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

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year December 31, 2009

ended

OR

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

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 _________________ to _________________

Commission file number 001-16601

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

(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)

Georgina Sousa, Telephone: (1) 441 295 6935, Facsimile: (1) 441 295 3494,
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

1
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.

77,858,502 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  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 

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  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  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  Accelerated filer  Non-accelerated filer 

2
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements
included in this filing:

U.S. GAAP  International Financial Reporting Standards as Other 

issued by the
International Accounting Standards Board 

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement
item the registrant has elected to follow:

Item 17  Item 18 

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 

3
 INDEX TO REPORT ON FORM 20-F

PAGE

PART I
Item 1. Identity of Directors, Senior Management and Advisers 6
Item 2. Offer Statistics and Expected Timetable 6
Item 3. Key Information 6
Item 4. Information on the Company 25
Item 4A. Unresolved Staff Comments 44
Item 5. Operating and Financial Review and Prospects 44
Item 6. Directors, Senior Management and Employees 69
Item 7. Major Shareholders and Related Party Transactions 72
Item 8. Financial Information 74
Item 9. The Offer and Listing 75
Item 10. Additional Information 76
Item 11. Quantitative and Qualitative Disclosures about Market Risk 87
Item 12. Description of Securities other than Equity Securities 87

PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies 88
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 88
Item 15. Controls and Procedures 88
Item 16. Reserved 89
Item 16A. Audit Committee Financial Expert 89
Item 16B. Code of Ethics 89
Item 16C. Principal Accountant Fees and Services 89
Item 16D. Exemptions from the Listing Standards for Audit Committees 90
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 90
Item 16F. Change in Registrant's Certifying Accountant 90
Item 16G. Corporate Governance 90

PART III
Item 17. Financial Statements 92
Item 18. Financial Statements 92
Item 19. Exhibits 93

4
 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, changes in world wide oil production and 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 or Commission.

5
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 are currently classified to carry dry cargo. Unless otherwise indicated,
all references to "USD,""US$" and "$" in this report are U.S. dollars.

A. SELECTED FINANCIAL DATA

The selected statement of operations data of the Company with respect to the fiscal years ended December 31, 2009,
2008 and 2007 and the selected balance sheet data of the Company with respect to the fiscal years ended December
31, 2009 and 2008, respectively, have been derived from the Company's consolidated financial statements included
herein and should be read in conjunction with such statements and the notes thereto. The selected statement of
operations data with respect to the fiscal years ended December 31, 2006 and 2005 and the selected balance sheet
data with respect to the fiscal years ended December 31, 2007, 2006 and 2005 have been derived from consolidated
financial statements of the Company not included herein. The following table should also 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. The Company's accounts are maintained in U.S. dollars.

Fiscal year ended December 31,

2009 2008 2007 2006 2005
(in thousands of $, except ordinary shares, per share data and ratios)
Statement of Operations Data (1):
Total operating revenues 1,133,286 2,104,018 1,299,927 1,558,369 1,495,975
Total operating expenses 896,237 1,395,831 898,904 850,623 713,919
Net operating income 240,110 850,480 519,191 803,401 858,137
Net income from continuing operations
before income taxes and noncontrolling
interest 105,833 701,264 503,991 661,330 761,078
Net income from continuing operations 105,472 700,954 587,138 661,168 762,202
Discontinued operations (2) - - 5,442 13,514 14,096
Net income attributable to Frontline Ltd. 102,701 698,770 570,418 516,000 606,839
Earnings from continuing operations per
ordinary share
- basic $ 1.32 $ 9.15 $ 7.55 $ 6.72 $ 7.92
- diluted $ 1.32 $ 9.14 $ 7.55 $ 6.72 $ 7.92
Net income per ordinary share
- basic $ 1.32 $ 9.15 $ 7.62 $ 6.90 $ 8.11
- diluted $ 1.32 $ 9.14 $ 7.62 $ 6.90 $ 8.11
Cash dividends declared per share $ 0.90 $ 8.25 $ 8.30 $ 7.00 $ 10.10

6
 Fiscal year ended December 31,
2009 2008 2007 2006 2005
(in thousands of $, except ordinary shares and ratios)
Balance Sheet Data (at end of year) (1):
Cash and cash equivalents 82,575 190,819 168,432 197,181 92,782
Newbuildings 413,968 454,227 160,298 166,851 15,927
Vessels and equipment, net 678,694 438,161 208,516 2,446,278 2,584,847
Vessels and equipment under capital lease,
net 1,740,666 2,100,717 2,324,789 626,374 672,608
Investments in unconsolidated subsidiaries
and associated companies 3,923 4,467 5,633 17,825 15,783
Total assets 3,715,218 4,027,728 3,762,091 4,589,937 4,454,817
Short-term debt and current portion of long-
term debt 123,884 293,471 96,811 281,409 228,135
Current portion of obligations under capital
lease 285,753 243,293 179,604 28,857 25,142
Long-term debt 760,698 614,676 376,723 2,181,885 2,101,061
Obligations under capital leases 1,579,708 1,969,919 2,318,794 723,073 706,279
Share capital 194,646 194,646 187,063 187,063 187,063
Total stockholders' equity 741,340 702,217 445,969 668,560 715,166
Ordinary shares outstanding 77,858,502 77,858,502 74,825,169 74,825,169 74,825,169

Weighted average ordinary shares

outstanding 77,858,502 76,352,673 74,825,169 74,825,169 74,825,169

Other Financial Data:

Equity to assets ratio (percentage) (3) 20.0% 17.4% 11.8% 14.6% 16.1%
Debt to equity ratio (4) 3.7 4.4 6.7 4.8 4.3
Price earnings ratio (5) 20.7 3.2 6.3 4.6 4.7
Time charter equivalent revenue (6) 896,843 1,493,912 938,960 1,154,029 1,155,135

Notes:
1. The Company distributed the majority of its remaining shareholding in Ship Finance International Limited
("Ship Finance") in March 2007 and no longer consolidates Ship Finance as of March 31, 2007. A
summary of the major changes to the financial statements is as follows;

a. Vessels leased from Ship Finance, which were previously reported as wholly owned are reported
as vessels held under capital lease.
b. Capital lease obligations with Ship Finance, which were previously eliminated on consolidation
are reported as liabilities with the related interest recorded in the income statement.

7
 c. Debt incurred by Ship Finance, which was previously reported as debt of the Company is no
longer reported.
d. Derivative instruments held by Ship Finance are no longer reported.
e. Noncontrolling interest expense relating to Ship Finance is no longer reported.
f. Profit share expense relating to amounts due to Ship Finance is shown in the income statement.
g. Results from Ship Finance's container ships, jack-up rigs and Panamax vessels are no longer
reported in the Company's consolidated results.

2. The Company disposed of the container vessel and rig operations of Ship Finance in the first quarter of
2007 as a result of the spin off of Ship Finance. These operations have been recorded as discontinued
operations in 2007 and 2006. The results from container vessels have also been recorded in discontinued
operations in 2005. These operations have been recorded as discontinued operations for all applicable years
presented, which are 2007, 2006 and 2005. During the year ended December 31, 2005 the Company
disposed of a portion of its dry-bulk operations, which have been recorded as discontinued operations in
the year ended December 31, 2005.

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

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

5. Price earnings ratio is calculated by dividing the closing year end share price by basic earnings per share.

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

2009 2008 2007 2006 2005

(in thousands of $)
Total operating revenues 1,133,286 2,104,018 1,299,927 1,558,369 1,495,975
Less:
Other income (17,068) (17,918) (8,516) (5,294) (3,877)
Voyage expense (219,375) (592,188) (352,451) (399,046) (336,963)
Time charter equivalent revenue 896,843 1,493,912 938,960 1,154,029 1,155,135

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. 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 U.S. 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
shipping industry for comparing financial performance between companies and to industry averages. Other
companies may calculate TCE using a different method.

8
B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS

We are engaged in the seaborne transportation of crude oil, oil products and dry bulk cargoes. The following
summarizes some of the risks that may materially affect our business, financial condition or results of operations. As
our OBOs are currently fitted to carry dry bulk cargoes, we include risk factors related to dry bulk vessels.

Risks Related to Our Industry

Tankers

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. When the tanker market is depressed 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:

 demand for oil and oil products;

 global and regional economic and political conditions;

 changes in oil production and refining capacity;

 environmental and other regulatory developments;

 the distance oil and oil products are to be moved by sea; and

 changes in seaborne and other transportation patterns.

The factors that influence the supply of tanker capacity include:

 the number of newbuilding deliveries;

 the scrapping rate of older vessels;

 port or canal congestion;

 vessel casualties;

 price of steel;

 potential conversion of vessels to alternative use;

 the number of vessels that are out of service; and

 changes in environmental and other regulations that may effectively cause reductions in the carrying
capacity of vessels or early obsolescence of tonnage.

9
Historically, the tanker markets have been volatile as a result of the many conditions and factors that can affect the
price, supply and demand for tanker capacity. The current global economic crisis may reduce demand for
transportation of oil over longer distances and supply of tankers to carry that oil, which may materially affect our
revenues, profitability and cash flows.

The international tanker industry has experienced volatile charter rates and vessel values and there can be no
assurance that these charter rates and vessel values will return to their previous high levels

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 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 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 further decrease in vessel values and charter
rates. A further decline in vessel values and charter rates could have an 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, West African, North Sea and
Carribean crude oil, 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. In July 2008, oil prices rose to a high of approximately $143 per barrel
before decreasing to approximately $38 per barrel by the end of December 2008 and rising to approximately $75 per
barrel in mid-February 2010.

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:

 increased crude oil production from other areas;

 increased refining capacity in the Arabian Gulf or West Africa;

 increased use of existing and future crude oil pipelines in the Arabian Gulf or West Africa;

 a decision by Arabian Gulf or West African oil-producing nations to increase their crude oil prices or to
further decrease or limit their crude oil production;

 armed conflict in the Arabian Gulf and West Africa and political or other factors; and

 the development and the relative costs of nuclear power, natural gas, coal and other alternative sources of
energy.

An over-supply of tanker capacity may lead to reductions in charter rates, vessel values and profitability

Currently, shipyards are booked to produce a large number of new tankers. If the capacity of new vessels delivered
exceeds the capacity of tankers being scrapped and converted to non-trading tankers, tanker capacity will increase. If
the supply of tanker capacity increases and the demand for tanker capacity does not increase correspondingly,
charter rates could materially decline. A reduction in charter rates and the value of our vessels may have a material
adverse effect on our results of operations, our ability to pay dividends and our compliance with loan covenants.

10
Dry Bulk

Charter hire rates for dry bulk vessels may decrease in the future, which may adversely affect our earnings

The dry bulk shipping industry is cyclical with attendant volatility in charterhire rates and profitability. The degree
of charterhire rate volatility among different types of dry bulk vessels has varied widely, and charterhire rates for dry
bulk vessels have declined significantly from historically high levels. Fluctuations in charter rates result from
changes in the supply and demand for vessel capacity and changes in the supply and demand for the major
commodities carried by water internationally. Because the factors affecting the supply and demand for vessels are
outside of our control and are unpredictable, the nature, timing, direction and degree of changes in industry
conditions are also unpredictable.

Factors that influence demand for vessel capacity include:

 supply and demand for energy resources, commodities, semi-finished and finished consumer and industrial
products;

 changes in the exploration or production of energy resources, commodities, semi-finished and finished
consumer and industrial products;

 the location of regional and global exploration, production and manufacturing facilities;

 the location of consuming regions for energy resources, commodities, semi-finished and finished consumer
and industrial products;

 the globalization of production and manufacturing;

 global and regional economic and political conditions, including armed conflicts and terrorist activities;
embargoes and strikes;

 developments in international trade;

 changes in seaborne and other transportation patterns, including the distance cargo is transported by sea;

 environmental and other regulatory developments;

 currency exchange rates; and

 weather.

Factors that influence the supply of vessel capacity include:

 number of newbuilding deliveries;

 scrapping of older vessels;

 vessel casualties; and

 number of vessels that are out of service.

Demand for our dry bulk vessels is dependent upon economic growth in the world's economies, seasonal and
regional changes in demand, changes in the capacity of the global dry bulk fleet and the sources and supply of dry
bulk cargo transported by sea. Given the large number of new dry bulk carriers currently on order with shipyards,
the capacity of the global dry bulk carrier fleet seems likely to increase and economic growth may not resume in
areas that have experienced a recession or continue in other areas. Adverse economic, political, social or other
developments could have a material adverse effect on our business and operating results.

11
A continued downturn in the dry bulk carrier charter market may have an adverse effect on our earnings and our
ability to comply with our loan covenants

The Baltic Exchange Capesize Index, or CS4TC, a daily equally weighted average of the four main Capesize routes
declined from a high of approximately $222,800 per day in May 2008 to a low of approximately $2,400 per day in
November 2008, which represents a decline of 99%. From November 2008 it rose to approximately $30,860 per day
in February 2010, which emphasizes the volatility of this market. The general decline in the dry bulk carrier charter
market has resulted in lower charter rates for vessels exposed to the spot market and time charters linked to the
CS4TC. Our ability to obtain renewal charters upon the expiration of our current charters or charters for new
vessels that we may acquire in the future will be directly impacted by prevailing charter rates.

Dry bulk carrier values have also declined both as a result of a slowdown in the availability of global credit and the
significant deterioration in charter rates. Charter rates and vessel values have been affected in part by the lack of
availability of credit to finance both vessel purchases and purchases of commodities carried by sea, resulting in a
decline in cargo shipments, and the excess supply of iron ore in China, which resulted in falling iron ore prices and
increased stockpiles in Chinese ports. There can be no assurance as to how long charter rates and vessel values will
remain at their currently low levels or whether the recent improvement will continue. Charter rates may remain at
low levels for some time which will adversely affect our revenue and profitability and could affect compliance with
the covenants in our loan agreements.

In addition, because the market value of our vessels may fluctuate significantly, we may incur losses when we sell
vessels, which may adversely affect our earnings. If we sell vessels at a time when vessel prices have fallen and
before we have recorded an impairment adjustment to our financial statements, the sale may be at less than the
vessel's carrying amount in our financial statements, resulting in a loss and a reduction in earnings.

An over-supply of dry bulk carrier capacity may prolong or further depress the current low charter rates and, in
turn, adversely affect our profitability

The market supply of dry bulk carriers has been increasing, and the number of dry bulk carriers on order is near
historic highs. Dry bulk newbuildings were delivered in significant numbers starting at the beginning of 2006 and
continue to be delivered in significant numbers. At the end of February 2010, Capesize newbuilding orders had been
placed for an aggregate of more than 75% of the current global Capesize fleet, with deliveries expected during the
next 36 months. According to market sources, approximately 60% is contracted at established yards, while the other
40% is contracted at yards that are less established and whose viability may be uncertain. Due to lack of financing
many analysts expect significant cancellations and/ or slippage of newbuilding orders. While vessel supply will
continue to be affected by the delivery of new vessels and the removal of vessels from the global fleet, either
through scrapping or accidental losses, an over-supply of dry bulk carrier capacity, particularly in conjunction with
the currently low level of demand, could exacerbate the recent decrease in charter rates or prolong the period during
which low charter rates prevail. If the current low charter rate environment persists, or a further reduction occurs,
during a period when the current charters for our dry bulk carriers expire or are terminated, we may only be able to
recharter those vessels at reduced rates or we may not be able to charter our vessels at all.

Shipping Generally

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:

 a marine disaster;

 piracy;

12
  terrorism;

 environmental accidents;

 cargo and property losses or damage; and

business interruptions caused by mechanical failure, human error, war, terrorism, piracy, political action in various
countries, labor 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.

World events could affect our results of operations and financial condition

Terrorist attacks in New York on September 11, 2001, in London on July 7, 2005 and in Mumbai on November 26,
2008 and the continuing response of the United States and others to these attacks, as well as the threat of future
terrorist attacks in the United States or elsewhere, continues to cause uncertainty in the world's financial markets and
may affect our business, operating results and financial condition. The continuing presence of United States and
other armed forces in Iraq and Afghanistan may lead to additional acts of terrorism and armed conflict around the
world, which may contribute to further economic instability in the global financial markets. These uncertainties
could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. In the past,
political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt
international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected
vessels trading in regions such as the South China Sea and the Gulf of Aden off the coast of Somalia. Any of these
occurrences could have a material adverse impact on our operating results, revenues and costs.

Terrorist attacks on vessels, such as the October 2002 attack on the M.V. Limburg, a very large crude carrier not
related to us, may in the future also negatively affect our operations and financial condition and directly impact our
vessels or our customers. Future terrorist attacks could result in increased volatility and turmoil of the financial
markets in the United States and globally. Any of these occurrences could have a material adverse impact on our
revenues and costs.

Acts of piracy on ocean-going vessels have recently increased in frequency, which could adversely affect our
business

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China
Sea and in the Gulf of Aden off the coast of Somalia. Throughout 2008 and 2009, the frequency of piracy incidents
against commercial shipping vessels increased significantly, particularly in the Gulf of Aden off the coast of
Somalia. For example, in November 2008, the M/V Sirius Star, a tanker vessel not affiliated with us, was captured
by pirates in the Indian Ocean while carrying crude oil estimated to be worth $100 million. If these pirate attacks
result in regions in which our vessels are deployed being characterized as "war risk" zones by insurers, as the Gulf
of Aden temporarily was in May 2008, premiums payable for such coverage could increase significantly and such
insurance coverage may be more difficult to obtain. In addition, crew costs, including due to employing onboard
security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these
incidents, which could have a material adverse effect on us. In addition, any of these events may result in loss of
revenues, increased costs and decreased cash flows to our customers, which could impair their ability to make
payments to us under our charters.

Safety, environmental and other governmental 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

13
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 United States Oil
Pollution Act of 1990, or OPA, the United States Clean Air Act and United States Clean Water Act, the United
States Marine Transportation Security Act of 2002, the International Convention on Civil Liability for Oil Pollution
Damage of 1969, as amended, or CLC, the International Convention for the Prevention of Pollution from Ships, of
1975, the International Convention for the Safety of Life at Sea of 1974, or SOLAS, the International Convention on
Load Lines of 1966 or LL Convention, and implementing regulations adopted by the International Maritime
Organization, or the IMO (the United Nations agency for maritime safety and the prevention of pollution by
vessels), the European Union, or the EU, and other international, national and local regulatory bodies.

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 such as ourselves 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. For example, various jurisdictions, including the United States, are
considering or have enacted legislation imposing more stringent requirements on air emissions and ballast water
discharges from vessels.

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 CLC, 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.

OPA also provides for the scheduled phase-out of all non-double-hull tankers that carry oil in bulk in United States
waters. The IMO and the EU, have adopted separate phase-out schedules applicable to single-hull tankers operating
in international and EU waters, respectively. These regulations could reduce the demand for single-hull tankers,
force the remaining single-hull vessels into less desirable trading routes, increase the number of vessels trading in
routes open to single-hull vessels and could increase demands for further restrictions in the remaining jurisdictions
that permit the operation of these vessels. As a result, single-hull vessels are likely to be chartered less frequently
and at lower rates.

14
In recent years, the IMO and EU have both accelerated their existing non-double-hull phase-out schedules in
response to highly publicized oil spills and other shipping incidents involving companies unrelated to us. Future
accidents may be expected in the industry, and such accidents or other events may be expected to result in the
adoption of even stricter laws and regulations, which could limit our operations or our ability to do business and
which could have a material adverse effect on our business and financial results.

Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a
maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions a claimant may seek to
obtain security for its claim 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 large sums of money to have the arrest or
attachment 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 attempt to assert "sister ship" liability
against one vessel in our fleet for claims relating to another of our vessels.

Governments could requisition our vessels during a period of war or emergency resulting in a loss of earnings

A government could requisition for title or seize one of more of our vessels. Requisition for title occurs when a
government takes control of a vessel and becomes her owner. Also, a government could requisition one or more of
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. This amount could be materially less than the charterhire that would have been
payable otherwise. In addition, we would bear all risk of loss or damage to a vessel under requisition for hire.
Government requisition of one or more of our vessels would negatively impact our revenues and therefore impact
our ability to service our debt.

Our vessels may call on ports located in countries that are subject to restrictions imposed by the United States
government, which could adversely affect investor perceptions

From time to time, vessels in our fleet may call on ports located in countries subject to sanctions and embargoes
imposed by the United States government and countries identified by the United States government as state sponsors
of terrorism. Although these sanctions and embargoes do not prevent our vessels from making calls to ports in these
countries, potential investors could view such port calls negatively, which could adversely affect our reputation and
the market for our shares. Investor perception of the value of our shares may be adversely affected by the
consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding
countries.

Disruptions in world financial markets and the resulting governmental action in the United States and in other
parts of the world could have a material adverse impact on our results of operations, financial condition and cash
flows, and could cause the market price of our ordinary shares to decline

Over the recent period, global financial markets have experienced extraordinary disruption and volatility following
adverse changes in the global credit markets. The credit markets in the United States have experienced significant
contraction, deleveraging and reduced liquidity, and governments around the world have taken highly significant
measures in response to such events, and may implement other significant responses in the future.

15
Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other
requirements. The Commission, other regulators, self-regulatory organizations and exchanges have enacted
temporary emergency regulations and may take other extraordinary actions in the event of market emergencies and
may effect permanent changes in law or interpretations of existing laws. Recently, a number of financial institutions
have experienced serious financial difficulties and, in some cases, have entered into bankruptcy proceedings or are
in regulatory enforcement actions. These difficulties have resulted, in part, from declining markets for assets held by
such institutions, particularly the reduction in the value of their mortgage and asset-backed securities portfolios.
These difficulties have been compounded by a general decline in the willingness by banks and other financial
institutions to extend credit. In addition, these difficulties may adversely affect the financial institutions that provide
our credit facilities and may impair their ability to continue to perform under their financing obligations to us, which
could have an impact on our ability to fund current and future obligations, including our ability to take delivery of
our newbuildings.

