreement setting forth the terms and conditions upon and subject to which
     Sealift acquired, INTER ALIA, all of the shares in the Owners from
     Frontline (the "ORIGINAL PURCHASE AGREEMENT");

     On 15 March 2007 the Parties entered into a supplemental agreement
     supplementing certain terms of the Original Purchase Agreement (the
     "SUPPLEMENTAL AGREEMENT") (together with the Original Purchase Agreement,
     referred to as the "PURCHASE AGREEMENT"); and

     The Parties wish to supplement the terms of the Purchase Agreement in
     respect of a number of issues.

NOW THEREFORE, it is hereby, agreed as follows:

1.   Terms defined in the Purchase Agreement shall, when used herein in
     capitalised form, have the same meaning as attributed to them in the
     Purchase Agreement.


2.   Clause 8.1.6 of the Original Purchase Agreement shall be supplemented for
     the avoidance of doubt so that:

     (i)   notwithstanding any of the terms in said Clause 8.1.6 or elsewhere in
           the Purchase Agreement, Frontline shall indemnify each Owner against
           all costs incurred by such Owner as a result of Frontline not paying
           any claim which such Owner is obliged to pay under the terms of the
           relevant Conversion Contract or any repair contract entered into by
           such Owner with Cosco;

     (ii)  Frontline shall be responsible for the repair costs of each
           Conversion Vessel and in Clause 8.1.6 all references to "conversion
           costs" shall be construed so that this term includes such costs
           incurred as a result of a repair contract being entered into by
           Frontline (on behalf of the relevant Owner) with the relevant Yard
           pursuant to Clause 10.8 of such Conversion Contract.

3.   Clause 8.1.5 of the Original Purchase Agreement shall be amended so that
     the final sentence is deleted and the clause is supplemented by the
     following:

     (i)   Sealift shall have the right to assign two representatives to the
           supervision team for Front Sunda, Front Target, Front Traveller and
           Front Comor, one of which shall have engine room expertise and the
           other deck expertise;

     (ii)  the Sealift representatives shall have full access to information and
           documentation provided by Cosco to the supervision teams, as well as
           all documentation related to the Conversion Vessels as is being
           prepared by the supervision teams or circulated among its members;

     (iii) the Sealift representatives shall have the right to attend all
           inspections, testing of equipment, sea trials and review of sea trial
           documentation;

     (iv)  the Sealift representatives shall work with the other members of the
           supervision team with the objective of resolving all technical issues
           in the best interests of the Owners and in the case of disagreement
           between the Sealift representatives and the other members of the
           supervision team, the views of the Sealift representatives shall be
           given in writing to the leader of the supervision team; and

     Frontline shall procure that the Seatrials include operational (including
     ballasting and de-ballasting trials) in the presence of the Sealift
     representatives.

4.   Clause 8.1.9 of the Original Purchase Agreement and Clause 2 of the
     Supplemental Agreement shall be amended so that the agreed redelivery dates
     are as follows:

     Front Sunda:       30 April 2007
     Front Target:      30 September 2007
     Front Traveller:   31 January 2008
     Front Comor:       31 May 2008


5.   This Agreement shall become effective immediately upon Merger Completion.

6.   This Agreement shall be considered null and void if Merger Completion has
     not occurred prior to 12 May 2007.

7.   The Parties agree that the provisions of Clauses 14 and 17 of the Original
     Purchase Agreement shall apply to this Agreement as well.

     For and on behalf of                  For and on behalf of
     SEALIFT LTD.                          SOUTHWEST TANKERS INC.


     /s/ Illegible                         /s/ Illegible
     -----------------------------------   -------------------------------------


     For and on behalf of                  For and on behalf of
     FRONT TARGET INC.                     FRONT TRAVELLER INC.


     /s/ Illegible                         /s/ Illegible
     -----------------------------------   -------------------------------------

     For and on behalf of                  For and on behalf of
     WEST TANKER INC.                      GRANITE SHIPPING COMPANY LTD.


     /s/ Illegible                         /s/ Illegible
     -----------------------------------   -------------------------------------


     For and on behalf of                  For and on behalf of
     QUADRANT MARINE INC.                  FRONTLINE LTD.