We face risks attendant to changes in economic environments, changes in interest rates and instability in securities
markets around the world, among other factors. Major market disruptions and the current adverse changes in market
conditions and regulatory climate in the United States and worldwide may adversely affect our business or impair
our ability to borrow amounts under our credit facilities or any future financial arrangements. We cannot predict
how long the current market conditions will last. However, these recent and developing economic and governmental
factors may have a material adverse effect on our results of operations, financial condition or cash flows and could
cause the price of our ordinary shares to decline significantly or impair our ability to make distributions to our
shareholders.

Risks Related to Our Business

A drop in spot charter rates may provide an incentive for some charterers to default on their charters

When we enter into a time charter, charter rates under that charter are fixed for the term of the charter. If the spot
charter rates or short-term time charter rates in the tanker or dry bulk shipping industry, as applicable, become
significantly lower than the time charter equivalent rates that some of our charterers are obligated to pay us under
our existing charters, the charterers may have incentive to default under that charter or attempt to renegotiate the
charter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels at lower
charter rates, which would affect our ability to comply with our loan covenants and operate our vessels profitably. If
we are not able to comply with our loan covenants and our lenders choose to accelerate our indebtedness and
foreclose their liens, we could be required to sell vessels in our fleet and our ability to continue to conduct our
business would be impaired.

The operation of dry bulk carriers and tankers each involve certain unique operational risks

The operation of dry bulk carriers has certain unique operational risks. With a dry bulk carrier, the cargo itself and
its interaction with the ship can be a risk factor. By their nature, dry bulk cargoes are often heavy, dense, easily
shifted, and react badly to water exposure. In addition, dry bulk carriers are often subjected to battering treatment
during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold), and small
bulldozers. This treatment may cause damage to the dry bulk carrier. Dry bulk carriers damaged due to treatment
during unloading procedures may be more susceptible to a breach to the sea. Hull breaches in dry bulk carriers may
lead to the flooding of their holds. If a dry bulk carrier suffers flooding in its forward holds, the bulk cargo may
become so dense and waterlogged that its pressure may buckle the dry bulk carrier's bulkheads leading to the loss of
the dry bulk carrier.

The operation of tankers has unique operational risks associated with the transportation of oil. An oil spill may
cause significant environmental damage, and a catastrophic spill could exceed the insurance coverage available.
Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited
by a terrorist attack, collision, or other cause, due to the high flammability and high volume of the oil transported in
tankers.

16
If we are unable to adequately maintain or safeguard our vessels we may be unable to prevent these events. Any of
these circumstances or events could negatively impact our business, financial condition, results of operations. In
addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

Purchasing and operating previously owned, or secondhand, vessels may result in increased drydocking costs and
vessels off-hire, which could adversely affect our earnings

Even following a physical inspection of secondhand vessels prior to purchase, we do not have the same knowledge
about their condition and cost of any required (or anticipated) repairs that we would have had if these vessels had
been built for and operated exclusively by us. Accordingly, we may not discover defects or other problems with
such vessels prior to purchase. Defects or problems discovered after purchase may be expensive to repair, and if not
detected, may result in accidents or other incidents for which we may become liable to third parties. We may not
receive the benefit of warranties on secondhand vessels. Increased drydocking costs or vessels off-hire may
adversely affect our earnings.

The volatility in both dry bulk and tanker charter rates, and vessel values, may affect our ability to comply with
various covenants in our loan agreements.

Our loan agreements for our borrowings, which are secured by liens on our vessels, contain various financial
covenants. Among those covenants are requirements that relate to our financial position, operating performance and
liquidity. For example, there are financial covenants that require us to maintain (i) a minimum value adjusted equity
that is based, in part, upon the market value of the vessels securing the loans, (ii) minimum levels of free cash, and
(iii) a positive working capital. The market value of dry bulk and tanker vessels is sensitive, among other things, to
changes in the dry bulk and tanker charter markets, respectively, with vessel values deteriorating in times when dry
bulk and tanker charter rates, as applicable, are falling and improving when charter rates are anticipated to rise.
Such conditions may result in our not being in compliance with these loan covenants. In such a situation, unless our
lenders were willing to provide waivers of covenant compliance or modifications to our covenants, or would be
willing to refinance our indebtedness, we may have to sell vessels in our fleet and/or seek to raise additional capital
in the equity markets in order to comply with our loan covenants. Furthermore, if the value of our vessels
deteriorates significantly, we may have to record an impairment adjustment in our financial statements, which would
adversely affect our financial results and further hinder our ability to raise capital.

If we are not in compliance with our covenants and are not able to obtain covenant waivers or modifications, our
lenders could require us to post additional collateral, enhance our equity and liquidity, increase our interest
payments or pay down our indebtedness to a level where we are in compliance with our loan covenants, sell vessels
in our fleet, or they could accelerate our indebtedness, which would impair our ability to continue to conduct our
business. In such an event, our auditors may give either an unqualified opinion with an explanatory paragraph
relating to the disclosure in the notes to our financial statements as to the substantial doubt of our ability to continue
as a going concern, or a qualified, adverse or disclaimer of opinion, which could lead to additional defaults under
our loan agreements. If our indebtedness is accelerated, we might not be able to refinance our debt or obtain
additional financing and could lose our vessels if our lenders foreclose their liens. In addition, if we find it
necessary to sell our vessels at a time when vessel prices are low, we will recognize losses and a reduction in our
earnings, which could affect our ability to raise additional capital necessary for us to comply with our loan
agreements.

17
Our ability to obtain additional debt financing may be dependent on the performance of our then existing
charters and the creditworthiness of our charterers

The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability
to obtain the additional capital resources required to purchase additional vessels or may significantly increase our
costs of obtaining such capital. Our inability to obtain additional financing at anticipated costs or at all may
materially affect our results of operation and our ability to implement our business strategy.

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.

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:

 general economic and market conditions affecting the shipping industry;

 competition from other shipping companies;

 types and sizes of vessels;

 other modes of transportation;

 cost of newbuildings;

 shipyard capacity;

 governmental or other regulations;

 age of vessels;

 prevailing level of charter rates; and

 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 and this will also have an adverse effect on
some of the financial covenants in our loan agreements.

We may be unable to successfully compete with other vessel operators for charters, which could adversely affect
our results of operations and financial position

The operation of tankers and dry bulk vessels and transportation of crude and petroleum products and dry bulk
cargoes is extremely competitive. Through our operating subsidiaries we compete with other vessel owners
(including major oil companies as well as independent companies), and, to a lesser extent, owners of other size
vessels. The tanker and dry bulk markets are highly fragmented. It is possible that we could not obtain suitable
employment for our vessels, which could adversely affect our results of operations and financial position.

18
Our time and bareboat charters may limit our ability to benefit from any improvement in charter rates, and at the
same time, our revenues may be adversely affected if we do not successfully employ our vessels on the expiration
of our charters

Currently, some of our vessels are contractually committed to time and bareboat charters. Although our time and
bareboat 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.
By the same token, we cannot assure you that we will be able to successfully employ our vessels in the future or
renew our existing charters at rates sufficient to allow us to operate our business profitably or meet our obligations.
A decline in charter or spot rates or a failure to successfully charter our vessels could have a material adverse effect
on our business, financial condition, results of operation and ability to pay dividends.

Delays or defaults by the shipyards in the construction of our newbuildings could increase our expenses and
diminish our net income and cash flows

We currently have newbuilding contracts for the construction of a total of six VLCC and two Suezmax vessels with
three shipyards in China: Shanghai Waigaoqiao Shipbuilding Company Ltd, or Waigaoqiao, Jiangsu Rongsheng
Heavy Industries Group Co. Ltd., or Rongsheng, and Zhoushan Jinhaiwan Shipyard Co. Ltd, or Jinhaiwan. These
projects are subject to the risk of delay or defaults by the shipyards caused by, among other things, unforeseen
quality or engineering problems, work stoppages, weather interference, unanticipated cost increases, delays in
receipt of necessary equipment, and inability to obtain the requisite permits or approvals. In accordance with
industry practice, in the event the shipyards are unable or unwilling to deliver the vessels, we may not have
substantial remedies. Failure to construct or deliver the ships by the shipyards or any significant delays could
increase our expenses and diminish our net income and cash flows.

We cannot assure you that we will be able to refinance indebtedness incurred under our current credit facilities

We cannot assure you that we will be able to refinance our indebtedness on terms that are acceptable to us or at all.
If we are not able to refinance our indebtedness, we will have to dedicate a greater portion of our cash flow from
operations to pay the principal and interest of this indebtedness. We cannot assure you that we will be able to
generate cash flow in amounts that are sufficient for these purposes. If we are not able to satisfy these obligations,
we may have to undertake alternative financing plans or sell our assets. In addition, debt service payments under our
credit facilities may limit funds otherwise available for working capital, capital expenditures, payment of dividends
and other purposes. If we are unable to meet our debt obligations, or if we otherwise default under our credit
facilities, our lenders could declare the debt, together with accrued interest and fees, to be immediately due and
payable and foreclose on our fleet, which could result in the acceleration of other indebtedness that we may have at
such time and the commencement of similar foreclosure proceedings by other lenders.

As we expand our fleet, we may not be able to recruit suitable employees and crew for our vessels which may limit
our growth and cause our financial performance to suffer

As we expand our fleet, we will need to recruit suitable crew, shoreside, administrative and management personnel.
We may not be able to continue to hire suitable employees as we expand our fleet of vessels. If we are unable to
recruit suitable employees and crews, we may not be able to provide our services to customers, our growth may be
limited and our financial performance may suffer.

19
We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties
to meet their obligations could cause us to suffer losses or otherwise adversely affect our business

We have entered into various contracts, including charterparties with our customers, newbuilding contracts with
shipyards and our credit facilities. These agreements subject us to counterparty risks. The ability of each of our
counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond
our control and may include, among other things, general economic conditions, the condition of the maritime and
offshore industries, the overall financial condition of the counterparty, charter rates received for specific types of
vessels, and various expenses. Should a counterparty fail to honor its obligations under agreements with us, we
could sustain significant losses which could have a material adverse effect on our business, financial condition,
results of operations and cash flows.

Declines in charter rates and other market deterioration could cause us to incur impairment charges

The carrying values of our vessels are reviewed whenever events or changes in circumstances indicate that the
carrying amount of the vessel may no longer be recoverable. We assess recoverability of the carrying value by
estimating the future net cash flows expected to result from the vessel, including eventual disposal. If the future net
undiscounted cash flows and the estimated fair market value of the vessel are less than the carrying value an
impairment loss is recorded equal to the difference between the vessel's carrying value and fair value. Any
impairment charges incurred as a result of declines in charter rates and other market deterioration could negatively
affect our business, financial condition, operating results or the trading price of our Ordinary Shares.

Fuel or bunker prices, may adversely affect our profits

For vessels on voyage charters, fuel oil, or bunkers, is a significant, if not the largest, expense. Changes in the price
of fuel may adversely affect our profitability to the extent we have vessels on voyage charters. 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. 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.

Operational risks and damage to our vessels could adversely impact our performance

If our vessels suffer damage due to inherent operational risks, we may experience unexpected drydocking costs and
delays or total loss of our vessels, which may adversely affect our revenues and business and financial condition.

Our vessels and their cargoes will be at risk of being damaged or lost because of events such as marine disasters, bad
weather, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human
error, war, terrorism, piracy and other circumstances or events. These hazards may result in death or injury to
persons, loss of revenues or property, environmental damage, higher insurance rates, damage to our customer
relationships, delay or rerouting.

In addition, the operation of tankers has unique operational risks associated with the transportation of oil. An oil
spill may cause significant environmental damage, and the costs associated with a catastrophic spill could exceed the
insurance coverage available to us. Compared to other types of vessels, tankers are exposed to a higher risk of
damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability
and high volume of the oil transported in tankers.

20
If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are
unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover in
full. The loss of earnings while these vessels are being repaired and repositioned, as well as the actual cost of these
repairs, may adversely affect our business and financial condition. 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 our vessels may be forced to travel to a drydocking facility that is not conveniently
located to our vessels' positions. The loss of earnings while these vessels are forced to wait for space or to travel to
more distant drydocking facilities may adversely affect our business and financial condition. Further, the total loss
of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator. If we are unable to
adequately maintain or safeguard our vessels, we may be unable to prevent any such damage, costs or loss which
could negatively impact our business, financial condition, results of operations and ability to pay dividends.

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.

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 an adverse effect on our business, financial condition and results of operations.

Risks Related to Our Company

Incurrence of expenses or liabilities may reduce or eliminate distributions

Our policy is to make distributions to shareholders based on earnings and cash flow, and our dividends have
fluctuated based on such factors. The amount and timing of dividends will depend on our earnings, market
prospects, capital expenditure program, investment opportunities and other factors. However, we could incur other
expenses or contingent liabilities that would reduce or eliminate the cash available for distribution by us as
dividends. In addition, the timing and amount of dividends, if any, is at the discretion of our Board of Directors. We
cannot assure you that we will pay dividends.

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

Our existing and future 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.

21
We may not be able to finance our future capital commitments

We cannot guarantee that we will be able to obtain additional financing at all or on terms acceptable to us. If
adequate funds are not available, we may have to reduce expenditures for investments in new and existing projects,
which could hinder our growth and prevent us from realizing potential revenues from prior investments which will
have a negative impact on our cash flows and results of operations.

If the volatility in LIBOR resumes, it could affect our profitability, earnings and cash flow

The London Interbank Offered Rate, or LIBOR, has shown high volatility in 2008 and 2009, with the spread
between LIBOR and the prime lending rate widening significantly at times. These conditions are the result of the
recent disruptions in the international credit markets. Because the interest rates borne by our outstanding
indebtedness fluctuate with changes in LIBOR, if this volatility were to continue, it would affect the amount of
interest payable on our debt, which in turn, could have an adverse effect on our profitability, earnings and cash flow.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement at the end of a vessel's
useful life our revenue will decline, which would adversely affect our business, results of operations, financial
condition and ability to pay dividends

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, we will be unable to
replace the vessels in our fleet upon the expiration of their remaining useful lives. Our cash flows and income are
dependent on the revenues earned by the chartering of our vessels. If we are unable to replace the vessels in our fleet
upon the expiration of their useful lives, our business, results of operations, financial condition and ability to pay
dividends would be adversely affected. Any funds set aside for vessel replacement will not be available for
dividends.

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, 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, for any extended period of time could have an adverse
effect on our business and results of operations.

Our new ship management company and crewing company may not be successful in hiring employees and may
expose us to additional liabilities, which could adversely affect our results of operations and financial position

Ship management and crewing are undertakings in competitive environments. It is possible that we could not recruit
suitable employees for these companies. Although the companies are intended to complement external entities to
which we currently outsource technical management of our vessels, a failure on the new companies' part to
successfully staff their operations could adversely affect our results of operations. These companies also expose us
to additional liabilities. Claims against the companies could result in expensive litigation. This could also have an
adverse effect on our financial position.

22
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.

Because we are a foreign corporation, you may not have the same rights that a shareholder in a United States
corporation may have

We are a Bermuda company. 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 shareholders. 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.

United States tax authorities could treat the Company as a "passive foreign investment company," which could
have adverse United States federal income tax consequences to United States shareholders

A foreign corporation will be treated as a "passive foreign investment company," or PFIC, for United States federal
income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of
"passive income" or (2) at least 50% of the average value of the corporation's assets produce or are held for the
production of those types of "passive income." For purposes of these tests, "passive income" includes dividends,
interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and
royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For
purposes of these tests, income derived from the performance of services does not constitute "passive income."
United States shareholders of a PFIC are subject to a disadvantageous United States federal income tax regime with
respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they
derive from the sale or other disposition of their shares in the PFIC.

23
Based on our current and proposed method of operation, we do not believe that we are, have been or will be a PFIC
with respect to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to
derive from our time chartering activities as services income, rather than rental income. Accordingly, we believe
that our income from our time chartering activities does not constitute "passive income," and the assets that we own
and operate in connection with the production of that income do not constitute assets that produce, or are held for the
production of, "passive income."

Although there is no direct legal authority under the PFIC rules addressing our method of operation there is
substantial legal authority supporting our position consisting of case law and United States Internal Revenue
Service, or the IRS, pronouncements concerning the characterization of income derived from time charters and
voyage charters as services income for other tax purposes. However, it should be noted that there is also authority
which characterizes time charter income as rental income rather than services income for other tax purposes.
Accordingly, no assurance can be given that the IRS or a court of law will accept our position, and there is a risk that
the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would
not constitute a PFIC for any future taxable year if there were to be changes in the nature and extent of our
operations.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders will face
adverse United States federal income tax consequences. Under the PFIC rules, unless those shareholders make an
election available under the United States Internal Revenue Code of 1986, as amended, or the Code (which election
could itself have adverse consequences for such shareholders, as discussed below under "Taxation"), such
shareholders would be liable to pay United States federal income tax at the then prevailing income tax rates on
ordinary income plus interest upon excess distributions and upon any gain from the disposition of our Ordinary
Shares, as if the excess distribution or gain had been recognized ratably over the shareholder's holding period of our
Ordinary Shares. See "Taxation" for a more comprehensive discussion of the United States federal income tax
consequences to United States shareholders if we are treated as a PFIC.

We may have to pay tax on United States source income, which would reduce our earnings

Under 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, may be subject to a 4% United States federal income tax without allowance for deduction, unless
that corporation qualifies for exemption from tax under Section 883 of the Code and the applicable Treasury
Regulations promulgated thereunder.

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 shipping income. For example, we would no longer
qualify for exemption under Section 883 of the Code for a particular taxable year if shareholders with a five percent
or greater interest in the our Ordinary Shares owned, in the aggregate, 50% or more of our outstanding Ordinary
Shares for more than half the days during the taxable year. Due to the factual nature of the issues involved, there
can be no assurances on our tax-exempt status or that of any of our subsidiaries.

If we or our subsidiaries are not entitled to exemption under Section 883 of the Code for any taxable year, we, or our
subsidiaries, could be subject for those years to an effective 42% United States federal income tax on gross shipping
income derived during such year that is attributable to the transport of cargoes to or from the United States. The
imposition of this tax would have a negative effect on our business and would result in decreased earnings available
for distribution to our shareholders.

24
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, or 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, or 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%.

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 judgment 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 ordinary shares 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. If we fail to
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.

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.

25
We are engaged primarily in the ownership and operation of oil tankers and oil/bulk/ore, or OBO carriers, which are
currently configured to carry dry cargo. We operate oil 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, the United Kingdom 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, or Old Frontline. In September 1997, Old
Frontline initiated an amalgamation with London & Overseas Freighters Limited, or 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 New York Stock Exchange on
August 6, 2001.

Vessel Acquisitions, Disposals and Other Significant Transactions

We entered into the following acquisitions and disposals in 2007, 2008 and 2009:

Newbuilding and Option Contracts

As of December 31, 2006, we had eight contracts for the construction of four VLCC newbuildings at Waigaoqiao
and four Suezmax newbuildings at Rongsheng. We also had options for the construction of four Suezmax vessels at
Rongsheng. In March and April 2007, we exercised our options with Rongsheng for four Suezmax newbuildings. As
of December 31, 2007, we had contracts for the construction of four VLCC newbuildings and eight Suezmax
newbuildings.

In April 2008, we entered into a contract with Jinhaiwan for the delivery of four VLCC newbuildings. In April 2008,
we also secured fixed price options, which were exercised in May 2008, for two similar VLCC newbuildings. As of
December 31, 2008, we had contracts for the construction of ten VLCC newbuildings and eight Suezmax
newbuildings.

Two of the VLCCs, Front Kathrine and Front Queen, were delivered to us on January 8, 2009 and May 18, 2009,
respectively. In the second quarter of 2009, we reached agreements with two shipyards to cancel two VLCC and
four Suezmax newbuilding contracts and agreed that the instalments already paid on the cancelled newbuildings be
applied to and set off against future payments in the remaining newbuildings. In the third quarter of 2009, we
reached agreement with a shipyard whereby the financial exposure of $252 million on two VLCC newbuildings can
be limited to the $54 million already paid. At December 31, 2009, we had newbuilding contracts for four Suezmaxes
and six VLCCs. Two of the Suezmax newbuildings, Northia and Naticina, were delivered to us on January 5, 2010
and March 9, 2010, respectively.

As of December 31, 2009, installments of $364 million have been paid on the newbuildings. The remaining
installments to be paid as of December 31, 2009 for the newbuildings amounted to $428 million, with expected
payments of approximately $338 million and $90 million in 2010 and 2011, respectively. Outstanding installments
of $428 million were reduced to $344 million following the delivery of Northia and Naticina in January and March
2010, respectively and payments made in 2010 up to March 29. These numbers exclude the payments on the two
VLCCs that have a financial exposure that can be limited to the $54 million already paid-in installments.

26
Acquisitions and Disposals

Consistent with our strategy to reduce our exposure to chartering single hull vessels, we have entered into a number
of transactions to reduce the number of single hull vessels in our fleet;

 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, which was eliminated on consolidation, on termination of the charter. The vessel was
delivered to her new owner in March 2007.

 In March 2007, the single hull VLCC Front Vanadis was sold and delivered to an unrelated third party in
May 2007. Upon delivery, our long-term charterparty contract with Ship Finance was terminated early, and
Frontline received a compensation payment in the amount of $13.2 million.

 In August 2007, we sold the single hull Suezmax tanker Front Horizon to a subsidiary of Farahead
Holdings Limited, a company subject to significant influence or indirect control of our Chairman, John
Fredriksen for net proceeds of $28.0 million resulting in a net gain of $6.2 million.

 In December 2007, we agreed with Ship Finance to terminate the long term charter parties between the
companies for the double sided, single bottom Suezmax vessels Front Birch and Front Maple. Ship Finance
simultaneously sold the vessels. Delivery of the Front Birch and Front Maple took place in December 2007
and January 2008, respectively. We received compensation payments of approximately $32.8 million for
the early termination of the current charter parties, which was recognized at the time of delivery to the new
owners.

 Additionally, in March 2008, we agreed with Ship Finance to terminate the long term charter party
between the companies for the single hull VLCC Front Sabang. Ship Finance simultaneously sold the
vessel. We received a compensation payment of approximately $25 million for the early termination of the
current charterparty, which was recognized in the second quarter of 2008 at the time of delivery to the new
owners.

 In June 2008, we acquired en bloc five secondhand double hull Suezmax tankers built between 1992 and
1996 from Top Ships Inc. for an aggregate purchase price of $240 million. We took delivery of these
vessels between June 2008 and September 2008 and took over existing time charters on three of the
vessels. We allocated $247.3 million and a negative value of $7.3 million to the vessels and time charters,
respectively.

 In July 2009, we agreed with Ship Finance to terminate the long term charterparty for the single hull
VLCC Front Duchess and received a compensation payment of approximately $2.4 million in October
2009.

 In March 2010, we agreed with Ship Finance to terminate the long term charter party for the single hull
VLCC Golden River. The termination of the charter is expected to take place in April 2010 and Ship
Finance will make a compensation payment to us of approximately $2.9 million for the early termination
of the charter party.

 In March 2010, we agreed to sell the single hull Suezmax Front Voyager with expected delivery to the
buyer in April 2010.

27
Charters and Redeliveries

In September 2008, we chartered out the Suezmax OBO carriers Front Guider and Front Viewer for a period of five
years with commencement of charter early December 2008 and mid April 2009, respectively.

In November 2008, we chartered out the VLCC Front Energy for a three year period with delivery mid November
2008 and the VLCC Front Champion for a period of one year with commencement of charter end November 2008.

In early December 2008, we redelivered Cosglory Lake after a total length of the charterparty of approximately 3.5
years.

In December 2008, we entered into an agreement with Teekay Corporation to commercially combine their Suezmax
tankers within the Gemini Pool, the world's largest Suezmax tanker pool. Our vessels entered the pool between
January 8 and February 12, 2009.

In December 2008, we chartered out the Suezmax tanker Front Brabant for a three year timecharter with
commencement in January 2009.

In January 2009, we entered into an agreement with Shell to charter out the two double hull Suezmax tankers
Genmar Phoenix and Genmar Harriet G. on time charter for the remainder of their existing charters in.

In April 2009, we entered into an agreement with the charterer of Front Lady and Front Highness to amend the time
charter agreements to bareboat agreements and extend the contracts for one additional year from the single hull
phase out date in 2010 to around April 2011 and August 2011, respectively. The charterers also assumed the
drydocking for Front Lady. The vessels will be operated as floating storage units (FSU) and have ceased to trade as
regular tankers. The vessels have been renamed "Ticen Ocean" and "Ticen Sun".

In early November and December 2009, we redelivered four of the five Suezmax tankers chartered in from Eiger.
We redelivered the final vessel in February 2010.

In November 2009, we did not exercise the purchase options for Front Chief, Front Commander and Front Crown.
We have agreed to charter in the three vessels on one year time charters at $29,000 per day.

In November 2009, we entered into an agreement to time charter out the OBO carrier Front Striver for a period of at
least five months at a time charter rate of $40,000 per day gross.

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.

28
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, or Board, 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. As a result of this spin off, we currently hold 73,383 shares in Ship Finance, which
represents 0.01% of Ship Finance's total outstanding shares and as of March 31, 2007, we no longer consolidate
Ship Finance and its subsidiaries in our financial statements.

Establishment and Spin-Off of Sealift Ltd

In January 2007, we established a separate entity named Sealift Ltd, or Sealift, to develop our heavy lift business.
Sealift completed a private placement in the amount of $180.0 million and its shares were listed on the Norwegian
over-the-counter (OTC) market in January 2007. We invested $60.0 million in the company and following the initial
private placement in January we became a 33.3% shareholder. Sealift acquired four single-hull Suezmax vessels
from us, which we were obligated to convert to heavy lift vessels for $100.0 million each. Sealift also acquired two
Suezmax vessels from us for $38.0 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 $476.0
million, of which $396.0 million was received in cash and $80.0 million in an interest free seller's credit. $40.0
million of the interest free seller's credit was payable on the delivery of each of the final two converted vessels. Five
of the vessels sold to Sealift were first acquired by Frontline from Ship Finance. We delivered the converted heavy
lift vessels to Sealift in May and December 2007 and May and July 2008. The $80.0 million interest free seller's
credit was paid in July 2008 and we recorded a gain of $91.0 million in 2008 relating to the delivery of the
converted heavylift vessels. We incurred net damages of $1.2 million with respect to the late delivery of the fourth
and final converted heavylift vessel.

In May 2007, Sealift completed a reorganization with the Dockwise group of companies. As part of the transaction,
Sealift completed a private placement of 39.8 million shares of which we purchased five million shares. Sealift also
issued 94.1 million shares to the former Dockwise Ltd, or Dockwise, shareholders. Sealift was renamed Dockwise
Ltd in July 2007. In October 2007, we sold our entire shareholding of 34,976,500 shares in Dockwise.

29
Establishment and Spin-Off of Sea Production Ltd

In February 2007, the Company's wholly owned subsidiary, Frontline Floating Production Ltd, or 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 January 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. 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.

Establishment and spin-off of Independent Tankers Corporation Limited

In January 2008, we established Independent Tankers Corporation Limited, or ITCL, a Bermuda company and our
wholly owned subsidiary for the purpose of holding, by way of contribution, our interests in Independent Tankers
Corporation, or ITC. ITC owns or leases six VLCC and four Suezmax tankers, which are financed through bonds in
the U.S. market and financial lease arrangements. On February 20, 2008, our Board declared the distribution of a
special dividend of 17.53% of the capital stock of ITCL to our shareholders. On February 28, 2008, we distributed to
our shareholders one share of ITCL for every five shares of Frontline. Certain of our U.S. shareholders were
excluded from the distribution and received a cash payment in lieu of shares equal to $0.34 per Frontline share.
ITCL listed its shares on the Oslo OTC Market on March 7, 2008.

B. BUSINESS OVERVIEW

As of December 31, 2009, our tanker fleet consisted of 76 vessels. The fleet consists of 41 VLCCs which are either
owned or chartered in, 27 Suezmax tankers which are either owned or chartered in and eight Suezmax OBOs which
are chartered in. We also had six VLCC newbuildings and four Suezmax newbuildings on order and five VLCCs
under our commercial management. Two of the Suezmax newbuildings, Northia and Naticina, were delivered to us
on January 5, 2010 and March 9, 2010, respectively.

As of December 31, 2009, the fleet that we operate has a total tonnage of approximately 19.2 million dwt, including
the 1.5 million dwt under commercial management. Our tanker vessels have an average age of approximately 12
years compared with an estimated industry average of approximately 9 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 and our vessels operate in the spot and time charter markets. 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.

In December 2008, Teekay Corporation, or Teekay, and the Company announced an agreement to commercially
combine their Suezmax vessels within the Gemini Pool, a global Suezmax tanker pool. Effective from January 1,
2009, we placed our Suezmax vessels within the Gemini Pool bringing the total number of vessels in the pool to 36.
Gemini Tankers LLC, a wholly-owned subsidiary of Teekay, has established an office in Oslo, Norway to, among
other things, manage the larger fleet and establish a chartering presence in Europe to supplement its existing
operations in Stamford, Connecticut. We expect to improve the utilization on our fleet and to reduce the cost basis
by entering a large pool. In addition to the Company and Teekay, König & Cie and Hyundai Merchant Marine also
participate in the Gemini Pool.

30
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. Currently, our eight
Suezmax OBOs are configured to carry dry bulk cargo and are fixed on medium to 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.

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 2009 and 2010.

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.

31
Frontline decided in August 2009 to establish a ship management company in Singapore. The new company, Sea
Team Management Pte. Ltd., will be a complement to the external ship management companies currently offering
services to Frontline and is not a change in the Company's outsourcing strategy. However, we would like to
strengthen our position towards our service providers to enhance and secure delivery of high quality service at low
cost in the future. Sea Team Management Pte Ltd. was certified and received its ISM Document of Compliance by
Det Norske Veritas on February 3, 2010 and is as such an approved ship management company. In addition a
crewing company was formally opened in Chennai, India, on January 17, 2010.

Strategy

Our strategy is to maintain and expand our position as a world leading operator and charterer of modern, high
quality oil tankers. Our principal focus is the transportation of crude oil and its related refined dirty petroleum
cargoes for major oil companies and major oil trading companies. We seek to optimize our income and adjust our
exposure through actively pursuing charter opportunities be it via time charters, bareboat charters, sale and
leasebacks, straight sales and purchases of vessels, newbuilding contracts and acquisitions.

We presently operate VLCC and Suezmax vessels in the tanker market and OBO vessels in the dry cargo market.
Our strategy is to have at least 30% fixed charter income coverage for our fleet, predominantly through time charters
and trade the balance of the fleet on the spot market. We focus on minimizing time spent on ballast by "cross
trading" our vessels, typically with voyages loading in the Persian Gulf discharging in Northern Europe, followed by
a trans-Atlantic voyage to the U.S. Gulf of Mexico and finally a voyage from either the Caribbean or West Africa to
the Far East/Indian Ocean. We believe that operating a certain number of vessels in the spot market, enables us to
capitalize on a potential stronger spot market as well as to serve our main customers on a regular non term basis. We
believe that the size of our fleet is important in negotiating terms with our major clients and charterers. We also
believe that our large, high-quality VLCC and Suezmax fleet enhances our ability to obtain competitive terms from
suppliers and ship repairers and builders and to produce cost savings in chartering and operations.

Our business strategy is primarily based upon the following principles:

 emphasizing operational safety and quality maintenance for all of our vessels;

 complying with all current and proposed environmental regulations;

 outsourcing technical operations and crewing;

 continuing to achieve competitive operational costs;

 operating a modern and homogeneous fleet of tankers;

 achieving high utilization of our vessels;

 achieving competitive financing arrangements;

 achieving a satisfactory mix of term charters, contracts of affreightment and spot voyages; and

 developing and maintaining relationships with major oil companies and industrial charterers.

We have newbuilding contracts for six VLCCs and two Suezmaxes as of March 29, 2010.

32
We continue to evaluate opportunities in the time charter market. On the basis of the strength of the drybulk market
when the vessels became available, all of our eight OBO carriers have been fixed on medium to long term charters at
an average daily rate of approximately $43,000 and $49,300 in 2009 and 2010, respectively. As of December 31,
2009 approximately 44% of our remaining operating days for our total fleet for 2010 were on fixed time charter and
bareboat charter.

Although there has been a trend towards 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 8% of the
world VLCC fleet and 7% of the world Suezmax tanker fleet. We intend 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.

Our goal is to generate competitive returns for our shareholders with quarterly dividend payments. Our dividend
payments are based on present earnings, market prospects, current capital expenditure programs as well as
investment opportunities.

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

During the year ended December 31, 2009, we reported total revenue from one customer of $250.1 million, which
represented approximately 22% of consolidated operating revenues (2008: one customer, which represented
approximately 20% and 2007: one customer, which represented approximately 19%). No other customers represent
more than 10% of consolidated operating revenues for the periods presented.

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 ship-owner 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.

33
Environmental and Other Regulations

Government regulations and laws significantly affect the ownership and operation of our vessels. We are subject to
international conventions, national, state and local laws and regulations in force in the countries in which our vessels
may operate or are registered and compliance with such laws, regulations and other requirements may entail
significant expense.

Our vessels are subject to both scheduled and unscheduled inspections by a variety of government, quasi-
governmental and private organizations including local port authorities, national authorities, harbor masters or
equivalent, classification societies, flag state administrations (countries of registry) and charterers. Our failure to
maintain permits, licenses, certificates or other approvals required by some of these entities could require us to incur
substantial costs or temporarily suspend operation of one or more of our vessels.

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 vessels and may accelerate the
scrapping of older vessels throughout the industry. Increasing environmental concerns have created a demand for
vessels that conform to stricter environmental standards. We believe that the operation of our vessels is 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 vessels. In addition, additional legislation or regulation applicable to the operation of our
vessels that may be implemented in the future could negatively affect our profitability.

International Maritime Organization

The International Maritime Organization, the United Nations agency for maritime safety and the prevention of
pollution by ships or the IMO, has adopted several international conventions that regulate the international shipping
industry, including the International Convention on Civil Liability for Oil Pollution Damage, the International
Convention on Civil Liability for Bunker Oil Pollution Damage, and the International Convention for the Prevention
of Pollution from Ships, or the MARPOL Convention. The MARPOL Convention establishes environmental
standards relating to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal of
noxious liquids and the handling of harmful substances in packaged forms.

The operation of our vessels is also affected by 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 under the
International Convention for the Safety of Life at Sea, or SOLAS. 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 our appointed ship managers have developed.

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:

34
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
lubricating oil as cargo, and of 30,000 dwt and above April 5, 2005 for ships delivered on April 5, 1982 or
carrying other oils, which do not comply with the earlier; or
requirements for protectively located segregated 2005 for ships delivered after April 5, 1982
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 above earlier
carrying other oils, which do comply with the 2005 for ships delivered after April 5, 1977 but before
protectively located segregated ballast tank January 1, 1978
requirements 2006 for ships delivered in 1978 and 1979
and 2007 for ships delivered in 1980 and 1981
Category 3 - oil tankers of 5,000 dwt and above but 2008 for ships delivered in 1982
less than the tonnage specified for Category 1 and 2 2009 for ships delivered in 1983
tankers. 2010 for ships delivered in 1984 or later

Under the revised regulations, a flag state may permit continued operation of certain Category 2 or 3 tankers beyond
their phase-out 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 regulations 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 Flag state

Vessel Name Vessel type Category Built IMO phase out Exemption

Front Voyager(1) Suezmax SH 1992 2010 2015

Edinburgh(2) VLCC DS 1993 2018 n/a
Front Ace(2) VLCC SH 1993 2010 2015
Front Duke(2) VLCC SH 1992 2010 2015
Ticen Sun(2) VLCC SH 1991 2010 2015
Ticen Ocean(2) VLCC SH 1991 2010 2015
Golden River (2)(3) VLCC SH 1991 2010 2015

(1)A Memorandum of Agreement, dated March 15, 2010, has been signed regarding the sale of this
vessel. Delivery to the buyers is expected in the first half of April 2010.

(2)Vessel chartered in from Ship Finance and not consolidated after March 31, 2007.

(3)Agreement reached in March 2010 regarding termination of the lease. Termination expected to be
April 2010.

35
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:

 crude oils having a density at 15єC higher than 900 kg/m3;

 fuel oils having either a density at 15єC higher than 900 kg/m3 or a kinematic viscosity at 50ºC higher than
180 mm2/s; or

 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 15єC 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 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.

Noncompliance with the ISM Code or with other IMO regulations may subject a 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 including United States and European Union Ports.

United States

The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability
Act

The U.S. Oil Pollution Act of 1990, or OPA, is 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.

36
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.OPA limits the
liability of responsible parties with respect to tankers over 3,000 gross tons to the greater of $3,000 per gross tons or
$22.0 million per single hull tanker, and $1,900 per gross ton or $16.0 million per double hull tanker, respectively,
and permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring
within their boundaries. Some states have enacted legislation providing for unlimited liability for discharge of
pollutants within their waters, however, 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 for vessels
carrying a hazardous substance as cargo and the greater of $300 per gross ton or $0.5 million for any other vessel.

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 willful misconduct.
These limits also 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 also 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. 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.

Other U.S. Environmental Initiatives

The U.S. Clean Water Act, or CWA, prohibits the discharge of oil, hazardous substances and ballast water in U.S.
navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of
penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal,
remediation and damages and complements the remedies available under OPA and CERCLA. Furthermore, 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 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 existing requirements.

37
European Union

The European Union has 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. In addition, European Union
regulations enacted in 2003 now prohibit all single hull tankers from entering into its ports or offshore terminals

Greenhouse Gas Regulation

The IMO is evaluating various mandatory measures to reduce greenhouse gas emissions from international shipping,
which may include market-based instruments or a carbon tax. Any passage of climate control legislation or other
regulatory initiatives by the IMO, EU, the U.S. or other countries where we operate that restrict emissions of
greenhouse gases could require us to make significant financial expenditures that we cannot predict with certainty at
this time.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel
security including the U.S. Maritime Transportation Security Act of 2002, or MTSA, amendments to SOLAS and a
requirement that any vessel trading internationally obtain an International Ship Security Certificate from a
recognized security organization approved by the vessel's flag state. We believe that our fleet is currently in
compliance with applicable security requirements.

Inspection by Classification Societies

Every oceangoing vessel must be "classed" by a classification society. 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.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as "in-class" by a
classification society which is a member of the International Association of Classification Societies. All our vessels
are certified as being "in-class" by a recognized classification society.

38
Risk of Loss and Insurance

The operation of any ocean-going vessel carries an inherent risk of catastrophic marine disasters and property losses
caused by adverse weather conditions, mechanical failures, human error, war, terrorism and other circumstances or
events. In addition, the transportation of crude oil is subject to the risk of spills, and business interruptions due to
political circumstances in foreign countries, hostilities, labor strikes and boycotts. OPA has made liability insurance
more expensive for ship owners and operators imposing potentially unlimited liability upon owners, operators and
bareboat charterers for oil pollution incidents in the territorial waters of the United States. We believe that our
current insurance coverage is adequate to protect us against the principal accident-related risks that we face in the
conduct of our business.

Our protection and indemnity insurance, or P&I insurance, covers third-party liabilities and other related expenses
from, among other things, injury or death of crew, passengers and other third parties, claims arising from collisions,
damage to cargo and other third-party property and pollution arising from oil or other substances. Our current P&I
insurance coverage for pollution is the maximum commercially available amount of $1.0 billion per tanker per
incident and is provided by mutual protection and indemnity associations. Each of the vessels currently in our fleet
is entered in a protection and indemnity association which is a member of the International Group of Protection and
Indemnity Mutual Assurance Associations. The 13 protection and indemnity associations that comprise the
International Group insure approximately 90% of the world's commercial tonnage and have entered into a pooling
agreement to reinsure each association's liabilities. Each protection and indemnity association has capped its
exposure to this pooling agreement at $4.3 billion. As a member of protection and indemnity associations, which
are, in turn, members of the International Group, we are subject to calls payable to the associations based on its
claim records as well as the claim records of all other members of the individual associations and members of the
pool of protection and indemnity associations comprising the International Group.

Our hull and machinery insurance covers actual or constructive total loss from covered risks of collision, fire, heavy
weather, grounding and engine failure or damages from same. Our war risk insurance covers risks of confiscation,
seizure, capture, vandalism, sabotage and other war-related risks. Our loss-of-hire insurance covers loss of revenue
at $23,000 per day for Suezmaxes and $30,000 per day for VLCCs for not less than 90 days resulting from an
accident covered by the terms of our hull and machinery insurance for each of our vessels, with a fourteen day
deductible for OBO vessels, a fourteen day deductible for the Golden Victory and a 60 day deductible for all other
Suexmaxes and VLCCs.

C. ORGANIZATIONAL STRUCTURE

See Exhibit 8.1 for a list of our significant subsidiaries.

D. PROPERTY, PLANTS AND EQUIPMENT

39
The Company's Vessels

The following table sets forth the fleet that we operated as of December 31, 2009 (including contracted
newbuildings not yet delivered):

Type of
Vessel Built Approximate Dwt. Construction Flag 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
British Pioneer 1999 307,000 Double-hull IoM Bareboat
charter
Front Shanghai 2006 298,500 Double-hull HK Spot market
Front Kathrine 2009 297,974 Double-hull MI Spot market
Front Queen 2009 297,000 Double-hull MI Time charter
Hull 2419 (Newbuilding) 2010 297,000 Double-hull n/a n/a
Hull 2420 (Newbuilding) 2010 297,000 Double-hull n/a n/a
Hull J0025 (Newbuilding) 2011 320,000 Double-hull n/a n/a
Hull J0026 (Newbuilding) 2011 320,000 Double-hull n/a n/a
Hull J0027 (Newbuilding) 2012 320,000 Double-hull n/a n/a
Hull J0028 (Newbuilding) 2012 320,000 Double-hull n/a n/a

Suezmax Tankers
Front Voyager (1) 1992 155,000 Single-hull BA Spot market
Front Fighter 1994 147,048 Double-hull MI Spot market
Front Hunter 1996 146,286 Double-hull MI Spot market
Front Alfa 1993 150,038 Double-hull MI Time charter
Front Beta 1992 135,915 Double-hull MI Time charter
Front Delta 1993 136,055 Double-hull MI Time charter
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
Hull 1017 (Newbuilding) (2) 2009 156,000 Double-hull n/a n/a
Hull 1018 (Newbuilding) 2009 156,000 Double-hull n/a n/a
Hull 1019 (Newbuilding) (3) 2009 156,000 Double-hull n/a n/a
Hull 1026 (Newbuilding) 2010 156,000 Double-hull n/a n/a

40
Tonnage Chartered in from
Ship Finance

VLCCs
Ticen Sun 1991 284,000 Single-hull SG Bareboat charter
Ticen Ocean 1991 284,000 Single-hull SG Bareboat charter
Golden River (4) 1991 284,000 Single-hull SG Time charter
Front Duke 1992 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 Time charter
Front Champion 1998 311,000 Double-hull BA Time charter
Front Vista (5) 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 1999 300,000 Double-hull IoM Bareboat charter
Front Scilla 2000 303,000 Double-hull MI Spot market
Oliva 2001 299,000 Double-hull IoM Bareboat charter
Front Serenade 2002 299,000 Double-hull LIB Time charter
Otina 2002 298,000 Double-hull IoM Bareboat charter
Ondina 2002 299,000 Double-hull IoM 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 Time charter
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 Pride 1993 150,000 Double-hull NIS Spot market
Front Glory 1995 150,000 Double-hull NIS Spot market
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 Time charter
Mindanao 1998 150,000 Double-hull SG Spot market

41
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 Pride 2000 307,000 Double-hull IoM Bareboat charter
British Progress (6) 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
Hampstead 1996 298,000 Double-hull IoM Time charter
Kensington 1995 298,000 Double-hull IoM Time charter

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 Time charter
Nordic Apollo (7) 2003 149,997 Double-hull MI Spot market
Nordic Discovery (7) 1998 149,999 Double-hull NIS Spot market
Nordic Fighter (7) 1998 149,999 Double-hull NIS Spot market
Nordic Hawk (7) 1997 151,475 Double-hull BA Spot market
Nordic Hunter (7) 1997 151,400 Double-hull BA Spot market
Nordic Saturn (7) 1998 157,332 Double-hull MI Spot market
Nordic Sprite (7) 1999 147,188 Double-hull NIS Spot market
Nordic Mistral (7) 2002 164,236 Double-hull MI Spot market
Genmar Harriet G 2006 149,999 Double-hull MI Spot market

VLCCs
Mayfair 1995 298,405 Double-hull MI Time charter
Camden 1995 298,306 Double-hull MI Time charter
Songa Chelsea 1995 298,432 Double-hull MI Spot market
Songa Julie 2000 299,089 Double-hull MI Spot market
Universal Queen 2005 309,373 Double-hull PAN Spot market

42
 (1)A Memorandum of Agreement, dated March 15, 2010, has been signed regarding the sale of this
vessel. Delivery to the buyers is expected in the first half of April 2010.