     /s/ Illegible                         /s/ Illegible
     -----------------------------------   -------------------------------------

EX-4.16

                                                                    Exhibit 4.16

                                    THE RULES

                                       OF

                                FRONTLINE LTD.'s

                               SHARE OPTION SCHEME

                       (Approved by Frontline Ltd.'s Board
                             on November 16 , 2006)



                                 FRONTLINE LTD.

                                  RULES OF THE
                               SHARE OPTION SCHEME
                               -------------------

1.    DEFINITIONS

1.1   In this Scheme the following words and expressions shall, where the
      context so permits, have the following meanings:

      "Adoption Date" means the date on which the Scheme is approved by the
      Board;

      "Auditors" means the auditors of the Company (acting as experts and not as
      arbitrators) from time to time;

      "Board" means the board of directors of the Company or the directors
      present at a duly convened meeting of the board of directors or of a duly
      constituted committee of the board of directors at which a quorum is
      present;

      "Change of Control" means an event whereby another entity gains control
      over the Company (i) by imposing a merger or consolidation in which the
      Company is not the surviving company or (ii) by acquiring the majority of
      the shares in the Company or (iii) by the vote of its own shares or by
      acting in concert with other shareholders appoints a new majority of the
      Board;

      "Company" means Frontline Ltd., registered in Bermuda;

      "Date of Grant" means the date on which an Option is granted by the Board
      pursuant to Clause 2 hereof;

      "Eligible Person" means an employee who is, or who becomes, contracted to
      work at least 20 hours per week in the service of one or more
      Participating Companies or a director or officer of a Participating
      Company;

      "Group" means the Company and the Subsidiaries;

      "Independent Expert" means either a firm of independent public accountants
      of recognised standing who may be the regular auditors of the Company or
      an internationally recognised investment bank to be selected by the Board;

      "Market Value" means, on any day, the average of the middle market
      quotations of the price of the Shares as derived from the New York Stock
      Exchange (or any other stock exchange on which the Shares are traded,
      chosen by the Board) for the three immediately preceding dealing days on
      that stock exchange; or, if the Shares are not traded on any stock
      exchange, means the value of the Shares as determined by the Board.

      "Option" means a right (but not an obligation) to subscribe for Shares
      granted to an Eligible Person pursuant to the Scheme;

      "Option Certificate" means a certificate issued by the Company to the
      Option Holder evidencing the title of the Option Holder to the Option;

      "Option Holder" means an Eligible Person or a former Eligible Person who
      is the holder of an Option which has neither been fully exercised nor
      ceased to be exercisable nor lapsed and, where the context so permits, a
      person entitled to rights under any such Option in consequence of the
      death of the original Option Holder;

      "Option Shares" means Shares in respect of which an Option has been
      granted;

      "Participating Company" means the Company and any Subsidiary;

      "Rules" means these rules as varied from time to time in accordance with
      Clause 8 hereof;

      "Scheme" means this share option scheme;

      "Shares" means fully paid ordinary shares of par value US$2.50, each in
      the capital of the Company;

      "Share Capital" means the fully paid issued share capital of the Company;

      "Subscription Cost" means, in relation to the exercise of an Option, the
      product of the number of Option Shares in respect of which the Option is
      exercised and the Subscription Price of such Option Shares;

      "Subscription Price" means such price as the Board shall from time to time
      at its discretion resolve shall apply to an Option when such Option is
      granted provided that such price is not lower than the nominal value of a
      Share;

      "Subsidiary" means a company, which for the time being, is a subsidiary of
      the Company within the definition contained in Section 86 of the Companies
      Act 1981 of Bermuda;

      "Subsisting Option" means an Option which has neither lapsed nor been
      exercised.

      "Vesting Date" means the date on which an Option becomes exercisable and
      is the date the Board, in its discretion, may prescribe from time to time
      when an Option is granted, provided that such date cannot be earlier than
      one day after the Date of Grant.