(2)Newbuilding (named Northia) was delivered in January 2010.

(3)Newbuilding (named Naticina) was delivered in March 2010.

(4)Agreement reached in March 2010 regarding termination of the lease. Termination expected to be
April 2010.

(5)Vessel was purchased from Ship Finance in February 2010 and simultaneously sold.

(6)Vessel was sold to a majority owned subsidiary in January 2010.

(7)Vessel is chartered in on a floating time charter.

Our chartered in fleet is contracted to us under leasing arrangements with fixed terms of between seven and twenty
three years. Lessors have options to extend nine of these leases by up to an additional five years from expiry of the
initial fixed term. We have fixed purchase price options to buy nine of these vessels at certain future dates and the
lessors have fixed options to sell nine of these vessels to us at the end of the lease period. Four of the lease
agreements may not be terminated by us without the agreement of the end-user of the vessel.

43
Key to Flags:

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

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.

As of December 31, 2009, our tanker fleet consisted of 76 vessels. The fleet consists of 41 VLCCs which are either
owned or chartered in, 27 Suezmax tankers which are either owned or chartered in and eight Suezmax OBOs which
are chartered in. We also had six VLCC newbuildings and four Suezmax newbuildings on order and five VLCCs
under our commercial management. Two of the Suezmax newbuildings, Northia and Naticina, were delivered to us
on January 5, 2010 and March 9, 2010, respectively.

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, 2009, 2008 and 2007 is as follows:

44
 2009 2008 2007
VLCCs
At start of period 40 42 41
Acquisitions 2 — 2
Dispositions (1) (2) (1)
At end of period 41 40 42

Suezmax
At start of period 29 16 23
Acquisitions — 5 —
Dispositions — (3) (7)
Chartered In (2) 11 —
At end of period 27 29 16

Suezmax OBOs
At start and end of period 8 8 8

Aframax
At start of period — — 1
Acquisitions — — —
Dispositions — — (1)
At end of period — — —

Total fleet
At start of period 77 66 73
Acquisitions 2 5 2
Dispositions (1) (5) (9)
Chartered In (2) 11 —
At end of period 76 77 66

45
Summary of Fleet Employment

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

As of December 31,
2009 2008 2007
Number Number Number
of Percentage of Percentage of Percentage
vessels of fleet vessels of fleet vessels of fleet
VLCCs
Spot or pool 15 37% 15 38% 17 40%
Time charter 14 34% 15 38% 15 36%
Bareboat charter 12 29% 10 25% 10 24%
Total 41 100% 40 100% 42 100%

Suezmax
Spot or pool 19 70% 21 73% 12 75%
Time charter 5 19% 5 17% 1 6%
Bareboat charter 3 11% 3 10% 3 19%
Total 27 100% 29 100% 16 100%

Suezmax OBOs
Time charter 8 100% 8 100% 8 100%
Total 8 100% 8 100% 8 100%

Total fleet
Spot or pool 34 45% 36 47% 29 44%
Time charter 27 35% 28 36% 24 36%
Bareboat charter 15 20% 13 17% 13 20%
Total 76 100% 77 100% 66 100%

Market Overview and Trend Information

According to industry sources, the average TCE rate for a modern VLCC in the first quarter of 2009 was
$55,400/day, ranging between $83,000/day in January to $36,500/day at the end of March. For the second, third and
fourth quarter, the average TCE rate was $27,700/day, $23,400/day and $39,500/day, respectively. For the full year,
the average TCE rate was $36,500/day.

The tanker market began the year rather strongly, as the world economic downturn did not have a significant effect
on tanker rates. The demand for oil remained high and the supply of tonnage remained tight. In addition, primarily
due to "contango" in the oil markets, some 45 to 50 VLCCs on average throughout this period were employed in
storage of oil. This, in conjunction with weak fleet growth for 2008 and the first quarter of 2009, positioned owners
for increased rates. However, significant factors, such as projections of reduced global oil demand and a high and
steady influx of new tonnage, inevitably tended to have a countervailing negative impact.

46
Transport distances fell sharply in the first half of the year but recovered substantially throughout the second half
due to China's large crude oil importing program and build up of reserves. Industry sources estimate that 2009
experienced a reduction of 4.3% in total tanker ton-mile demand compared with 2008. In contrast, the fourth quarter
remained relatively steady (-0.1%) year-on-year. Storage was at the level of the first half of the year, but oil demand
decreased and newbuilding deliveries began to increase in frequency. Removals from the fleet were below
expectations, but fleet growth should slow down as the 2010 phase out deadline for single hull vessels approaches.
Delays in the Turkish straits increased towards the end of the year with approximately 6 to 7 days waiting time
through the Bosporus and Dardanelles through much of November and all of December. Port strikes in Fos and
Lavera also contributed to a tightening tonnage supply.

Global oil demand remains the most important driver for ton-mile demand, and as oil demand decreased by 1.5% in
2009, ton-miles subsequently dropped by about 4.3%. However, the average transportation distance is increasing
year-on-year as China and India are enhancing their West Africa and Central and South American crude programs.
Furthermore, expected increased trade volume between the Persian Gulf and the U.S. should also help boost the
2010 ton-mile demand, which industry sources currently estimate at approximately 7% larger than in 2009.

The dry bulk shipping market opened 2009 in a highly depressed state. After the all-time high of $234,000 per day
for spot earnings for a capsize vessel in June 2008, the spot market declined by more than 99% in just six months.
However, the dramatic fall of the costs of transportation and of commodity prices in general served as incentives for
the rapidly growing Chinese economy to secure raw materials at considerably lower delivered cost than that which
had been experienced in recent years.

Global steel production fell by 110 million mt during 2009 while China's steel production rose by 67 million mt.
China's iron ore imports increased by 187 million mt, or 41%. In addition, the dry bulk market was unexpectedly
bolstered by strong Chinese coal imports. China is the biggest coal producer in the world and has traditionally been
a net exporter, but, in 2009, China suddenly became a substantial net importer.

The supply of new drybulk vessels entering the market remains a concern. Due to delays and cancellations, actual
deliveries fell about 40% short of expectations. As a consequence, the utilization of the dry bulk fleet from the
second quarter onward exceeded 90%, and spot earnings as well as the period time charter market outperformed
expectations.

The average spot rate for a Capesize bulker in 2009 was $42,650 per day, representing a 60% decrease from 2008,
though still high from a historic perspective.

According to the February 2010 report from the International Energy Agency, or "IEA", average OPEC production
is estimated at 28.7 million barrels per day in 2009. The expected 2010 OPEC production output figure has not yet
been published by the IEA. However, the IEA estimates a production figure of 29.1 million barrels per day for
January 2010, which is equivalent to their production output in January 2009.

The IEA further estimates that the average world oil demand was 84.9 million barrels per day in 2009, which
represents a decrease of 1.5% or 1.3 million barrels per day from 2008. For 2010, the world oil demand is estimated
at 86.5 million barrels per day, representing an increase of 1.8% or 1.6 million barrels per day from 2009.

47
Throughout 2009, the oil majors continued to discriminate against single hull tankers. An increasing number of port
and flag states also announced their reluctance to accept such vessels beginning in January 2010. Subsequently, the
market for these vessels has started to diminish, leaving only a few areas in East Asia where they are still allowed to
trade.

The bunker (vessel fuel oil) market followed movements in the oil market closely in 2009. The average bunker price
in Fujairah was approximately $370/mt, which represents a decrease of $137/mt from 2008. The prices ranged from
a low of $226/mt in the middle of March to a high of $485/mt at the end of December.

According to the 'World Economic Outlook - Update' published by The International Monetary Fund, or "IMF", in
January 2010, World Output, or GDP, decreased 0.8% in 2009, which was a substantial downward shift compared to
the 2009 3% growth estimate as reported in October 2008. For 2010 and 2011, however, the IMF forecasts World
GDP growth of 3.9% and 4.3%, respectively.

Furthermore, the IMF reported a U.S. GDP decrease of 2.5% for 2009, down from the 2008 increase of 0.4%. It is,
however, estimated that U.S. GDP will increase by 2.7% in 2010.

While the Euro area (Germany, France, Italy and Spain) and Japan both experienced a decrease in GDP throughout
2009 of 3.9% and 5.3%, respectively, they are also expected to report GDP growth for both 2010 and 2011.

The emerging and developing economies increased their GDP by 2% for 2009, which represents a decrease from
their 2008 growth of 6%. Current estimates, however, estimate a healthier economy in the next four years with a
predicted growth rate of approximately 6% for 2010 and 2011, according to the IMF.

China reported figures consistent with expectations. After an unprecedented domestic industry build-up, China's
GDP increased by 8.7% throughout 2009. While this represents a small decrease in growth relative to the 9.6%
growth experienced in 2008, the IMF has forecast GDP growth of about 10% for 2010 and 2011.

The total VLCC fleet increased by approximately 8% in 2009 to 529 vessels. Throughout the year, a total of 54 new
vessels were delivered to owners and 12 new orders were placed. The total order book consisted of 178 vessels at
the end of the year, representing approximately 34% of the existing fleet.

The total Suezmax fleet increased by approximately 13% in 2009 to 393 vessels. Throughout the year, a total of 46
new vessels were delivered to owners and 24 new orders were placed. The total order book consisted of 134 vessels
at the end of the year, which represented approximately 34% of the existing fleet.

Throughout 2010, it is estimated that 67 VLCCs and 62 Suezmaxes will enter the market, including 20 and 24,
respectively, in the first quarter. This substantial amount of new tonnage will be cushioned, to some extent, by the
expected phase-out program of single hull vessels which, at the end of 2009, consisted of 84 VLCCs and 33
Suezmaxes. Finally, to help mitigate the future influx of vessels, we expect further changes to orders such as
cancellations, delays and deferrals.

Accounting Changes

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) (codified in ASC 810) 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 capital leases. A summary of the major changes to the
financial statements is as follows;

48
  Vessels leased from Ship Finance, which were previously reported as wholly owned are reported as vessels
held under capital lease.

 Capital lease obligations with Ship Finance, which were previously eliminated on consolidation are
reported as liabilities with the related interest recorded in the income statement.

 Debt incurred by Ship Finance, which was previously reported as debt of the Company is no longer
reported.

 Derivative instruments held by Ship Finance are no longer reported.

 Noncontrolling interest expense relating to Ship Finance is no longer reported.

 Profit share expense relating to amounts due to Ship Finance is shown in the income statement.

 Results from Ship Finance's container ships, jack-up rigs and Panamax vessels are no longer reported in the
Company's consolidated results.

Discontinued Operations

As a result of the spin off of Ship Finance in March 2007, we disposed of the container vessel and rig operations of
Ship Finance. These operations have been recorded as discontinued operations in 2007 and 2006. The results of the
container vessels have also been recorded as discontinued operations in 2005.

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 judgment 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 and expense recognition

Revenues and expenses are recognized on the accruals basis. Revenues are generated from freight billings, time
charter and bareboat charter hires. Voyage revenues and expenses are recognized ratably over the estimated length
of each voyage and, therefore, are allocated between reporting periods based on the relative transit time in each
period. The impact of recognizing voyage expenses ratably over the length of each voyage is not materially different
on a quarterly and annual basis from a method of recognizing such costs as incurred. 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 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 recognizes revenue ratably from when product is discharged (unloaded) at the end of one voyage to when
it is discharged after the next voyage. However, the Company does not recognize revenue if a charter has not been
contractually committed 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.

49
Amounts receivable or payable arising from profit sharing arrangements are accrued based on amounts earned as of
the reporting date. Profit share income represents vessel earnings earned by the Company's customers in excess of
market rates. Profit share expense represents amounts due to Ship Finance based on 20% of the excess of vessel
revenues earned by the Company over the base hire paid to Ship Finance for chartering in the vessels.

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 consolidated statements of operations.

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.

On July 1, 2009, the Company effected a change in estimate related to the estimated scrap rate for all of its owned
vessels and for leased vessels where the Company has an interest in the residual value. The scrap rate was amended
from an average of $222 per lightweight tonne to $281 per lightweight tonne for VLCCs and from an average of
$378 per lightweight tonne to $281 per lightweight tonne for Suezmaxes. The resulting change in salvage values has
been applied prospectively and reduced depreciation by approximately $0.1 million for the six months ended
December 31, 2009. This change also resulted in an increase in net income of approximately $0.1 million with no
impact in earnings per share for the year ended December 31, 2009. The Company's assumptions used in the
determination of estimated salvage value took into account then current scrap prices, the historic pattern of scrap
rates over the ten years ended December 31, 2008, estimated changes in future market demand for scrap steel and
estimated future demand for vessels. Management believes that $281 per lightweight tonne is a reasonable estimate
of future scrap prices, taking into consideration the cyclicality of the nature of future demand for scrap steel.
Although management believes that the assumptions used to determine the scrap rate are reasonable and appropriate,
such assumptions are highly subjective, in part, because of the cyclicality of the nature of future demand for scrap
steel.

Vessel Impairment

The carrying values of the Company's vessels may not represent their fair market value at any point in time since the
market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings.
Historically, both charter rates and vessel values tend to be cyclical. The carrying amounts of vessels held and used
by the Company are reviewed for potential impairment whenever events or changes in circumstances indicate that
the carrying amount of a particular vessel may not be fully recoverable. In such instances, an impairment charge
would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the
vessel and its eventual disposition is less than the vessel's carrying amount. This assessment is made at the
individual vessel level as separately identifiable cash flow information for each vessel is available.

50
In developing estimates of future cash flows, the Company must make assumptions about future charter rates, ship
operating expenses, and the estimated remaining useful lives of the vessels. These assumptions are based on
historical trends as well as future expectations. Although management believes that the assumptions used to evaluate
potential impairment are reasonable and appropriate, such assumptions are highly subjective.

Vessels and equipment under capital lease

The Company charters in certain vessels and equipment under leasing agreements. Leases of vessels and equipment,
where the Company has substantially all the risks and rewards of ownership, are classified as capital leases. Capital
leases are capitalized at the inception of the lease at the lower of the fair value of the leased assets and the present
value of the minimum lease payments.

Each lease payment is allocated between liability and finance charges to achieve a constant rate on the finance
balance outstanding. The interest element of the finance cost is charged to the income statement over the lease
period.

Depreciation of vessels and equipment under capital lease is included within "depreciation and amortization
expense" in the consolidated statement of operations. Vessels and equipment 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.

Factors Affecting our Results

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

 the earnings of our vessels in the charter market;

 gains from the sale of assets;

 vessel operating expenses;

 profit share expense;

 administrative expenses;

 depreciation;

 interest expense;

 impairment of securities.

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

As of December 31, 2009, 2008 and 2007, 34, 36 and 29, 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.

51
Gains from the sale of assets relates to gains from the sale of vessels and marketable securities and payments
received on the termination of leases.

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.

Profit share expense relates to the vessels amounts due to Ship Finance based on 20% of the excess of vessel
revenues earned by the Company over the base hire paid to Ship Finance for chartering in the vessels.

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 vessels we own, less their
estimated residual value, over their estimated useful life on a straight-line basis. We depreciate the cost of vessels
held under capital lease over the term of the lease. No charge is made for depreciation of vessels under construction
until they are delivered.

Interest expense relates to vessel specific debt facilities, corporate debt and capital leases. 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.

An other-than-temporary impairment regarding our available-for-sale marketable securities will be recorded as an

impairment of securities.

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. It is anticipated that insurance costs, which have risen over the last three years, may well
continue to rise moderately 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, 2009 compared with the year ended December 31, 2008

Total operating revenues and voyage expenses and commission

Change
(in thousands of $) 2009 2008 $ %
Voyage charter revenues 565,331 1,425,968 (860,637) (60.3)
Time charter revenues 486,361 602,980 (116,619) (19.3)
Bareboat charter revenues 64,526 57,152 7,374 12.9
Other income 17,068 17,918 (850) (4.7)
Total operating revenues 1,133,286 2,104,018 (970,732) (46.1)

52
Total operating revenues decreased in 2009, as compared to 2008, primarily due to significant decreases in voyage
and time charter revenues.

Voyage charter revenues decreased mainly due to the following reasons:

 The average TCE rates for double hull VLCCs and double hull Suezmaxes decreased from approximately
$90,000 and $58,400, respectively, in 2008 to approximately $38,000 and $23,200, respectively, in 2009.

 The average TCE rates for single hull VLCCs and single hull Suezmaxes decreased from approximately
$40,500 and $39,900, respectively, in 2008 to approximately $23,800 and $9,100, respectively, in 2009.

 The lease on a single hull VLCC, Front Duchess, was terminated in September 2009 resulting in a decrease
in voyage charter revenues of $14.4 million compared with 2008.

 Demurrage income was lower in 2009 than in the prior year, resulting in a $82.2 million reduction in voyage
charter revenues. These rates are determined by the market rates which were also lower in the year.

 Revenues generated from relets were $69.2 million lower in 2009. This was largely matched by a $68.9
million reduction in voyage expenses in the year.

· A decrease in trading days in 2009 due mainly to the redelivery of a vessel chartered in for 2008, which
reduced income by $52.6 million, and the transfer of three double hull VLCCs and one double hull
Suezmax to time charters from voyage charters for the majority of 2009. There was a reduction of $166.5
million in voyage charter revenues for these vessels.

· Eighteen double hull Suezmax vessels entered the Gemini Pool during the first quarter of the year.
Earnings on the vessels traded in the pool were $277.3 million lower in 2009 than in 2008 as a result of the
weaker spot market.

Time charter revenues decreased mainly due to the following reasons:

 Six OBOs were drydocked in the year compared with one in 2008. As a result these vessels incurred
much larger periods of offhire, which reduced income by $7.9 million.

 Two single hull VLCCs, Front Sabang and Front Duchess, did not trade on time charter in 2009
decreasing revenue by $6.2 million. Two other vessels were transferred onto bareboat charters from time
charters. The impact on revenue was a decrease of $37.5 million from the prior year. Two other vessels
were chartered out at rates linked to the Baltic Exchange Index which fell in 2009 from 2008, resulting in
reported revenues decreasing by $17.0 million.

 Six double hull VLCCs are chartered out under floating rate time charters. In 2009, revenues from these
vessels was $121.4 million lower than 2008.

 Movement of double hull VLCCs between spot and time charters gave rise to a $20.7 million increase in
time charter revenues in 2009 on 2008.

53
These items were partially offset by an increase in double hull Suemax trading days compared to 2008. This is due
to three of the Suezmax double hull vessels purchased midway through 2008 operating for the whole of 2009
resulting in increased revenues of $21.2 million. In addition, two vessels that had traded in the spot market moved to
time charters, increasing income by $15.9 million.

Bareboat revenues increased during the year after two single hull VLCCs were chartered out on long term bareboat
agreements during the year.

The decrease in administrative income in 2009 is mainly due to a decrease in income earned from supervising the
newbuilding projects of related parties and a decrease in commercial management commissions, which were
partially offset by cost recharges to various related parties.

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 shipping industry for comparing financial performance between companies and to
industry averages. Other companies may calculate TCE using a different method. A summary of average time
charter equivalent earnings per day for our fleet is as follows:

(in $ per day) 2009 2008 2007 2006 2005

VLCC 38,300 74,500 45,700 56,800 57,400
Suezmax 25,300 55,200 33,000 37,800 40,300
Suezmax OBO 43,000 43,500 39,700 31,700 34,900

Gain on sale of assets

Change
(in thousands of $) 2009 2008 $ %
Gain on sale of assets 3,061 142,293 (139,232) (97.8)

The gain on sale of assets in 2009 comprises a gain resulting from the termination of the long-term charterparty
agreement for Front Duchess.

The gain on sale of assets in 2008 comprises gains of $17.1 million and $24.8 million resulting from the termination
of the long-term charterparty agreements for Front Maple and Front Sabang respectively. Also included in the gain
on sale of assets are gains of $26.0 million and $26.4 million relating to the delivery of two completed heavy lift
conversions, the Front Comor and Front Traveller, respectively. Upon delivery of these final two vessels a further
$38.6 million was recognized on the gain on the sale of the heavylift vessels. A further gain of $9.4 million was
recognized on the sale of the Front Comor and Front Traveller mid-sections.

Ship operating expenses

Change
(in thousands of $) 2009 2008 $ %
VLCC 124,357 141,565 (17,208) (12.2)
Suezmax 49,980 45,210 4,770 10.6
Suezmax OBO 32,044 26,991 5,053 18.7
Total ship operating expenses 206,381 213,766 (7,385) (3.5)

54
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.