1.2   In this Scheme except in so far as the context otherwise requires:

      a.    words denoting the singular number shall include the plural number
            and words denoting the masculine gender shall include the feminine
            gender;

      b.    any reference herein to any enactment or statutory provision shall
            be construed as a reference to that Bermudian enactment or provision
            as from time to time amended extended or re-enacted; and

      c.    references to the exercise of an Option shall include the exercise
            of an Option in part.

2.    GRANT OF OPTION

2.1   At any time after the Adoption Date, and not later than the tenth
      anniversary thereof, the Board may, in its absolute discretion, resolve to
      grant an Option or Options to an Eligible Person or to Eligible Persons on
      the terms and conditions set out in the Rules and in its resolution.

2.2   Immediately following the Date of Grant the Board shall notify the
      relevant Eligible Persons that they have been granted Options.

2.3   The notice given by the Board pursuant to Clause 2.2 shall be in such
      form, not inconsistent with these Rules, as the Board may determine and
      shall specify the number of Shares comprised in the Option, any terms
      applicable thereto other than as set out herein, the Date of Grant and the
      Subscription Price.

2.4   Not later than twelve weeks following the Date of Grant, the Option Holder
      may, by a notice given in writing, renounce his rights to any Option
      granted pursuant to Clause 2.1 in which event such Option shall be deemed
      for all purposes never to have been granted.

2.5   As soon as possible after the expiry of the twelve week notice period
      referred to in Clause 2.4, the Board shall issue an Option Certificate in
      respect of each Option in such form, not inconsistent with these Rules, as
      the Board may determine.

3.    LIMITATIONS

3.1   No Option shall be granted after the tenth anniversary of the Adoption
      Date.

3.2   No Option shall be granted to any person unless he is, at the Date of
      Grant, an Eligible Person.

4.    MAIN TERMS

4.1   No consideration shall be payable to the Company for the grant of an
      Option.

4.2   The Option shall entitle the Option Holder to subscribe for Shares at a
      price per Share equal to the Subscription Price at the date the Option is
      exercised.

4.3   Any Option which has not lapsed may be exercised in whole or in part at
      any time provided the earliest of the following events has occurred:

      a.    the Vesting Date;

      b.    the death of the Option Holder;

      c.    a Change of Control.

4.4   An Option which has vested, shall lapse on the earliest of the following
      events:

      a.    such date as the Board in its discretion may prescribe at the date
            the Option is granted, provided that such date cannot be later than
            the tenth anniversary of the Date of Grant;

      b.    the first anniversary of the Option Holder's death;

      c.    the first anniversary of the Option Holder's retirement;

      d.    three months following the Option Holder's ceasing to be an Eligible
            Person, other than by reason of his death or retirement;

      e.    six months after the Option has become exercisable in accordance
            with Clause 7.1;

4.5   An Option which has not vested, shall lapse on the earliest of the
      following events:

      a.    the date of an Option Holder's retirement; and

      b.    the date an Option Holder ceasing to be an Eligible Person other
            than by reason of his death or retirement.

5.    EXERCISE OF OPTIONS

5.1   Exercise of an Option shall be effected by the Option Holder giving notice
      in writing to the Company specifying the number of Option Shares (not
      being less than 500 Shares, and being a multiple of 100 Shares, except in
      the case of final exercise of all outstanding rights under the Option) in
      respect of which the Option is being exercised on that occasion and
      accompanied by the relevant Option Certificate and otherwise in such form
      and manner as the Board in its discretion may prescribe from time to time,
      provided that such notice shall be deemed to have been exercised and to
      take effect on the date on which payment of the Subscription Cost is
      received by the Company.

5.2   Subject to any necessary consents under regulations or enactments for the
      time being in force, compliance by the Option Holder with the Rules and
      receipt by the Company of the Subscription Cost, the Company shall, not
      later than thirty days after receipt of the notice referred to in Clause
      5.1 above, allot and issue to the Option Holder the number of Shares
      specified in the notice. If the number of Shares over which the Option is
      exercised is less than that specified in the relevant Option Certificate
      then the Company will issue a balance Option Certificate in respect of the
      remainder of such Shares over which the Option is still capable of
      exercise.