VLCC operating costs have decreased mainly due to the following reasons:

 Eight double hull and one single hull vessel were drydocked in 2009 compared with six double hull and
three single hull vessels in 2008. Drydocking expenditure in 2009 was $14.6 million lower than in 2008
due to fewer single hull vessels being drydocked and more vessels being drydocked in China, which
proved to be cost effective.

 Two single hull vessels were delivered onto bareboat charters in April and May 2009. Operating costs
incurred on these vessels was $7.0 million lower in 2009 when compared to 2008.

 The Front Sabang which had previously reported operating expenditure in 2008 but was sold in the first
half of the year led to a decrease of $1.3 million in 2009. The Front Duchess was sold in 2009 and resulted
in decreased operating expenditure of $1.7 million.

These items were partially offset by two newbuilding double hull VLCCs, which were completed and delivered
during 2009 resulting in additional operating costs of $4.4 million compared to 2008 and an increase in crew costs
on the VLCCs contributed of $3.0 million compared to 2008.

Suezmax operating costs have increased mainly due to the following:

 One double hull Suezmax was drydocked in 2009 compared with three double hull Suezmaxes in 2008,
which resulted in a decrease of $4.6 million in drydocking expenses.

 Operating expenditure for single hull Suezmax vessels for the whole of 2009 related to one single hull
Suezmax. As a result of the disposal of other single hull Suezmaxes in the prior year, operating expenditure
fell by $1.7 million.

 Five double hull Suezmax vessels were acquired and delivered during the period from June to August 2008
and consequently a full year of operating expenditure was incurred in 2009 resulting in an increase of
$10.0 million.

OBO operating costs have increased mainly due to drydocking costs. Six OBOs were drydocked in 2009, compared
with one in 2008, resulting in increased drydocking costs of $4.2 million.

Profit share expense

Change
(in thousands of $) 2009 2008 $ %
Profit share expense 33,018 110,962 (77,944) (70.2)

Profit share expense relates to the vessels leased from Ship Finance and is calculated as 20% of TCE in excess of
daily base charter hire.

Charterhire expenses

Change
(in thousands of $) 2009 2008 $ %
Charterhire expenses 169,503 220,170 (50,667) (23.0)

Number of vessels chartered in and accounted for

as operating leases: 2009 2008
VLCC 2 4
Suezmax 15 14
Total 17 18

55
Charterhire expenses decreased in 2009 following the redelivery of two VLCCs and two Suezmaxes during 2008
and due to a fall in rates for the vessels chartered in on floating rates and profit share basis. In 2009, an additional
three Suezmaxes were chartered in under floating rate charters, bringing the total under such agreements to nine
during 2009. Two vessels (2008: two) are chartered in on a profit share basis.

Administrative expenses

Change
(in thousands of $) 2009 2008 $ %
Administrative expenses 30,647 35,226 (4,579) (13.0)

The decrease in administrative expenses during 2009 was mainly due to a $1.3 million reduction in stock
compensation, a $1.0 million reduction in personnel costs due mainly to a decrease in the number of staff and a $1.8
million reduction in consultancy, audit and other professional costs, which were partially offset by a $0.7 million
increase in newbuilding supervision expenses.

Interest income

Change
(in thousands of $) 2009 2008 $ %
Interest income 22,969 41,204 (18,235) (44.3)

Interest income has decreased primarily as a result of a decrease in average cash balances held during the year
resulting from increased investments and lower cash generated from operations as a result of the weaker market.

Interest expense

Change
(in thousands of $) 2009 2008 $ %
Interest expense 160,988 183,925 (22,937) (12.5)

Interest expense has decreased in 2009 mainly as a result of lower capital lease interest on the vessels leased from
Ship Finance due to the decreasing capital lease balances outstanding and one fewer vessel being leased during
2009. In addition, the capital lease interest expense on the vessels in the ITCL group decreased due to one fewer
vessel being leased during 2009 and the effect of foreign exchange.

Equity earnings of unconsolidated subsidiaries and associated companies

Change
(in thousands of $) 2009 2008 $ %
Share of results of associated companies (544) (901) (357) (39.6)

As of December 31, 2009, we account for four investees (2008: five) under the equity method.

56
Other

Change
(in thousands of $) 2009 2008 $ %
Foreign currency exchange (losses) gains (346) 1,565 (1,911) (122.1)
Mark to market of derivatives - (17,399) 17,399 100.0
Impairment of securities - (25,134) 25,134 100.0
Dividends received 3,087 1,522 1,565 102.8
Loss on sale of securities - (221) 221 100.0
Other non-operating items, net 1,545 34,043 (32,498) (95.5)

There were no derivative transactions during 2009. The unfavorable movement in mark to market of derivatives in
2008 relates primarily to the forward contracts and total return swap in relation to the purchase and sale of securities
in Overseas Shipholding Group Inc. ("OSG") totaling $15.0 million. The remaining loss in 2008 relates to losses on
forward freight contracts.

Impairment of securities in 2008 relates to the other-than-temporary impairment recorded against securities held in
OSG. The securities were written down to fair value of $59.3 million as of December 31, 2008 resulting in an
impairment loss of $25.1 million.

The loss on sale of securities in 2008 relates to the disposal of securities in OSG.

Other non operating items, net in 2008 is primarily due to a gain of $16.6 million following settlement by Bocimar
of a legal case and a $18.0 million gain on the partial spin-off of ITCL.

Net income attributable to noncontrolling interest

Change
(in thousands of $) 2009 2008 $ %
Net income attributable to noncontrolling interest 2,771 2,184 587 26.9

In 2009 and 2008, net income attributable to noncontrolling interest represents the 17.53% interest not owned by
Frontline in the net income of ITCL from February 2008.

Year ended December 31, 2008 compared with the year ended December 31, 2007

Total operating revenues and voyage expenses and commission

Change
(in thousands of $) 2008 2007 $ %
Voyage charter revenues 1,425,968 801,546 624,422 77.9
Time charter revenues 602,980 432,813 170,167 39.3
Bareboat charter revenues 57,152 57,052 100 -
Other income 17,918 8,516 9,402 110.4
Total operating revenues 2,104,018 1,299,927 804,091 61.9

Total operating revenues increased in 2008, as compared to 2007, primarily due to significant increases in voyage
and time charter revenues. Voyage charter revenues increased mainly due to the following reasons:

 An increase in trading days due to the charter in of 11 Suezmax vessels, which resulted in an increase of
$213.3 million.

57
  The purchase of five Suezmax vessels, which were delivered in the period from June to August 2008, two
of which traded in the spot market and increased revenue by $33.9 million.

 TCE rates increased in 2008 compared to 2007 resulting in a rise in income across all revenue categories in
the period. In voyage charter earnings, TCE for double hull VLCCs and double hull Suezmaxes was
approximately $90,000 and $58,400, respectively, in 2008 compared with approximately $48,200 and
$41,100, respectively, in 2007.

 The average TCE voyage charter rates earned on single hull Suezmaxes and single hull VLCCs were
approximately $39,900 and $40,500, respectively, in 2008. This compares with rates of approximately
$23,000 for single hull Suezmaxes and $37,600 for single hull VLCCs in 2007. As has been the case in
prior years the rates earned underline a continuing variance in market rates for single and double hull
vessels.

 The leases on two single hull vessels were terminated in the January and April 2008 resulting in a decrease
in voyage charter revenue of $24.7 million in the year.

Time charter revenues increased mainly due to the following reasons:

 The OBO's were fixed on new charters throughout 2007 at higher rates and consequently the current year
results reflect a full trading period on these charters, generating increased revenues of $12.9 million.

 Our Suezmax vessels increased revenues by $1.6 million in 2008 as compared to 2007. The delivery of
three new vessels in 2008 resulted in increased revenues of $20.5 million, which was partially offset by the
shift in employment of two vessels to the spot market, resulting in a $13.9 million decrease in revenues and
a further decrease of $7.6 million as there were no single hull Suezmaxes traded on time charter during
2008 as compared to 2007.

 Single hull VLCC time charter earnings were increased due to higher market linked charter rates. Four
single hulled vessels were chartered out at rates linked to the Baltic Exchange Index which continued to
increase in 2008, resulting in a $39.3 million increase in revenues, which was partially offset by a $7.6
million loss of revenue from the Front Sabang which was sold in the second quarter of 2008. The
remaining $3.2 million increase represents receipts from old insurance claims.

 The double hull VLCC revenues were augmented by a full year of trading two vessels that were chartered
in during 2007. These vessels increased earnings by $15.4 million, assisted by a market linked charter out
rate.

 The most significant increase was realized by six other VLCC vessels chartered out under floating time
charters. In 2008, these vessels posted a $99.3 million increase on earnings compared to 2007.

Other income has increased due to an increase in income earned from supervising the newbuilding projects of
related parties and an increase in commissions earned on the commercial management of vessels chartered in from
Nordic American Tankers and the Songa Chelsea. These vessels were not managed by us in 2007.

Gain on sale of assets

Change
(in thousands of $) 2008 2007 $ %
Gain on sale of assets 142,293 118,168 24,125 20.4

58
The gain on sale of assets in 2008 comprises gains of $17.1 million and $24.8 million resulting from the termination
of the long-term charterparty agreements for Front Maple and Front Sabang respectively. Also included in the gain
on sale of assets are gains of $26.0 million and $26.4 million relating to the delivery of two completed heavy lift
conversions, the Front Comor and Front Traveller, respectively. Upon delivery of these final two vessels a further
$38.6 million was recognized on the gain on the sale of the heavylift vessels. A further gain of $9.4 million was
recognized on the sale of the Front Comor and Front Traveller mid-sections.

The gain on sale of assets in 2007 comprises gains of $21.3 million and $6.2 million from the sale of the single hull
vessels Front Transporter and Front Horizon, respectively, a gain of $60.7 million from the delivery of two
converted heavylift vessels and gains of $13.3 million and $16.6 million resulting from the termination of the long-
term charterparty agreements for Front Vanadis and Front Birch, respectively.

Ship operating expenses

Change
(in thousands of $) 2008 2007 $ %
VLCC 141,565 119,552 22,013 18.4
Suezmax 45,210 52,642 (7,432) (14.1)
Suezmax OBO 26,991 24,064 2,927 12.2
Total ship operating expenses 213,766 196,258 17,508 8.9

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.

VLCC operating costs have increased mainly due to the following:

 Nine VLCCs (six double hull and three single hull) were drydocked in both 2008 and 2007. The cost of
vessels drydocked in 2008 was $16.1 million higher than in 2007.

 In May 2008, the long term charter for the Front Sabang was terminated resulting in a decrease in ship
operating expenditure of $6.0 million in 2008 as compared to 2007.

 Increased crew costs contributed to $6.0 million of the higher operating costs reported in 2008.

Suezmax operating costs have decreased mainly due to the following:

 In 2008, three double hull Suezmaxes were drydocked as compared with five Suezmaxes (two single hull
and three double hull) in 2007, which resulted in a decrease of $2.9 million in drydocking expenses.

 A single hull Suezmax vessel was sold in January 2008 which had previously reported an entire year's
operating expenditure resulting in a $2.5 million decrease in 2008 operating expenditures.

 The Front Birch was sold in December 2007 and, therefore, reported close to a full year's operating
expenditure. The impact in 2008 was to decrease operating expenditure by $2.5 million.

 The Front Granite and Marble were sold to Dockwise in 2007 and time chartered back. In 2007 the vessels
reported $4.7 million more operating expenditure as a result.

 Five other single hull Suezmaxes were sold in 2007 that reported $7.3 million of expenses compared with
$0.3 million in 2008.

59
  Five newly acquired double hull Suezmax vessels were delivered during the period from June to August
2008 resulting in an increase in operating expenditure of $10.7 million in 2008.

 There have also been general costs increases across the Suezmax fleet.

OBO operating costs have increased slightly due to increased cost associated with spare parts purchases, higher crew
costs, as well as hull and machinery claim costs.

Profit share expense

Change
(in thousands of $) 2008 2007 $ %
Profit share expense 110,962 37,279 73,683 197.7

Profit share expense relates to the vessels leased from Ship Finance and is calculated as 20% of TCE in excess of
daily base charter hire. Profit share expense of $37.3 million recorded in the income statement in 2007 excludes
$15.2 million relating to the first quarter, which was eliminated on consolidation of Ship Finance.

Charterhire expenses

Change
(in thousands of $) 2008 2007 $ %
Charterhire expenses 220,170 56,868 163,302 287.2

Number of vessels chartered in and accounted for

as operating leases: 2008 2007
VLCC 4 3
Suezmax 14 6
Total 18 9

The increase in charterhire expense in 2008 relates to 18 vessels under operating lease in 2008 as compared to nine
vessels under operating lease in 2007. Six of the chartered in Suezmax vessels operated under floating charters in
2008.

Administrative expenses

Change
(in thousands of $) 2008 2007 $ %
Administrative expenses 35,226 36,410 (1,184) (3.3)

The decrease in administrative expenses during 2008 was mainly due to the strengthening of the U.S. dollar against
the Norwegian Kroner and the British Pound as most of our administrative expenses are denominated in Norwegian
Kroner and the British Pound. In addition, administrative expenses in 2007 included $2.0 million with respect to
Ship Finance for the first quarter. These items were partially offset by a $3.3 million increase in stock compensation
and a $2.1 million increase in newbuilding supervision expenses as a result of additional projects being supervised
in 2008.

Interest income

Change
(in thousands of $) 2008 2007 $ %
Interest income 41,204 54,316 (13,112) (24.1)

60
Interest income has decreased primarily as a result of a decrease in average cash balances held during the year
resulting from increased investments in fixed assets and non trading financial instruments, which has been coupled
with significant decrease in interest rates.

Interest expense

Change
(in thousands of $) 2008 2007 $ %
Interest expense 183,925 204,535 (20,610) (10.1)

The decrease in interest expense is primarily due to the fact that the Company no longer consolidates the results of
Ship Finance from the end of March 2007 and as a result the bank interest expense incurred by Ship Finance has
significantly decreased. This decrease in bank interest has been offset by an increase in lease interest expense. This
lease interest expense was eliminated in the first quarter of 2007.

Equity earnings of unconsolidated subsidiaries and associated companies

Change
(in thousands of $) 2008 2007 $ %
Share of results of associated companies (901) 573 (1,474) (257.2)

As of December 31, 2008, we account for five investees (2007: five) under the equity method. The decrease in
share of results of associated companies is primarily due to the disposal of International Maritime Exchange ASA,
or IMAREX, in 2007 and a write-down of the investment in Front Tobago Shipping Corporation.

Other

Change
(in thousands of $) 2008 2007 $ %
Foreign currency exchange gains 1,565 3,312 (1,747) (52.8)
Mark to market of derivatives (17,399) 3,530 (20,929) (592.9)
Impairment of securities (25,134) - (25,134) -
Dividends received 1,522 533 989 185.6
(Loss) gain on sale of securities (221) 122,120 (122,341) (100.2)
Other non-operating items, net 34,043 4,951 29,092 587.6

The unfavorable movement in mark to market of derivatives relates primarily to the forward contracts and total
return swap in relation to the purchase and sale of securities in OSG totaling $15.0 million. The remaining loss in
2008 relates to losses on forward freight contracts.

Impairment of securities relates to the other-than-temporary impairment recorded against securities held in OSG.
The securities were written down to fair value of $59.3 million as of December 31, 2008 resulting in an impairment
loss of $25.1 million.

The loss on sale of securities in 2008 relates to the disposal of securities in OSG. The gain on sale of securities in
2007 comprises the gains arising on the sale of our remaining shares in Dockwise, IMAREX, and Sea Production of
$48.7 million, $41.9 million and $31.2 million, respectively.

61
Other non operating items, net in 2008 is primarily due to a gain of $16.6 million following settlement by Bocimar
of a legal case and a $18.0 million gain on the partial spin-off of ITCL.

Net income attributable to noncontrolling interest

Change
(in thousands of $) 2008 2007 $ %
Net income attributable to noncontrolling interest 2,184 22,162 (19,978) (90.2)

In 2008, net income attributable to noncontrolling interest represents the 17.53% interest in the net income of ITCL
from February 2008. The net income attributable to noncontrolling interest in 2007 represents majority investors'
88.9% interests in the net income of Ship Finance for the first quarter. There is no net income attributable to
noncontrolling interest expense after March 31, 2007 as we no longer consolidate the results of Ship Finance.

Gain on issuance of shares by associate

Change
(in thousands of $) 2008 2007 $ %
Gain on issuance of shares by associate — 83,566 (83,566) (100.0)

The gain on issuance of shares in 2007 comprises a gain on the issuance of shares in Sea Production of $39.8 million
and a gain on the issuance of shares in Sealift of $43.7 million in connection with the business combination with
Dockwise. Based on the information currently available to us, we do not expect to record any gains on the issuance
of shares by associates in 2009.

Discontinued operations

Change
(in thousands of $) 2008 2007 $ %
Discontinued operations — 5,442 (5,442) (100.0)

Discontinued operations in 2007 are the results of the containerships and jack up rig of Ship Finance. We no longer
consolidate the results of Ship Finance following the spin off in March 2007.

62
Recent accounting pronouncements

In December 2007, the Financial Accounting Standards Board ('FASB') issued Statements No. 141(R), Business
Combinations, ("FAS 141(R)", (codified in ASC 805), and No. 160 Noncontrolling Interests in Consolidated
Financial Statements, ("FAS 160"), (codified in ASC 810). Together these statements can affect the way companies
account for future business combinations and noncontrolling interests. ASC 805 requires, amongst other changes,
recognition of subsequent changes in the fair value of contingent consideration in the Statement of Operations rather
than against Goodwill, and transaction costs to be recognized immediately in the Statement of Operations. ASC 810-
10-65-1 clarifies the classification of noncontrolling interests in consolidated balance sheets and the accounting for
and reporting of transactions between the reporting entity and holders of such noncontrolling interests. In particular
the noncontrolling interest in subsidiaries should be presented in the consolidated balance sheet within equity, but
separate from the parent's equity. Similarly the amount of net income attributable to the parent and to the minority
interest be clearly identified and presented on the consolidated statement of income. Both these Statements are
effective for transactions completed in fiscal years beginning after December 15, 2008. Adoption of these
Statements by the Company in the financial statements beginning January 1, 2009 did not have a material effect on
the Company's consolidated financial statements except that noncontrolling interests is classified as a component of
equity.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1 (codified in ASC 825), Guidance on Interim Fair
Value Disclosures, which expands the fair value disclosures required for all financial instruments within the scope of
this topic to interim periods for publicly traded entities. Entities must disclose the method(s) and significant
assumption used to estimate the fair value of financial instruments in financial statements on an interim basis and to
highlight any changes in the methods and significant assumptions from prior periods. The guidance is effective for
interim and annual periods ending after June 15, 2009 and adoption of this FSP did not have a material effect on our
consolidated financial statements.

In April 2009, the FASB issued FSP FAS 115-2 (codified in ASC 320) which provides additional guidance to
highlight and expand on the factors that should be considered in estimating fair value when there has been a
significant decrease in market activity for a financial asset. The guidance is effective for interim and annual periods
ending after June 15, 2009. Adoption of this FSP did not have a material effect on our consolidated financial
statements.

In May 2009, the FASB issued Statement No. 165 Subsequent Events, ('FAS 165'), (codified in ASC 855). This
Statement provides guidance on management's assessment of subsequent events. The guidance clarifies that
management must evaluate, as of each reporting period, events or transactions that occur after the balance sheet date
"through the date that the financial statements are issued or are available to be issued." Management must perform
its assessment for both interim and annual financial reporting periods. The new guidance is effective prospectively
for interim and annual periods ending after June 15, 2009. Adoption of the Statement did not have a material effect
on the Company's consolidated financial statements. In February 2010, the FASB amended the subsequent events
guidance issued in May 2009 to remove the requirement for SEC filers to disclose a date through which subsequent
events have been evaluated in both issued and revised financial statements. The amendment is effective upon
issuance. The adoption of this guidance did not have a material effect on our consolidated financial condition or
results of operations.

In June 2009, the FASB issued Statement No. 168, Statement on Codification and Hierarchy of Generally Accepted
Accounting Principles, ('FAS 168'), (codified in ASC 105). The Statement is a replacement for FAS 162. The GAAP
hierarchy will be modified to include only two levels of GAAP; authoritative and nonauthoritative. The Statement is
effective for financial statements issued for interim and annual periods ending after September 15, 2009. The
adoption of this Statement did not have a material effect on the Company's consolidated financial statements.

63
In June 2009, the FASB issued Statement No. 167, Amendments to FASB Interpretation No. 46(R) (FAS 167)
(codified in ASC 810). The amended guidance requires companies to qualitatively assess the determination of the
primary beneficiary of a variable-interest entities ("VIEs") based on whether the entity (1) has the power to direct
the activities of the VIE that most significantly impact the entity's economic performance and (2) has the obligation
to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the
entity that could potentially be significant to the VIE. It also requires additional disclosures for any enterprise that
holds a variable interest in a VIE. The new accounting and disclosure requirements become effective for the
Company from January 1, 2010. The Company is currently assessing the impact of this amendment on its
consolidated financial statements.

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 Pounds and Norwegian Kroner.

Our short-term liquidity requirements relate to servicing our debt, payment of operating costs (including
drydocking), 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.

Net cash provided by operating activities was $321.5 million in 2009 compared with $826.8 million in 2008 and
$556.2 million in 2007. The Company’s reliance on the spot market contributes to fluctuations in cash flows from
operating activities historically as a result of the exposure to highly cyclical tanker rates and more recently as a
result of the impact of the downturn in the world economy on worldwide oil demand. Any decrease in the average
TCE rates earned by the Company’s vessels in periods subsequent to December 31, 2009, compared with the actual
TCE rates achieved during 2009, will have a negative comparative impact on the amount of cash provided by
operating activities. As of February 2010, we have average total cash cost breakeven rates on a TCE basis of
approximately $25,500 for our Suezmax tankers and approximately $30,800 for our VLCCs. These are the daily
rates our vessels must earn to cover budgeted operating costs, estimated interest expenses and scheduled loan
principal repayments, bareboat hire and corporate overhead costs. These rates do not take into account capital
expenditures or loan balloon repayments at maturity which we expect to refinance with new loans. Furthermore,
M/T Kensington, M/T Hampstead, the remaining Genmar vessel being chartered in and three vessels on bareboat
charters out are not included in the breakeven rates.