5.3   Notwithstanding the provisions of Clause 5.1 and Clause 5.2, the Company
      reserves the right upon receipt of a notice of exercise of an Option to
      make a cash payment in lieu of issuing Shares that would be due on the
      exercise of the Option. The cash payment will be calculated as the
      positive difference between the highest market price of the Shares on the
      New York Stock Exchange (or any other stock exchange on which the Shares
      are traded, chosen by the Board), and the Subscription Price on the date
      the Company receives the notice of exercise of an Option.

5.4   Shares allotted under the Scheme in pursuance of the exercise of an Option
      shall rank pari passu in all respects with the Shares for the time being
      in issue save as regards any rights attaching by reference to a record
      date prior to the date on which the Option is exercised.

6.    ADJUSTMENTS TO OPTION RIGHTS

6.1   In the event of any capitalisation or rights issue, any sub-division,
      consolidation or a reduction of the capital of the Company, the Board
      shall make appropriate adjustments with regard to:

      a.    the aggregate number of Shares subject to any Option;

      b.    the Subscription Price subject to any Option; or

      c.    the terms of any Option.

PROVIDED THAT:
- -------------

      d.    any such adjustment has been confirmed in writing by an Independent
            Expert to be in their opinion fair and reasonable; and

      e.    the aggregate Subscription Cost payable by an Option Holder on the
            exercise of all his Options is not increased; and

      f.    the amount payable to subscribe for any Share subject to any Option
            shall not be reduced below its nominal value.

      Further, the Subscription Price shall be reduced by the amount of all
      dividends declared by the Company per Share in the period from the Date of
      Grant until the date the Option(s) is exercised, always provided that the
      Subscription Price never shall be reduced below the par value of the
      Share.

6.2   The Board shall give notice in writing to each Option Holder affected by
      any adjustment made pursuant to Clause 6.1 and may, at its discretion,
      deliver to him a revised Option Certificate in respect of his Option.

      Adjustments to the Subscription Price due to dividend payments shall be
      calculated as and when the Option(s) is exercised.

7.    WINDING-UP

7.1   If notice is given by the Board to the shareholders in the Company of a
      members' resolution for the voluntary winding-up of the Company, notice of
      the same shall forthwith be given by the Board to the Option Holders.

      Each of the Option Holders shall be entitled, within three months
      following such notice, to give notice in writing to the Company (such
      notice being accompanied by payment of the Subscription Cost) that such
      Option Holder wishes to be treated as if all or any of his Options had
      been exercised immediately before the commencement of the winding-up. In
      such event the Option Holder will be entitled to participate in the assets
      available in the winding-up pari passu with the shareholders in the
      Company as if he were a shareholder in relation to such number of Shares
      as he would have been entitled to had his Options been so exercised.
      Subject thereto all Options shall lapse on the commencement of the
      winding-up.

7.2   Option rights shall lapse immediately in the event of the Company being
      wound-up otherwise than in the event of a voluntary winding-up.

8.    VARIATION OF THE SCHEME

8.1   Subject to Clause 9.2 the Board may at any time alter or add to the Rules
      in any respect, provided that:

      a.    the Board may not cancel an Option except where (i) the Option
            Holder has breached the provisions of Clause 9.5 or (ii) the Option
            Holder has previously agreed; and

      b.    (subject as herein provided) the Board may not modify the terms of
            an Option already granted otherwise than with the consent of the
            Option Holder.

8.2   Notwithstanding the provisions of Clause 8.1, no amendment may be made
      which would make the terms on which Options may be or have been granted
      materially more generous without the prior approval of the Company in a
      general meeting.

8.3   The Board shall give notice in writing to each Option Holder of any
      alteration or addition made pursuant to this Clause 8 and may, at its
      discretion, deliver to each Option Holder a revised Option Certificate in
      respect of his Option.

9.    GENERAL PROVISIONS

9.1   The Company shall at all times keep available sufficient authorised but
      unissued Shares to satisfy the exercise in full of all Options for the
      time being capable of being exercised.

9.2   The Board may from time to time make and vary such regulations and
      establish such procedures for the administration and implementation of the
      Scheme as it thinks fit. In the event of any dispute or disagreement as to
      the interpretation of the Rules or as to the question of rights arising
      from or related to the Scheme, the decision of the Board shall (except as
      regards any matter required to be determined by the Auditors hereunder) be
      final and binding upon all persons.

9.3   The cost of the administration and implementation of the Scheme shall be
      borne by the Company.

9.4   The rights and obligations of an Eligible Person under the terms on which
      the Eligible Person holds his office or employment with a Participating
      Company shall not be affected by his participation in the Scheme or by any
      right he may have to participate therein, and the Scheme shall afford an
      Eligible Person no rights to compensation or damages in connection with
      the termination of such office or employment for any reason whatsoever.

9.5   The rights and obligations of an Option Holder shall be personal to the
      Option Holder and no Option nor the benefit thereof may be transferred,
      assigned, charged or otherwise alienated save that nothing in this
      sub-clause shall prohibit the transmission of an Option or the benefit
      thereof by operation of law.

9.6   For so long as the Shares are listed on the New York Stock Exchange or any
      other stock exchange, the Company shall apply to the appropriate
      authorities of such stock exchange(s) for all Shares subscribed for under
      the Scheme to be admitted for trading thereon on par with the other
      Shares.

9.7   Any notice or other document to be served by the Company under the Scheme
      on an Eligible Person or Option Holder may be served personally or by
      e-mail or by sending it through the post in a prepaid letter addressed to
      him at his address as last known to the Company.

      Any notice or other document to be served on the Company under the Scheme
      may be served by an Eligible Person or Option Holder by leaving it at the
      registered office for the time being of the Company or by e-mail or by
      sending it through the post in a prepaid letter addressed to such
      registered office.

      Where any notice or other document is served or sent by first class post
      it shall be deemed to have been received at the expiration of seven days
      (excluding Saturdays, Sundays or public holidays in Bermuda or Norway)
      after the time when cover containing the same was put in the post properly
      addressed and stamped. Any notice or document sent by e-mail shall be
      deemed to have been received at the time of transmission to the party to
      which it is addressed.

9.8   The Insider Trading Regulations of the Company are applicable to the
      Shares received as a consequence of the exercise of Options.

10.   TERMINATION OF THE SCHEME

10.1  The Scheme shall terminate on the earlier of the following dates:

      a.    the date (if any) determined by the Board to be the date of
            termination of the Scheme; and

      b.    the tenth anniversary of the Adoption Date.

10.2  Following termination of the Scheme pursuant to Clause 10.1 above, no
      further Options shall be granted but the subsisting rights and obligations
      of existing Option Holders will continue in force as if the Scheme had not
      terminated.

shareiotuinokan.txt

EX-12.1

Exhibit 12.1
- ------------


                CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
              PURSUANT TO RULE 13a-14(a) AND 15d-14(a), AS AMENDED

I, John Fredriksen, certify that:

1.   I have reviewed this annual report on Form 20-F of Frontline Ltd;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the Company as of, and for, the periods presented in this report;

4.   The Company's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f) for the Company and have:

     a)   designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          Company, including its consolidated subsidiaries, is made known to us
          by others within those entities, particularly during the period in
          which this report is being prepared;

     b)   designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   evaluated the effectiveness of the Company's disclosure controls and
          procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   disclosed in this report any change in the Company's internal control
          over financial reporting that occurred during the period covered by
          this report that has materially affected, or is reasonably likely to
          materially affect, the Company's internal control over financial
          reporting.

5.   The Company's other certifying officer and I have disclosed, based on our
     most recent evaluation of internal control over financial reporting, to the
     Company's auditors and the audit committee of the Company's board of
     directors (or persons performing the equivalent function):

     a)   all significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the Company's ability to record,
          process, summarize and report financial information; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the Company's internal
          control over financial reporting.