Our medium and long-term liquidity requirements include funding the equity portion of investments in new or
replacement vessels, repayment of long-term debt balances and funding any payments we may be required to make
due to lessor put options on certain vessels we charter in. Sources of funding our long-term liquidity requirements
include new loans or equity issues, public and private debt offerings, vessel sales and sale and leaseback
arrangements. We believe our working capital is sufficient for the Company's present requirements; however, we
may not be able to refinance our current borrowings or enter into future borrowings at an interest rate or on terms
that are acceptable to us or at all and we are reviewing our capital commitments in order to enhance our liquidity.
See "Risk Factors – We cannot assure you that we will be able to refinance indebtedness incurred under our current
credit facilities."

64
As of December 31, 2009, 2008 and 2007, we had cash and cash equivalents of $82.6 million, $190.8 million and
$168.4 million, respectively. As of December 31, 2009, 2008 and 2007, we had restricted cash balances of $500.0
million, $554.8 million and $651.4 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. $184.3 million of our restricted cash as of December 31, 2009 (2008:
216.1 million) 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. In March 2010, we made certain amendments to the charter
agreements with Ship Finance relating to 31 double hull crude oil tankers and OBOs, which resulted in our restricted
cash deposits being reduced by approximately $112 million in exchange for a guarantee from us for the payment of
charterhire. Withdrawals from these restricted cash deposits will be prohibited. We also agreed with Ship Finance to
make an upfront payment of charterhire less operating expenses of approximately $73 million covering part of the
payments due to Ship Finance over the next six months. On March 26, 2010, we paid $54.4 million of this balance.
The remainder is expected to be paid before the end of March 2010.

At December 31, 2009, ITCL's assets included $314.9 million (2008: $336.7 million) of restricted cash deposits
which are held for the benefit of the holders of the Notes issued on behalf of ITCL subsidiaries. This restricted cash
also included deposits, which can only be used to meet liabilities under the lease agreements.

We currently have six VLCC and two Suezmax vessels under construction with an aggregate contract cost of
approximately $855 million. Out of the total contractual cost the financial exposure on two VLCC's of $252 million
can be limited to the $54 million already paid-in installments. As of December 31, 2009, installments of $364
million have been paid on the newbuildings. The remaining installments to be paid as of December 31, 2009 for the
newbuildings amount to $428 million, with expected payments of approximately $338 million and $90 million in
2010 and 2011, respectively. Outstanding installments of $428 million were reduced to $344 million following the
delivery of Northia and Naticina in January and March 2010, respectively and payments made in 2010 up to March
29. These numbers exclude the payments on the two VLCCs that have a financial exposure that can be limited to the
$54 million already paid-in installments. The remaining installments will be financed through a combination of bank
loans, other financing sources and existing liquidity.

We delivered the third and fourth heavy lift vessels in May and June 2008, respectively, generating net cash
proceeds of approximately $28.0 million (the net of an $80.0 million seller's credit and the remaining heavy lift
conversion commitments).

In January 2008 and March 2008, Ship Finance sold the single hull vessels Front Maple and Front Sabang,
respectively, and terminated our long-term leases for the vessels. We received termination payments of $16.7
million and $26.8 million, respectively.

In April 2008, we received a $16.6 million settlement from Bocimar NV following judgement in January 2008 of a
court case in our favor.

In March 2009, Frontline Shipping III Limited ("FSL III"), our wholly owned subsidiary, and Ship Finance amended
their charter ancillary agreement whereby the charter service reserve totaling $26.5 million relating to vessels on
charter from Ship Finance may be in the form of a loan to Ship Finance. In March 2009, a loan in the amount of
$26.5 million was drawn down by Ship Finance. The loan bears interest at LIBOR plus a margin and is due for
repayment within 364 days of the loan being provided, or earlier in accordance with the agreement.

In January 2009, the lease agreement between Buckingham Shipping plc, a majority-owned subsidiary, and
Dresdner Kleinwort Leasing was terminated and the outstanding lease obligation was settled in full using restricted
cash. At December 31, 2008, the outstanding lease obligation was $69.3 million. In January 2010, the lease
agreement between Caernarfon Shipping plc, a majority-owned subsidiary, and Dresdner Kleinwort Leasing was
terminated and the outstanding lease obligation was settled in full using restricted cash. At December 31, 2009, the
outstanding lease obligation was $70.0 million. These lease terminations were cash neutral for the Company.

65
In July 2009, we agreed with Ship Finance to terminate the long term charterparty for the single hull VLCC Front
Duchess and received a compensation payment of approximately $2.4 million in October 2009.

In February 2010, we acquired the VLCC Front Vista from Ship Finance for a purchase price of $58.5 million and
agreed to sell the vessel with the purchase price to be paid in installments over a 10 year period. The purchase price
was financed with a $15 million bank loan, a $26.5 million sellers credit from Ship Finance and equity. The buyer of
Front Vista has secured a 10 year time charter with a state owned oil company at a gross rate of $43,500 per day
during the entire charter period.

During the year ended December 31, 2009, we paid total cash dividends of $70.1 million. In the first quarter of
2010, we declared a cash dividend of $0.25 per share for the fourth quarter of 2009 representing a total cash
payment of $19.5 million.

Borrowing activities

In June 2006, we entered into an $80.0 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. The facility was
refinanced in June 2008 and partially refinanced in June 2009 for $65.0 million. The facility matures in June 2013.
At December 31, 2009, the outstanding amount on this facility was $52.9 million, and the available undrawn amount
was $nil. The facility contains a minimum value covenant and covenants that require the Company to maintain a
minimum level of free cash, a certain level of market adjusted net worth and positive working capital.

In June 2008, we entered into a $129.6 million pre-delivery secured term loan facility. This loan was refinanced in
June 2009 and bears interest at LIBOR plus a margin. The facility matures in June 2010. At December 31, 2009, the
outstanding amount on this facility was $34.8 million, and the available undrawn amount was $nil. In June 2008, we
also entered into a $420.0 million pre and post delivery secured term loan facility due in 2017. This facility bears
interest at LIBOR plus a margin. At December 31, 2009, the outstanding amount on this facility was $257.0 million
and the available undrawn amount was $122 million. In May 2009, we entered into a $146.4 million pre and post
delivery secured term loan facility falling due in 2020. At the year end, the outstanding amount on this facility was
$43.9 million and the available undrawn amount was $102.5 million. This facility bears interest at LIBOR plus a
margin. All three of these facilities were used to part finance our newbuilding program and are secured with the
newbuildings. The facilities contain a minimum value covenant and covenants that require us to maintain a
minimum level of free cash, a certain level of market adjusted net worth and positive working capital.

In July 2008 and August 2008, ITCL entered into a $21.6 million and $50.0 million secured term loan facility,
respectively. These facilities were used to purchase three tranches of Windsor Petroleum Transport Corporation
7.84% term notes with a par value of $38.0 million and were partially refinanced with a $33.0 million secured loan
facility in June 2009. This facility was fully drawn at December 31, 2009 and matures in June 2010. The facility
requires ITCL to maintain a minimum level of free cash, a certain level of market adjusted net worth and positive
working capital.

In September 2008, we entered into a $180.0 million secured term loan facility repayable over five years, which was
used to part finance the acquisition of five second hand Suezmax vessels with a cost of $240.0 million. The facility
bears interest at LIBOR plus a margin and is secured on the acquired vessels. At December 31, 2009, the
outstanding amount on this facility was $136.5 million and the available undrawn amount was $nil. The facility
contains a minimum value covenant and covenants that require us to maintain a minimum level of free cash, a
certain level of market adjusted net worth and positive working capital.

On March 26, 2010, we announced the private placement of $225 million of convertible bonds. The proceeds from
the bonds will be used for general corporate purposes, financing of the remaining equity investments in our
newbuilding program and will improve our ability to react to attractive market opportunities. The senior, unsecured
convertible bonds will have an annual coupon of 4.50%, payable quarterly in arrears and a conversion price of
$39.00. The reference price has been set at $29.7784 (NOK 180.0045). The applicable exchange rate has been set at
6.0448. The bonds will be issued and redeemed at 100% of their principal amount and will, unless previously
redeemed, converted or purchased and cancelled, mature on April 14, 2015. The offering of the bonds is expected to
close on April 14, 2010.

66
As of December 31, 2009, we were in compliance with all loan covenants.

Acquisitions and Disposals

Independent Tankers Corporation Limited

In February 2008, we divested 17.53% of our holding in ITCL through a stock and cash dividend of $11.4 million
and $14.0 million, respectively. We recorded a gain of $18.0 million in the first quarter of 2008 as a result of this
spin-off.

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 30.0 million shares issued by Sealift in a private placement at a cost of $60.0
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 39.8 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 owned 17.1% of Sealift. In October 2007, we sold our
entire holdings of 34,976,500 shares in Dockwise for a gross price of NOK 25 per share, generating net proceeds of
approximately $157.0 million.

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 $67.0 million.

International Maritime Exchange ASA

In November 2007, we sold our entire holdings of 1,714,544 shares in IMAREX for a price of NOK 160 per share,
generating proceeds of $50.5 million.

Navig8 Limited

In February 2008, we invested $20.0 million in Navig8 against the issue of new share capital representing
approximately 15.8% of the company.

Overseas Shipholding Group, Inc.

In March 2008, we entered into a forward contract to purchase 1,366,600 shares of OSG, which represented 4.4% of
the total outstanding shares, for $92.2 million. This contract was settled in October 2008. Also in October 2008, we
sold 100,000 shares in OSG at a price of $64.50 per share. For the year ending December 31, 2009, we did not
purchase or sell any shares of OSG. As of March 29, 2010, we beneficially owned 1,408,868 shares of OSG
representing 5.4% of the total outstanding shares.

67
Equity

In June 2008, we completed a private placement of three million shares at a subscription price of NOK 357 per share
resulting in net proceeds of $207.2 million. We used these proceeds to part finance the acquisition of the five
Suezmax vessels from Top Ships Inc. and the purchase of OSG shares.

Derivative Activities

As of December 31, 2009 and 2008, we did not hold any financial instruments for speculative or trading purposes.
In 2008, we entered a limited number of Forward Freight Agreements, or FFAs, with an objective to utilize them as
economic hedging instruments that reduce our exposure to changes in the spot market rates earned by some of our
vessels or for trading purposes to take advantage of short term fluctuations in the market. All of the FFAs were
settled as of December 31, 2008. In 2008, realized losses of $1.2 million have been recorded in the income
statement.

Tabular disclosure of contractual obligations

At December 31, 2009, we had the following contractual obligations and commitments:

Payment due by period

Less than After 5
(In thousands of $) 1 year 1 – 3 years 3 – 5 years years Total
Fixed rate long-term debt 12,352 35,937 45,015 232,491 325,795
Floating rate long-term debt 111,532 95,664 148,625 202,966 558,787
Fixed rate long-term debt in unconsolidated
subsidiaries 9,526 19,052 19,052 9,525 57,155
Operating lease obligations 73,102 39,958 3,340 1,423 117,823
Capital lease obligations 285,578 329,862 282,221 967,800 1,865,461
Newbuilding commitments 381,716 234,000 - - 615,716
Interest on fixed rate long-term debt 25,619 47,708 41,357 72,048 186,732
Interest on floating rate long-term debt 30,667 46,026 30,762 97,059 204,514
Interest on fixed rate long-term debt in
unconsolidated subsidiaries 4,464 6,493 3,246 406 14,609
Interest on capital lease obligations 119,673 187,045 144,610 253,507 704,835
Total 1,054,229 1,041,745 718,228 1,837,225 4,651,427

Interest payments are based on the existing borrowings of both consolidated and unconsolidated subsidiaries. It is
assumed that no refinancing of existing loans takes place. Interest on floating rate debt has been calculated using the
five year U.S. dollar swap rate as of February 22, 2010 of 2.78% plus agreed margins. Interest on fixed rate loans is
calculated using the contracted interest rates.

The newbuilding commitments as of December 31, 2009 consist of six VLCC and four Suezmax vessels.

As of December 31, 2009, the Company leased in 50 vessels on long-term time charters and bareboat charters from
third parties and related parties. Four of these leases are classified as operating leases and 46 as capital leases. In
addition, eight vessels were chartered in on floating rates and can be terminated by giving one month notice and a
further three are leased on short-term fixed rate charters. With the exception of the Company's long-term leases with
Ship Finance, the Company's long-term leases of vessels generally contain optional renewal periods and purchase
and put options.

68
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.

Safe harbor

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

The following table sets forth information regarding our executive officers and directors and certain key officers of
our wholly owned subsidiary, Frontline Management AS, who are responsible for overseeing our management.

Name Age Position

John Fredriksen 65 Chairman, Chief Executive Officer, President and Director

Kathrine Fredriksen 26 Director
Kate Blankenship 45 Director and Audit Committee Chairman
Frixos Savvides 58 Director and Audit Committee member
Tony Curry 59 Director
Jens Martin Jensen 46 Chief Executive Officer of Frontline Management AS
Inger M. Klemp 47 Chief Financial Officer of Frontline Management AS

Tor Olav Trøim acts as an alternate director for Kathrine Fredriksen.

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

John Fredriksen has served as Chairman of the Board, Chief Executive Officer, President and a director of the
Company since November 3, 1997. Mr. Fredriksen has established trusts for the benefit of his immediate family
which control Hemen, our largest shareholder. Mr. Fredriksen is Chairman, President and a director of a related
party Seadrill Limited, a Bermuda company listed on the Oslo Stock Exchange. He is also a director of a related
party Golar LNG Limited, or Golar, a Bermuda company listed on the Nasdaq Global Market and the Oslo Stock
Exchange whose principal shareholder is World Shipholding Limited, a company indirectly controlled by trusts
established by Mr. John Fredriksen for the benefit of his immediate family. He is also a director of a related party
Golden Ocean Group Limited, or Golden Ocean, a Bermuda company listed on the Oslo Stock Exchange whose
principal shareholder is Hemen.

Kathrine Fredriksen has been a director since February 2008. Ms. Fredriksen is also a director of Golar LNG
Limited, Seadrill Limited and Independent Tankers Corporation Limited. She graduated from Wang Handels
Gymnas in Norway and studied at the European Business School in London. Ms. Fredriksen is the daughter of Mr.
John Fredriksen, our Chairman and Chief Executive Officer.

69
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
served as Chief Financial Officer of Knightsbridge Tankers Limited from April 2000 to September 2007 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 Independent Tankers Corporation
Limited since February 2008, 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. Mr.
Savvides was appointed to the Board of Directors of Frontline in July 2005.

Tony Curry has been a director since October 2009. Mr. Curry retired from Shell in May 2009 having spent 40
years in Shell Shipping. For the last 12 years Mr. Curry was the Time Charter and Sale and Purchase Manager. Prior
to this, Mr. Curry spent seven years in Shell Western Services, Nassau, Bahamas as the Oil Freight Manager. Mr.
Curry is very familiar with the international oil and tanker sector and also the growing LNG and LPG areas.

Jens Martin Jensen served as the Acting Chief Executive Officer of Frontline Management AS since April 2008
and was appointed as permanent Chief Executive Officer in May 2009. Mr. Jensen joined Frontline in September
2004 as Commercial Director. From August 1996 to September 2004, Mr. Jensen was a partner in Island
Shipbrokers in Singapore. From April 1985 to August 1996, Mr. Jensen worked in the A.P. Moller Group with
postings to Singapore, Tokyo, Mexico and Denmark. Mr. Jensen completed the A.P. Moller training program in
1987.

Inger M. Klemp has served as Chief Financial Officer of Frontline Management AS since June 1, 2006. Mrs.
Klemp has served as a director of Independent Tankers Corporation Limited since February 2008 and has served as
Chief Financial Officer of Knightsbridge Tankers Limited since September 2007. Mrs. Klemp 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, 2009, we paid to our directors and executive officers (seven persons) aggregate
cash compensation of $1,586,814 and an aggregate amount of $47,219 for pension and retirement benefits. In
addition to cash compensation, during 2009 we also recognized stock compensation expense of $1,394,689 in
respect of 320,000 options, which were granted in October 2009 under the Frontline Ltd. Share Option Scheme. All
options vest over a three year period beginning in October 2010 and expire in October 2013. The initial exercise
price of these options is NOK 145.00, which is reduced by the amount of dividends paid after the date of grant. The
exercise price of these options as of December 31, 2009 is NOK 144.16.

70
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 five 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 see Item 16G or visit
the corporate governance section of our website at www.frontline.bm.

D. EMPLOYEES

As of December 31, 2009, Frontline and its subsidiaries employed approximately 51 people in their respective
offices in Bermuda, London, Oslo, Singapore and India. 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 February 28, 2010,
were as follows:

Options
% of for
Ordinary Ordinary Ordinary
Shares of Shares Shares of
Director or Officer $2.50 each Outstanding $2.50 each

John Fredriksen* * * 100,000

Katherine Fredriksen - - 30,000
Kate Blankenship 2,000 ** 30,000
Frixos Savvides - - 30,000
Tony Curry - - 30,000
Jens Martin Jensen - - 50,000
Inger M. Klemp 16,000 ** 50,000

* Hemen Holding Ltd, or Hemen, is a Cyprus holding company, the shares of which are held in trusts established
by Mr. John Fredriksen for the benefit of his immediate family. Mr. Fredriksen disclaims beneficial ownership
of the 26,304,053 Ordinary Shares held by Hemen, except to the extent of his voting and dispositive interest in
such shares of common stock. Mr. Fredriksen has no pecuniary interest in the shares held by Hemen.
** Less than one per cent.

71
The options were granted in October 2009 under the Frontline Ltd. Share Option Scheme, which was approved by
the board on November 16, 2006. All options vest over a three year period beginning in October 2010 and expire in
October 2013. The initial exercise price of these options is NOK 145.00, which is reduced by the amount of
dividends paid after the date of grant. The exercise price of these options as of December 31, 2009 is NOK 144.16.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

The following table presents certain information as at February 28, 2010, regarding the ownership of our Ordinary
Shares with respect to each shareholder whom we know to beneficially own more than five percent of our
outstanding Ordinary Shares.

Ordinary
Owner Shares Amount %

Hemen Holding Ltd. (1) 26,304,053 33.78%

(1) Hemen, a Cyprus holding company, the shares of which are held in trusts established by Mr. John Fredriksen
for the benefit of his immediate family.

As of March 9, 2010, 36,446,932 of our Ordinary Shares were held on the New York Stock Exchange.

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

As of March 31, 2007, the Company is no longer consolidating the results of Ship Finance. The majority of the
Company's leased vessels are leased from Ship Finance and under a Charter Ancillary Agreement; Ship Finance is
entitled to a share of 20% of the Company's earnings on these leased vessels. A summary of leasing transactions
with Ship Finance during the years ended December 31, 2009 and 2008 (excluding amounts prior to
deconsolidation) is as follows:

(in thousands of $) 2009 2008

Charterhire paid (principal and interest) 331,534 345,551
Payments received for termination of leases 2,386 43,510
Profit share expense 33,018 110,962
Remaining lease obligation 1,462,753 1,609,987

A summary of net amounts earned (incurred) from related parties excluding the Ship Finance lease related balances
above for the years ended December 31, 2009, 2008 and 2007 are as follows:

72
(in thousands of $) 2009 2008 2007
Seatankers Management Co. Ltd 1,126 1,175 582
Golar LNG Limited 156 17 284
Ship Finance International Limited 2,347 3,430 1,525
Golden Ocean Group Limited 4,253 6,714 2,099
Geveran Trading Co Ltd (405) (366) -
Greenwich Holdings Ltd - - 69
Bryggegata AS (1,300) (1,395) (1,430)
Arcadia Petroleum Limited 42,264 64,784 17,443
Seadrill Limited 322 25 (52)
Seawell Limited 126 - -
Deep Sea Supply Plc 32 - -
Aktiv Kapital ASA 63 - -
CalPetro Tankers (Bahamas I) Limited 45 43 40
CalPetro Tankers (Bahamas II) Limited 45 43 40
CalPetro Tankers (IOM) Limited 45 43 40

Net amounts earned from related parties comprise office rental income and management, technical and commercial
advisory, newbuilding supervision, corporate and administrative service income and interest income. Net expenses
paid to related parties comprise primarily of rental for office space.

A summary of balances with related parties as at December 31, 2009 and 2008 is as follows:

(in thousands of $) 2009 2008

Receivables
Ship Finance International Limited 26,944 8,351
Seatankers Management Co. Ltd 214 370
Golar LNG Limited 247 381
Northern Offshore Ltd 13 13
Golden Ocean Group Limited 1,119 2,012
Seadrill Limited 160 106
CalPetro Tankers (Bahamas I) Limited 11 35
CalPetro Tankers (Bahamas II) Limited 11 35
CalPetro Tankers (IOM) Limited 11 35
Deep Sea Supply Plc 2 -
Arcadia Petroleum Limited 11 -
28,743 11,338

(in thousands of $) 2009 2008

Payables
Ship Finance International Limited (33,158) (46,540)
Seatankers Management Co. Ltd (96) (119)
Golar LNG Limited (519) (242)
Golden Ocean Group Limited (30) (155)
Geveran Trading Co Ltd - (366)
(33,803) (47,422)

Receivables and payables with related parties comprise unpaid management, technical advisory, newbuilding
supervision, 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. The payable with Ship Finance also includes
unpaid profit share due to Ship Finance. Receivables and payables with related parties are generally settled quarterly
in arrears with the exception of profit share due to Ship Finance which is settled annually.

73
Ship Finance International Limited, Golar LNG Limited, Northern Offshore Ltd, Norse Energy Group ASA, Seadrill
Limited, Bryggegata AS, Golden Ocean Group Limited, Greenwich Holdings Ltd, Arcadia Petroleum Limited
("Arcadia"), Geveran Trading Co Ltd ("Geveran"), Deep Sea Supply Plc ("Deep Sea"), Seawell Limited
("Seawell"), and Seatankers Management Co. Ltd are each subject to the significant influence or indirect control of
John Fredriksen. CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas II) Limited, CalPetro Tankers
(Bahamas III) Limited and CalPetro Tankers (IOM) Limited were all equity accounted until March 31, 2006 at
which point, the Company began consolidating CalPetro (Bahamas III) Limited.

During 2008, the Company engaged in the trading of forward freight agreement trading through Arcadia, a related
party, for which Arcadia was paid commission on each trade. The total amount of commissions paid to Arcadia in
2008 was $12,500. The Company did not engage in forward freight agreement trading in 2009. In addition, the
Company earned freights on chartering vessels to Arcadia in the amount of $42.5million (2008: $64.8 million).

In November 2008, the Company advanced $60.0 million of the profit share balance, which was paid to Ship
Finance in March 2009. The advance bore interest at a fixed rate.

In March 2009, Frontline Shipping III Limited ("FSL III"), a wholly owned subsidiary of the Company, and Ship
Finance amended their charter ancillary agreement whereby the charterservice reserve totaling $26.5 million relating
to vessels on charter from Ship Finance may be in the form of a loan to Ship Finance. In March 2009, a loan in the
amount of $26.5 million was drawn down by Ship Finance. The loan bears interest at LIBOR plus a margin and is
due for repayment within 364 days of the loan being provided, or earlier in accordance with the agreement.

Geveran acted as a guarantor for two loan facilities taken out by ITCL that expired in July and August 2009.
Geveran received an annual fee of 2% of the draw down facility for acting as guarantor. Both of these facilities were
refinanced by ITCL in the year, with Frontline Ltd acting as guarantor.

In September 2009, Ship Finance sold the single hull vessel Front Duchess to a third party and as a result,
terminated the Company's long-term lease for the vessel. The Company received a termination payment of $2.4
million and recorded a net gain of $3.1 million as a gain on sale of assets.

During the year ended December 31, 2007, the Company held investments in Sea Production and Dockwise and
earned income from these companies in the form of rental income and income earned from the provision of
accounting services totaling $1.0 million. During 2007, the Company disposed of its entire investments in these
companies and they are no longer considered to be related parties.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See Item 18.

74
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.

Dividend Policy

The timing and amount of dividends, if any, is at the discretion of our Board of Directors. The level of dividend will
be guided by present earnings, market prospects, current capital expenditure programs as well as investment
opportunities. We have paid the following cash dividends in 2007, 2008 and 2009.

Amount
Payment Date per Share

2007
March 22, 2007 $ 2.05
June 22, 2007 $ 1.50
October 24, 2007 $ 1.50
October 24, 2007 $ 1.75
December 12, 2007 $ 1.50

2008
March 10, 2008 $ 2.00
June 25, 2008 $ 2.75
September 19, 2008 $ 3.00
December 22, 2008 $ 0.50

2009
March 27, 2009 $ 0.25
June 23, 2009 $ 0.25
September 24, 2009 $ 0.25
December 22, 2009 $ 0.15

On February 25, 2010 the Board declared a cash dividend of $0.25 per share for the fourth quarter of 2009 which
will be paid on or about March 30, 2010.

B. SIGNIFICANT CHANGES

None.

ITEM 9. THE OFFER AND LISTING

The Company's Ordinary Shares are traded on the New York Stock Exchange, or NYSE, the Oslo Stock Exchange,
or OSE, and on the London Stock Exchange, or 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.

75
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,
2009 $ 33.29 $ 15.78 NOK 235.00 NOK 107.00
2008 $ 72.36 $ 25.00 NOK 376.50 NOK 165.25
2007 $ 53.09 $ 29.35 NOK 306.00 NOK 183.75
2006 $ 44.65 $ 28.80 NOK 280.00 NOK 184.00
2005 $ 57.97 $ 35.89 NOK 355.00 NOK 230.00

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,
2009
First quarter $ 33.29 $ 15.78 NOK 235.00 NOK 112.00
Second quarter $ 28.59 $ 17.00 NOK 186.50 NOK 107.00
Third quarter $ 25.28 $ 19.76 NOK 164.00 NOK 125.70
Fourth quarter $ 29.88 $ 21.50 NOK 175.90 NOK 124.20

NYSE OSE
High Low High Low
Fiscal year ended December 31,
2008
First quarter $ 49.66 $ 34.00 NOK 268.00 NOK 180.00
Second quarter $ 72.36 $ 46.34 NOK 376.50 NOK 231.50
Third quarter $ 69.09 $ 43.25 NOK 358.00 NOK 256.50
Fourth quarter $ 47.50 $ 25.00 NOK 279.50 NOK 165.25

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
February 2010 $ 29.95 $ 25.02 NOK180.30 NOK146.40
January 2010 $ 34.15 $ 28.52 NOK194.00 NOK160.20
December 2009 $ 29.88 $ 26.36 NOK175.90 NOK152.30
November 2009 $ 28.80 $ 22.53 NOK159.40 NOK130.20
October 2009 $ 27.51 $ 21.50 NOK155.20 NOK124.20
September 2009 $ 25.00 $ 20.66 NOK147.90 NOK125.70

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

Not applicable.

76
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.

At the 2007 Annual General Meeting of the Company, our shareholders voted to amend the Company's Bye-laws to
ensure conformity with recent revisions to the Bermuda Companies Act 1981, as amended. These amended Bye-
laws of the Company as adopted on September 28, 2007, are incorporated by reference in 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 provisions excluding personal liability of a
director, alternate director, officer, member of a committee authorized under Bye-law 104, resident representative or
their respective heirs, executors or administrators 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, alternate
directors and officers of the Company and any members of a committee authorized under Bye-law 104, resident
representatives or their respective heirs, executors or administrators 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, alternate director or officer of the Company or member of a committee authorized
under Bye-law 104, resident representative or their respective heirs, executors or administrators 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.

77
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 tortious 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 authorized 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.

78
C. MATERIAL CONTRACTS

Sealift Ltd.

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., or 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, or 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 and time 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. We were liable for certain damages if the converted vessels
were delivered after certain agreed times and paid damages of $1.2 million regarding the late delivery of the fourth
and final converted vessel.

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.

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%. We subsequently sold all our shares in Sealift and
have no financial interest in the company.

Sea Production Ltd

On February 14, 2007 our subsidiary, 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
inter-company 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.

79
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 currently have no financial interest in
the company.

Gemini Pool

Frontline Chartering Services, Inc., or FCS, a wholly-owned subsidiary, Gemini Tankers LLC, or Gemini Tankers,
Teekay Chartering Ltd., Koenig & Cie GMBH & Co and Hyundai Merchant Marine (Europe) Ltd entered into an
Amended & Restated Pool Agreement regarding the Gemini Tankers Suezmax Pool, or the Pool, with effect from
January 1, 2009. This agreement amended a pool agreement, which became effective on December 1, 2003 between
the above parties excluding FCS. The Pool is commercially operated by the Gemini Tankers, or the Pool Manager,
which employs the vessels in the Pool under a contract with a particular charterer or shipper for a number of
voyages, with each single voyage or contract of carriage being performed by a pool vessel after nomination by the
Pool Manager. Each participant in the Pool shall, in relation to each of its vessels, maintain the vessel in a seaworthy
condition and to defined technical and operational standards and obtain and maintain the required number of
vettings. Each participant in the Pool shall also keep its vessels in the Pool insured for its own account and is
responsible for the technical management of its vessels.

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

United States Taxation

The following discussion is based upon the provisions of the United States Internal Revenue Code of 1986, as
amended, or the Code, existing and proposed United States 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 the Company does not have an
office or other fixed place of business in the United States.

80
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, charterhire 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 is not permitted by law to engage in transportation that gives
rise to 100% United States source income.

Shipping income attributable to transportation exclusively between non-United States 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 United States ports. Unless exempt from United States federal income taxation under
Section 883 of the Code, or Section 883, the Company will be subject to United States 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 Section 883

Under the relevant provisions of Section 883, the Company will be exempt from United States federal income
taxation on its United States source shipping income if:

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

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

● 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

● 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 organization requirement and the Publicly-
Traded Test, which the Company refers to as the "50% Ownership Test."

The United States 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 United States Treasury Department has
recognized Liberia, the Isle of Man and the Bahamas, 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 organization requirement.

81
Therefore, the Company's eligibility for exemption under Section 883 is wholly dependent upon being able to satisfy
one of the stock ownership requirements.

For the 2009 taxable year, the Company satisfied the Publicly-Traded Test since, on more than half the days of the
taxable year, the Company's Ordinary Shares were primarily and regularly traded on the New York Stock Exchange.

Taxation in Absence of Section 883 Exemption

To the extent the benefits of Section 883 are unavailable with respect to any item of United States source income,
the Company's United States 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, which the Company refers to as the "4% gross basis tax
regime". Since under the sourcing rules described above, no more than 50% of the Company's shipping income
would be treated as being derived from United States sources, the maximum effective rate of United States 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 the Company qualifies for exemption under Section 883, the Company will not be subject to
United States federal income taxation with respect to gain realized 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 the Company will be considered to occur outside of the United States.

Taxation of United States Holders

The following is a discussion of the material United States federal income tax considerations relevant to an
investment decision by a United States Holder, as defined below, with respect to the Ordinary Shares. This
discussion does not purport to deal with the tax consequences of owning Ordinary Shares to all categories of
investors, some of which, such as dealers in securities, tax-exempt organizations, investors whose functional
currency is not the United States dollar and investors that own, actually or under applicable constructive ownership
rules, 10% or more of the Company's common shares, 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 Ordinary Shares.

As used herein, the term "United States Holder" means a beneficial owner of Ordinary Shares that (i) is a United
States citizen or resident, a United States corporation or other United States entity taxable as a corporation, an estate,
the income of which is subject to United States 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
United States persons have the authority to control all substantial decisions of the trust and (ii) owns the Ordinary
Shares as a capital asset, generally, for investment purposes.

If a partnership holds Ordinary Shares, 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 Ordinary Shares, you
are encouraged to consult your own tax advisor regarding the United States federal income tax consequences of
owning an interest in a partnership that holds Ordinary Shares.

82
Distributions

Subject to the discussion of passive foreign investment companies below, any distributions made by the Company
with respect to Ordinary Shares to a United States 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 the Company's
current or accumulated earnings and profits, as determined under United States federal income tax principles.
Distributions in excess of the Company's earnings and profits will be treated first as a non-taxable return of capital
to the extent of the United States Holder's tax basis in his Ordinary Shares on a dollar-for-dollar basis and thereafter
as capital gain. Because the Company is not a United States corporation, United States Holders that are corporations
will not be entitled to claim a dividends-received deduction with respect to any distributions they receive from the
Company.

Dividends paid on Ordinary Shares to a United States Holder which is an individual, trust or estate (a "United States
Non-Corporate Holder") will generally be treated as "qualified dividend income" that is taxable to such shareholders
at preferential United States federal income tax rates (currently through 2010) provided that (1) Ordinary Shares are
readily tradable on an established securities market in the United States (such as the New York Stock Exchange on
which the Ordinary Shares are listed); (2) the Company is not a passive foreign investment company for the taxable
year during which the dividend is paid or the immediately preceding taxable year (which the Company does not
believe it is, has been or will be); and (3) the United States Non-Corporate Holder has owned the Ordinary Shares
for more than 60 days in the 121-day period beginning 60 days before the date on which the Ordinary Shares
become ex-dividend.

Legislation has been previously introduced in the United States Congress which, if enacted in its present form,
would preclude the dividends paid by the Company from qualifying for such preferential rates prospectively from
the date of the enactment. Any dividends paid by the Company which are not eligible for these preferential rates will
be taxed as ordinary income to a United States Holder.

Sale, Exchange or other Disposition of Common Stock

Assuming the Company does not constitute a passive foreign investment company for any taxable year, a United
States Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of the
Company's Ordinary Shares in an amount equal to the difference between the amount realized by the United States
Holder from such sale, exchange or other disposition and the United States Holder's tax basis in the Ordinary Shares.
Such gain or loss will be treated as long-term capital gain or loss if the United States Holder's holding period in the
Ordinary Shares is greater than one year at the time of the sale, exchange or other disposition. A United States
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 United States 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, the Company will be treated as a PFIC with respect to a United States Holder if, for any
taxable year in which such United States Holder held the Company's Ordinary Shares, either;

 at least 75% of the Company's 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

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

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

83
Based on the Company's current operations and future projections, the Company does not believe that it is, nor does
it expect to become, a PFIC with respect to any taxable year. Although there is no legal authority directly on point,
the Company's belief is based principally on the position that, for purposes of determining whether the Company is a
PFIC, the gross income the Company derives or is deemed to derive from the time chartering and voyage chartering
activities should constitute services income, rather than rental income. Correspondingly, the Company believes that
such income does not constitute passive income, and the assets that the Company or its wholly-owned subsidiaries
own and operate in connection with the production of such income, in particular, the vessels, do not constitute assets
that produce, or are held for the production of, passive income for purposes of determining whether the Company is
a PFIC.

Although there is no direct legal authority under the PFIC rules, the Company believes there is substantial legal
authority supporting its position consisting of case law and United States Internal Revenue Service, or the IRS,
pronouncements concerning the characterization of income derived from time charters and voyage charters as
services income for other tax purposes. However, it should be noted that there is also authority which characterizes
time charter income as rental income rather than services income for other tax purposes. Accordingly, in the absence
of any legal authority specifically relating to the Code provisions governing PFICs, the IRS or a court could disagree
with our position. In addition, although the Company intends to conduct its affairs in such a manner as to avoid
being classified as a PFIC with respect to any taxable year, there can be no assurance that the nature of its operations
will not change in the future.

As discussed more fully below, if the Company were to be treated as a PFIC for any taxable year, a United States
Holder would be subject to different taxation rules depending on whether the United States Holder makes an
election to treat the Company as a "Qualified Electing Fund," which the Company refers to as a "QEF election." As
an alternative to making a QEF election, a United States Holder should be able to elect to mark-to-market the
Company's Ordinary Shares, which the Company refers to as a "Mark-to-Market Election," as discussed below.

Taxation of United States Holders Making a Timely QEF Election

If a United States Holder makes a timely QEF election, which United States Holder is referred to by the Company as
an "Electing United States Holder," the Electing United States Holder must report each year for United States
federal income tax purposes its pro rata share of the Company's ordinary earnings and its net capital gain, if any, for
the Company's taxable year that ends with or within the taxable year of the Electing United States Holder, regardless
of whether or not distributions were received from the Company by the Electing United States Holder. The Electing
United States Holder's adjusted tax basis in the Ordinary Shares 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 Ordinary Shares and will not be taxed again once distributed.
An Electing United States Holder would generally recognize capital gain or loss on the sale, exchange or other
disposition of the Ordinary Shares. A United States Holder will be eligible to make a QEF Election with respect to
its Ordinary Shares only if the Company provides the United States Holder with annual tax information relating to
the Company. There can be no assurance that the Company will provide such tax information on an annual basis.

Taxation of United States Holders Making a "Mark-to-Market" Election

Alternatively, if the Company were to be treated as a PFIC for any taxable year and, as anticipated, the Ordinary
Shares are treated as "marketable stock," a United States Holder would be allowed to make a Mark-to-Market
Election with respect to the Company's Ordinary Shares. If that election is made, the United States Holder generally
would include as ordinary income in each taxable year the excess, if any, of the fair market value of the Ordinary
Shares at the end of the taxable year over such United States Holder's adjusted tax basis in the Ordinary Shares. The
United States Holder would also be permitted an ordinary loss in respect of the excess, if any, of the United States
Holder's adjusted tax basis in the Ordinary Shares 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 United
States Holder's tax basis in his Ordinary Shares would be adjusted to reflect any such income or loss amount. Gain
realized on the sale, exchange or other disposition of the Ordinary shares would be treated as ordinary income, and
any loss realized on the sale, exchange or other disposition of the Ordinary Shares 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 United States
Holder.

84
Taxation of United States Holders Not Making a Timely QEF or Mark-to-Market Election

Finally, if the Company were to be treated as a PFIC for any taxable year, a United States Holder who does not
make either a QEF election or a Mark-to-Market Election for that year, whom is referred to as a "Non-Electing
United States 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 United States Holder on the Ordinary Shares in a taxable year in
excess of 125% of the average annual distributions received by the Non-Electing United States Holder in the three
preceding taxable years, or, if shorter, the Non-Electing United States Holder's holding period for the Ordinary
Shares), and (2) any gain realized on the sale, exchange or other disposition of the Ordinary Shares. Under these
special rules:

 the excess distribution or gain would be allocated ratably over the Non-Electing United States Holders'
aggregate holding period for the Ordinary Shares;

 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

 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 tax 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 the Ordinary Shares. If a Non-
Electing United States Holder who is an individual dies while owning the Ordinary Shares, the successor of such
deceased Non-Electing United States Holder 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 a holder of Ordinary
Shares will be subject to information reporting requirements. Such payments will also be subject to "backup
withholding" if paid to a non-corporate United States Holder who:

85
  fails to provide an accurate taxpayer identification number;

 is notified by the IRS that he has failed to report all interest or dividends required to be shown on his
United States federal income tax returns; or

 in certain circumstances, fails to comply with applicable certification requirements.

If a holder sells his Ordinary Shares to or through a United States office or broker, the payment of the proceeds is
subject to both United States information reporting and backup unless the holder establishes an exemption. If a
holders sells his Ordinary Shares through a non- United States office of a non- United States broker and the sales
proceeds are paid to the holder outside the United States then information reporting and backup withholding
generally will not apply to that payment. However, United States information reporting requirements, but not
backup withholding, will apply to a payment of sales proceeds, including a payment made to a holder outside the
United States, if the holder sells his Ordinary Shares through a non- United States office of a broker that is a United
States person or has some other contacts with the United States.

Backup withholding is not an additional tax. Rather, a tax payer generally may obtain a refund of any amounts
withheld under backup withholding rules that exceed then taxpayer's income tax liability by filing a refund claim
with the IRS.

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 holders of Ordinary Shares. Bermuda has undertaken not to impose any such Bermuda taxes on
holders of Ordinary Shares prior to 2016 except in so far as such tax applies to persons ordinarily resident in
Bermuda. The Company is not eligible for the benefits of any tax treaty between the United States and Bermuda.

Liberian Taxation

The Republic of Liberia enacted a new income tax act effective as of January 1, 2001, or the New Act. In contrast
to the income tax law previously in effect since 1977, or 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 the
Company's 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 the Company's Liberian subsidiaries, will not be subject to tax under the
New Act retroactive to January 1, 2001, or 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, the Company's Liberian subsidiaries will be wholly exempt
from Liberian income tax as under the Prior Law.

If the Company's Liberian subsidiaries were subject to Liberian income tax under the New Act, the Company's
Liberian subsidiaries would be subject to tax at a rate of 35% on their worldwide income. As a result, their, and
subsequently the Company's, net income and cash flow would be materially reduced by the amount of the applicable
tax. In addition, the Company, 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%.

86
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 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 to our floating rate debt, which totaled $558.1 million as of December 31,
2009 (2008: $568.1 million). A one per cent change in interest rates would increase or decrease interest expense by
$5.6 million per year as of December 31, 2009.

As of December 31, 2009, the fair market value of our fixed rate debt was $313.6 million (2008: $352.9 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 have decreased or increased by approximately $15.7 million and
$17.0 million respectively (2008: decrease by $21.5 million and increase by $23.5 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.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

87
 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, 2009. 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:

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

 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

 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.

88
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, 2009. 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, 2009.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2009 has been
audited by PricewaterhouseCoopers AS., an independent registered public accounting firm, as stated in their report
which appears herein.

c) Attestation Report of Independent Registered Public Accounting Firm

The registered public accounting firm that audited the consolidated financial statements, PricewaterhouseCoopers
AS, has issued an attestation report on the Company's internal control over financial reporting, appearing under Item
18, and such report is incorporated herein by reference.

d) 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 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that both Mr. Frixos Savvides and Mrs. Kate Blankenship are independent
directors and audit committee financial experts.

ITEM 16B. 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. 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 our code of ethics upon written request to our registered office.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our principal accountant for 2009 and 2008 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 $) 2009 2008

Audit Fees (a) 1,457 1,664
Audit-Related Fees (b) — —
Tax Fees (c) — —
All Other Fees (d) — —
Total 1,457 1,664

(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.

89
(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 2009
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

None.

ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

Pursuant to an exception under the NYSE listing standards available to foreign private issuers, we are not required to
comply with all of the corporate governance practices followed by U.S. companies under the NYSE listing
standards. The significant differences between our corporate governance practices and the NYSE standards
applicable to listed U.S. companies are set forth below:

 Executive Sessions. The NYSE requires that non-management directors meet regularly in executive
sessions without management. The NYSE also requires that all independent directors meet in an executive
session at least once a year. As permitted under Bermuda law and our bye-laws, our non-management
directors do not regularly hold executive sessions without management and we do not expect them to do so
in the future.

 Nominating/Corporate Governance Committee. The NYSE requires that a listed U.S. company have a
nominating/corporate governance committee of independent directors and a committee charter specifying
the purpose, duties and evaluation procedures of the committee. As permitted under Bermuda law and our
bye-laws, we do not currently have a nominating or corporate governance committee.

90
 Audit Committee. The NYSE requires, among other things, that a listed U.S. company have an audit
committee with a minimum of three members. As permitted by Rule 10A-3 under the Securities Exchange
Act of 1934, our audit committee consists of two independent members of our Board.