Date: July 2, 2007

/s/ John Fredriksen
- ---------------------------
John Fredriksen
Principal Executive Officer

EX-12.2

Exhibit 12.2
- ------------

                CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
              PURSUANT TO RULE 13a-14(a) AND 15d-14(a), AS AMENDED

I, Bjorn Sjaastad, certify that:

1.   I have reviewed this annual report on Form 20-F of Frontline Ltd;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the Company as of, and for, the periods presented in this report;

4.   The Company's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f) for the Company and have:

     a)   designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          Company, including its consolidated subsidiaries, is made known to us
          by others within those entities, particularly during the period in
          which this report is being prepared;

     b)   designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   evaluated the effectiveness of the Company's disclosure controls and
          procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   disclosed in this report any change in the Company's internal control
          over financial reporting that occurred during the period covered by
          this report that has materially affected, or is reasonably likely to
          materially affect, the Company's internal control over financial
          reporting.

5.   The Company's other certifying officer and I have disclosed, based on our
     most recent evaluation of internal control over financial reporting, to the
     Company's auditors and the audit committee of the Company's board of
     directors (or persons performing the equivalent function):

     a)   all significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the Company's ability to record,
          process, summarize and report financial information; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the Company's internal
          control over financial reporting.

Date: July 2, 2007

/s/ Bjorn Sjaastad
- ----------------------------
Bjorn Sjaastad
Principal Executive Officer

EX-12.3

Exhibit 12.3
- ------------

                CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
              PURSUANT TO RULE 13a-14(a) AND 15d-14(a), AS AMENDED

I, Inger M. Klemp, certify that:

1.   I have reviewed this annual report on Form 20-F of Frontline Ltd;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the Company as of, and for, the periods presented in this report;

4.   The Company's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f) for the Company and have:

     a)   designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          Company, including its consolidated subsidiaries, is made known to us
          by others within those entities, particularly during the period in
          which this report is being prepared;

     b)   designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   evaluated the effectiveness of the Company's disclosure controls and
          procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   disclosed in this report any change in the Company's internal controls
          over financial reporting that occurred during the period covered by
          this report that has materially affected, or is reasonably likely to
          materially affect, the Company's internal control over financial
          reporting.

5.   The Company's other certifying officer and I have disclosed, based on our
     most recent evaluation of internal control over financial reporting, to the
     Company's auditors and the audit committee of the Company's board of
     directors (or persons performing the equivalent function):

     a)   all significant deficiencies and material weaknesses in the design or
          operation of internal controls over financial reporting which are
          reasonably likely to adversely affect the company's ability to record,
          process, summarize and report financial information; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the Company's internal
          control over financial reporting.

Date: July 2, 2007

/s/ Inger M. Klemp
- ----------------------------
Inger M. Klemp
Principal Financial Officer

EX-13.1

Exhibit 13.1
- ------------


                    PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350

     In connection with this Annual Report of Frontline Ltd (the "Company") on
Form 20-F for the annual period ended December 31, 2006, as filed with the
Securities and Exchange Commission (the "SEC") on or about the date hereof (the
"Report"), I, John Fredriksen, the Principal Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material
     respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and
will be retained by the Company and furnished to the SEC or its staff upon
request.


Date: July 2, 2007

/s/ John Fredriksen
- ----------------------------
John Fredriksen
Principal Executive Officer

EX-13.2

Exhibit 13.2
- ------------

                    PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350

     In connection with this Annual Report of Frontline Ltd (the "Company") on
Form 20-F for the annual period ended December 31, 2006, as filed with the
Securities and Exchange Commission (the "SEC") on or about the date hereof (the
"Report"), I, Bjorn Sjaastad, the Principal Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

A signed original of this written statement has been provided to the Company and
will be retained by the Company and furnished to the SEC or its staff upon
request.

Date:  July 2, 2007

/s/ Bjorn Sjaastad
- ----------------------------
Bjorn Sjaastad
Principal Executive Officer

EX-13.3

Exhibit 13.3
- ------------
                    PRINCIPAL FINANCIAL OFFICER CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350

     In connection with this Annual Report of Frontline Ltd (the "Company") on
Form 20-F for the annual period ended December 31, 2006, as filed with the
Securities and Exchange Commission (the "SEC") on or about the date hereof (the
"Report"), I, Inger M. Klemp, the Principal Financial Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

A signed original of this written statement has been provided to the Company and
will be retained by the Company and furnished to the SEC or its staff upon
request.

Date:  July 2, 2007

/s/ Inger M. Klemp
- ----------------------------
Inger M. Klemp
Principal Financial Officer