 Corporate Governance Guidelines. The NYSE requires U.S. companies to adopt and disclose corporate
governance guidelines. The guidelines must address, among other things: director qualification standards,
director responsibilities, director access to management and independent advisers, director compensation,
director orientation and continuing education, management succession and an annual performance
evaluation. We are not required to adopt such guidelines under Bermuda law and we have not adopted such
guidelines.

91
 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-35 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 – PricewaterhouseCoopers AS F-2

Report of Independent Registered Public Accounting Firm – Grant Thornton LLP F-3

Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and
2007 F-4

Consolidated Balance Sheets as of December 31, 2009 and 2008 F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and
2007 F-6

Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31,
2009, 2008 and 2007 F-7

Consolidated Statements of Comprehensive Income for the years ended December 31, 2009,
2008 and 2007 F-8

Notes to Consolidated Financial Statements F-9

92
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 September 28,
2007 incorporated by reference to Exhibit 1.2 of the Company's annual Report on form 20-F for the
fiscal year ended December 31, 2007.

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.

4.4 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.

4.6 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 Form 20-F for the fiscal year ended December 31, 2004.

93
4.8 Form of Performance Guarantee issued by the Company incorporated by reference to Exhibit 10.4 of
the Company's Annual Report on Form 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 Form 20-F
for the fiscal year ended December 31, 2004.

4.13 Second Supplemental Purchase Agreement between Sealift Ltd., Southwest Tankers Inc., Front
Target Inc., Front Traveller Inc., West Tankers Inc., Granite Shipping Ltd., Quadrant Marine Inc.
and Frontline Ltd. dated April 27, 2007 incorporated by reference to Exhibit 4.13 of the Company's
Annual Report on Form 20-F for the fiscal year ended December 31, 2007.

4.14 Shareholder's Agreement Relating to Sealift Ltd dated April 27, 2007 incorporated by reference to
Exhibit 4.14 of the Company's Annual Report on Form 20-F for the fiscal year ended December 31,
2007.

4.15 Merger Agreement between Dockwise Limited and Sealift Ltd dated April 27, 2007 incorporated by
reference to Exhibit 4.15 of the Company's Annual Report on Form 20-F for the fiscal year ended
December 31, 2007.

4.16 Frontline Ltd Share Option Scheme dated November 16, 2006 incorporated by reference to Exhibit
4.16 of the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2007.

4.17 Management Agreement between Ship Finance International Limited and its subsidiaries and
Frontline Management (Bermuda) Ltd, dated November 29, 2007. (Replaces Administrative
Services Agreement dated December 31, 2004) incorporated by reference to Exhibit 4.17 of the
Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2007.

4.18 Addendum No. 3 to Charter Ancillary Agreement between Frontline Ltd, Ship Finance International
Limited and Frontline Shipping Ltd, dated August 21, 2007 incorporated by reference to Exhibit
4.18 of the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2007.

94
4.19 Addendum No. 1 to Charter Ancillary Agreement between Frontline Ltd., Ship Finance International
Limited and Frontline Shipping II Ltd., dated August 21, 2007 incorporated by reference to Exhibit
4.19 of the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2007.

4.20 Amended and Restated Gemini Suezmax Pool Agreement dated January 1, 2009.

8.1 Subsidiaries of the Company.

12.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act, as amended.

12.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act, as amended.

13.1 Certification of the Principal Executive Officer pursuant to 18 USC Section 1350, as adopted,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

13.2 Certification of the Principal Financial Officer pursuant to 18 USC Section 1350, as adopted,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

95
 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 authorized.

Frontline Ltd.
(Registrant)

Date: March 29, 2010 By: /s/ Inger M. Klemp

Name: Inger M. Klemp
Title: Principal Financial Officer

96
Index to Consolidated Financial Statements of Frontline Ltd.

Report of Independent Registered Public Accounting Firm - PricewaterhouseCoopers AS F-2

Report of Independent Registered Public Accounting Firm - Grant Thornton LLP F-3
Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007 F-4
Consolidated Balance Sheets as of December 31, 2009 and 2008 F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007 F-6
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, F-7
2009, 2008 and 2007
Consolidated Statements of Comprehensive Income for the years ended December 31, 2009, 2008 F-8
and 2007
Notes to Consolidated Financial Statements F-9

F-1
Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Frontline Ltd.

In our opinion, based on our audits and the report of other auditors, the accompanying consolidated balance sheets and the
related consolidated statements of operations, consolidated statements of cash flows, consolidated statements of comprehensive
income and consolidated statements of changes in stockholders’ equity present fairly, in all material respects, the financial
position of Frontline Ltd. and its subsidiaries at December 31, 2009 and December 31, 2008, and the results of their operations
and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company's management is responsible for these financial statements, for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in
Management’s Report on Internal Control Over Financial Reporting appearing under item 15(b) of Frontline Ltd.’s Annual
Report on Form 20-F. Our responsibility is to express opinions on these financial statements and on the Company's internal
control over financial reporting based on our integrated audits.

We did not audit the financial statements for the year ended December 31, 2007 of Independent Tankers Corporation,
Buckingham Shipping PLC, Caernarfon 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, wholly owned
subsidiaries, whose statements reflect total revenues of $60.1 million for the ended December 31, 2007. The financial
statements of Independent Tankers Corporation, Buckingham Shipping PLC, Caernarfon 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, were audited by other auditors whose report thereon has been furnished to us, and our opinion
on the financial statements expressed herein, insofar as it relates to the amounts included for Independent Tankers Corporation,
Buckingham Shipping PLC, Caernarfon 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, is based solely on the
report of the other auditors.

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 audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement and whether effective internal control over financial reporting was maintained in
all material respects. Our audits of the financial statements included 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. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audits and the report of other auditors provide 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.

/s/PricewaterhouseCoopers AS

PricewaterhouseCoopers AS
Oslo, Norway
March 29, 2010
F-2
Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder of

Independent Tankers Corporation

We have audited the combined statements of operations, cash flows and changes in stockholders’ equity of
Independent Tankers Corporation (a Cayman Islands Company and wholly owned subsidiary of Frontline Ltd.), and
Buckingham Shipping PLC, Caernarfon 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 (the “Affiliates”), (collectively, the “Company”) for the year ended December 31, 2007 (not presented
separately herein). 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 audit.

We conducted our audit 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 audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the results
of operations and cash flows of Independent Tankers Corporation and Affiliates for the year ended December 31,
2007, in conformity with accounting principles generally accepted in the United States of America.

/s/Grant Thornton LLP

Grant Thornton LLP

New York, New York
April 9, 2008

F-3
Frontline Ltd.
Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
(in thousands of $, except per share data)
2009 2008 2007
Operating revenues
Time charter revenues 486,361 602,980 432,813
Bareboat charter revenues 64,526 57,152 57,052
Voyage charter revenues 565,331 1,425,968 801,546
Other income 17,068 17,918 8,516
Total operating revenues 1,133,286 2,104,018 1,299,927
Gain on sale of assets 3,061 142,293 118,168
Operating expenses
Voyage expenses and commission 219,375 592,188 352,451
Ship operating expenses 206,381 213,766 196,258
Profit share expense 33,018 110,962 37,279
Charterhire expenses 169,503 220,170 56,868
Administrative expenses 30,647 35,226 36,410
Depreciation 237,313 223,519 219,638
Total operating expenses 896,237 1,395,831 898,904
Net operating income 240,110 850,480 519,191
Other income (expenses)
Interest income 22,969 41,204 54,316
Interest expense (160,988) (183,925) (204,535)
Equity (losses) earnings of unconsolidated subsidiaries and associated
companies (544) (901) 573
Foreign currency exchange (loss) gain (346) 1,565 3,312
Mark to market of derivatives - (17,399) 3,530
Impairment of securities - (25,134) -
(Loss) gain on sale of securities - (221) 122,120
Dividends received 3,087 1,552 533
Other non-operating items, net 1,545 34,043 4,951
Net other expenses (134,277) (149,216) (15,200)
Net income from continuing operations before income taxes and
noncontrolling interest 105,833 701,264 503,991
Income tax expense (361) (310) (419)
Gain on issuance of shares by subsidiaries and associates - - 83,566
Net income from continuing operations 105,472 700,954 587,138
Discontinued operations - - 5,442
Net income 105,472 700,954 592,580
Net income attributable to noncontrolling interest (2,771) (2,184) (22,162)
Net income attributable to Frontline Ltd. 102,701 698,770 570,418

Earnings per share attributable to Frontline Ltd. stockholders:

Basic earnings per share from continuing operations $ 1.32 $ 9.15 $ 7.55
Diluted earnings per share from continuing operations $ 1.32 $ 9.14 $ 7.55

Basic and diluted earnings per share from discontinued operations - - $ 0.07

Basic earnings per share $ 1.32 $ 9.15 $ 7.62

Diluted earnings per share $ 1.32 $ 9.14 $ 7.62

Weighted average shares outstanding, basic 77,859 76,353 74,825

Weighted average shares outstanding, diluted 77,867 76,442 74,867

Cash dividends per share declared $ 0.90 $ 8.25 $ 8.30

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

F-4
Frontline Ltd.
Consolidated Balance Sheets as of December 31, 2009 and 2008
(in thousands of $)

2009 2008
ASSETS
Current Assets
Cash and cash equivalents 82,575 190,819
Restricted cash 429,946 370,078
Marketable securities 62,920 60,138
Trade accounts receivable, net 44,598 60,287
Related party receivables 28,743 11,338
Other receivables 52,135 17,498
Inventories 35,093 42,223
Voyages in progress 32,358 58,032
Prepaid expenses and accrued income 14,675 10,832
Other current assets 139 117
Total current assets 783,182 821,362
Long term assets
Restricted cash 70,075 184,673
Newbuildings 413,968 454,227
Vessels and equipment, net 678,694 438,161
Vessels and equipment under capital lease, net 1,740,666 2,100,717
Investment in unconsolidated subsidiaries and associated companies 3,923 4,467
Deferred charges 4,670 4,081
Long term investments 20,020 20,020
Other long-term assets 20 20
Total assets 3,715,218 4,027,728

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Short-term debt and current portion of long-term debt 123,884 293,471
Current portion of obligations under capital leases 285,753 243,293
Related party payables 33,803 47,422
Trade accounts payable 36,574 27,034
Accrued expenses 65,579 71,670
Deferred charter revenue 15,442 16,130
Other current liabilities 44,327 11,910
Total current liabilities 605,362 710,930
Long-term liabilities
Long-term debt 760,698 614,676
Obligations under capital leases 1,579,708 1,969,919
Deferred gains on sales of vessels 12,649 17,954
Other long-term liabilities 6,053 5,395
Total liabilities 2,964,470 3,318,874
Commitments and contingencies
Stockholders’ equity
Share capital (77,858,502 shares outstanding, par value $2.50) 194,646 194,646
Additional paid in capital 221,991 219,036
Contributed surplus 248,360 248,360
Accumulated other comprehensive loss (1,686) (5,227)
Retained earnings 78,029 45,402
Total stockholders’ equity 741,340 702,217
Noncontrolling interest 9,408 6,637
Total equity 750,748 708,854
Total liabilities and stockholders’ equity 3,715,218 4,027,728

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

F-5
Frontline Ltd.
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
(in thousands of $)
2009 2008 2007

Net income 105,472 700,954 592,580

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 237,313 223,519 221,246
Amortization of deferred charges 1,282 550 810
Gain from sale of assets (including securities) (3,061) (160,031) (323,860)
Equity earnings (losses) of unconsolidated subsidiaries and associated
companies 544 901 (573)
Unrealized foreign exchange loss (gain) 686 (2,172) 689
Adjustment of derivatives and securities to market value - 41,379 (3,541)
Other, net (2,612) 2,223 (1,922)
Changes in operating assets and liabilities, net of effect of acquisitions:
Trade accounts receivable 15,689 (764) (1,208)
Other receivables (33,441) 11,746 39,238
Inventories 7,131 13,212 (11,772)
Voyages in progress 25,673 2,447 (17,068)
Prepaid expenses and accrued income (4,516) (1,683) 3,341
Trade accounts payable 9,541 10,990 11,646
Accrued expenses (6,895) (12,852) 17,241
Deferred charter revenue (3,382) 3,432 2,441
Related party balances (30,658) (466) 19,441
Other, net 2,754 (6,582) 7,483
Net cash provided by operating activities 321,520 826,803 556,212
Investing activities
Maturity (placement) of restricted cash 75,620 (2,579) 12,674
Additions to newbuildings, vessels and equipment (170,049) (657,443) (348,176)
Proceeds from sale of vessels and equipment 2,390 128,264 503,407
Investments in associated companies - - (60,510)
Dividends received from associated companies - 265 255
Proceeds from sale of investments in associated companies - - 116,631
Receipts from capital leases and loans receivable - - 5,564
Purchases of other assets - (109,360) (43,375)
Proceeds from sale of other assets - 3,286 162,392
Proceeds from issuance of shares in subsidiary - 10,941 -
Sale of subsidiary, net of cash sold - - 38,308
Cash effect of deconsolidation of subsidiary - - (146,435)
Net cash (used in) provided by investing activities (92,039) (626,626) 240,735
Financing activities
Proceeds from long-term debt 243,771 520,178 127,188
Repayments of long-term debt (267,336) (87,370) (165,108)
Payment of obligations under capital leases (241,198) (171,900) (130,362)
Debt fees paid (2,888) (4,928) (1,406)
Net proceeds from share issuances - 208,123 -
Cash dividends paid (including payments to noncontrolling interest) (70,074) (641,893) (656,008)
Net cash used in financing activities (337,725) (177,790) (825,696)
Net (decrease) increase in cash and cash equivalents (108,244) 22,387 (28,749)
Cash and cash equivalents at beginning of year 190,819 168,432 197,181
Cash and cash equivalents at end of year 82,575 190,819 168,432
Supplemental disclosure of cash flow information:
Interest paid, net of interest capitalized 186,873 202,840 206,495
Income taxes paid 383 372 215

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

F-6
Frontline Ltd.
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2009, 2008
and 2007
(in thousands of $, except number of shares)
2009 2008 2007
NUMBER OF SHARES OUTSTANDING
Balance at beginning of year 77,858,502 74,825,169 74,825,169
Shares issued - 3,033,333 -
Balance at the end of the year 77,858,502 77,858,502 74,825,169

SHARE CAPITAL
Balance at beginning of year 194,646 187,063 187,063
Shares issued - 7,583 -
Balance at end of year 194,646 194,646 187,063

ADDITIONAL PAID IN CAPITAL

Balance at beginning of year 219,036 14,242 494,067
Shares issued - 200,539 -
Stock option expense 2,955 4,255 962
Transfer to contributed surplus - - (480,787)
Balance at end of year 221,991 219,036 14,242

CONTRIBUTED SURPLUS
Balance at beginning of year 248,360 248,360 (8,145)
Cash dividends - - (212,896)
Noncontrolling interest in deemed equity contributions and deemed
dividends - - (11,386)
Transfer from additional paid in capital - - 480,787
Balance at end of year 248,360 248,360 248,360

ACCUMULATED OTHER COMPREHENSIVE LOSS

Balance at beginning of year (5,227) (3,696) (4,425)
Other comprehensive income (loss) 3,541 (1,531) 729
Balance at end of year (1,686) (5,227) (3,696)

RETAINED EARNINGS
Balance at beginning of year 45,402 - -
Net income 102,701 698,770 570,418
Cash dividends (70,074) (641,893) (408,196)
Stock dividends - (11,475) (162,222)
Balance at end of year 78,029 45,402 -

TOTAL EQUITY ATTRIBUTABLE TO FRONTLINE LTD. 741,340 702,217 445,969

NONCONTROLLING INTEREST
Balance at beginning of year 6,637 - 541,122
Net income 2,771 2,184 22,162
Deemed equity contributions and deemed dividends - - 11,386
Deconsolidation adjustments - - (574,670)
Partial spin-off of ITCL - 4,453 -
Balance at end of year 9,408 6,637 -
TOTAL EQUITY 750,748 708,854 445,969

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

F-7
Frontline Ltd.
Consolidated Statements of Comprehensive Income for the years ended December 31, 2009, 2008 and 2007
(in thousands of $, except number of shares)

2009 2008 2007

COMPREHENSIVE INCOME (LOSS), NET OF TAX

Net income attributable to Frontline Ltd. 102,701 698,770 570,418
Unrealised gains (losses) from marketable securities 2,782 (219) (595)
Foreign currency translation 759 (1,312) 1,324
Other comprehensive income (loss), net of tax 3,541 (1,531) 729
Comprehensive income 106,242 697,239 571,147

Comprehensive income attributable to:

Stockholders of Frontline Ltd. 103,471 695,055 548,985
Noncontrolling interest 2,771 2,184 22,162
106,242 697,239 571,147

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

F-8
Frontline Ltd.
Notes to the 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 and oil/bulk/ore (“OBO”) carriers, which are currently configured to carry
dry cargo. The Company operates oil 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. The Company operates primarily through subsidiaries and partnerships located in Bermuda, Isle of Man,
Liberia, Norway, Singapore, Cayman Islands, the United Kingdom and the Bahamas. 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 these vessels back on long-term charters.

Since May 2004, the Company has distributed its holding of Ship Finance to its shareholders and in March 2007, the
Company distributed the majority of its remaining 11.1% shareholding to its shareholders. The Company still holds
73,383 shares in Ship Finance which represents 0.01% of Ship Finance’s total shares. Prior to the final distribution
of shares in March 2007, the Company consolidated Ship Finance under the provisions of FASB Interpretation No.
46 (revised December 2003) Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51
(“FIN46(R)”), (codified in ASC 810). Subsequent to the distribution in March 2007, the Company no longer
consolidates Ship Finance.

In January 2007, the Company’s wholly owned subsidiary Sealift Ltd (“Sealift”) completed a private placement
raising $180.0 million in equity. The Company participated by investing $60.0 million and as a result of the private
placement, its shareholding was reduced to 33.3%. The Company consequently began accounting for its investment
under the equity method. Sealift used the proceeds from the private placement along with the proceeds from a
$110.0 million bond facility, $120.0 million of a $240.0 million term loan facility and short-term sellers credit of
$80 million from the Company, to acquire from the Company four single hull vessels to be converted to heavy lift
vessels and two Suezmax vessels. The private placement discussed above was conditional on the acquisition of the
assets described above being effective and the sellers credit was payable to the Company upon the completion and
delivery of each of the last two converted vessels with $40 million allocated to each vessel. In May 2007, Sealift
acquired Dockwise Ltd (“Dockwise”) and immediately completed another private placement for 39.8 million shares,
of which the Company subscribed for five million shares. The Company’s investment was reduced to 17.1% as a
result of these transactions. In July 2007, Sealift changed its name to Dockwise. In October 2007, the Company sold
its entire shareholding in Dockwise.

In February 2007, the Company’s wholly owned subsidiary Sea Production Ltd (“Sea Production”) completed a
private placement raising $180.0 million in equity and simultaneously acquired the Company’s floating production
activities. The Company subscribed for 28.3% of the shares and consequently accounted for its investment under the
equity method. In June 2007, the Company disposed of its entire shareholding in Sea Production.

In February 2008, Frontline spun off 17.53% of its holding in its subsidiary Independent Tankers Corporation
Limited (“ITCL”) to Frontline shareholders in conjunction with the listing of ITCL on the Norwegian over-the-
counter (“OTC”) market. Frontline recorded a gain of $18.0 million in the first quarter of 2008 as a result of this
spin off. This was reported in other non-operating items.

F-9
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. The 2008 and 2007 financial
information has been recast to reflect the adoption of an accounting pronouncement, which changed the presentation
of noncontrolling interest. Certain amounts in the consolidated statements of cash flows for the years ended
December 31, 2008 and 2007 have been reclassified to conform to the 2009 presentation.

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. FIN46(R) (codified in ASC
810) 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.

The Company accounts for all business combinations by the purchase method in accordance with Financial
Accounting Standard No. 141(R), Business Combinations (codified in ASC 805). The Company assesses whether it
has purchased a business or a group of assets, in accordance with Emerging Issues Task Force (“EITF”) 98-3:
Determining Whether a Transaction Is an Exchange of Similar Productive Assets or a Business Combination. The
Company ascertains the cost of the asset (or net asset) group and allocates that cost to the individual assets (or
individual assets and liabilities) that make up the group in accordance with this guidance. A portion of the cost of
the group of assets is then assigned to each individual asset (or assets) acquired on the basis of its fair value.

Investments in companies over which the Company exercises significant influence but does not control are
accounted for using the equity method. The Company records its investments in equity-method investees in the
consolidated balance sheets as “Investment in unconsolidated subsidiaries and associated companies” and its share
of the investees’ earnings or losses in the consolidated statements of operations as “Share in results of
unconsolidated subsidiaries and 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 unconsolidated subsidiaries and 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.

We evaluated all of our activity through the issue date of these financial statements and concluded that no
subsequent events have occurred that would require recognition in the financial statements or additional disclosure
in the Notes to Consolidated Financial Statements.

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. Restricted
cash is classified as long-term when it is segregated for the liquidation of long-term obligations.

F-10
 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. Any resulting unrealized gains and losses, net of deferred taxes if any, are recorded as a
separate component of other comprehensive income in stockholders’ equity unless the securities are considered to be
other than temporarily impaired, in which case unrealized losses are recorded in the income statement.

Long-term investments
Long-term investments consist of unlisted securities for which fair values are not readily determinable and for which
the investments are not equity method investees. Long-term investments are recorded at cost less impairment.

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.

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 and equipment under leasing agreements. Leases of vessels and equipment,
where the Company has substantially all the risks and rewards of ownership, are classified as capital leases. Capital
leases are capitalized at the inception of the lease at the lower of the fair value of the leased assets and the present
value of the minimum lease payments.

Each lease payment is allocated between liability and capital charges to achieve a constant rate on the capital
balance outstanding. The interest element of the capital cost is charged to the income statement over the lease
period.

Depreciation of vessels and equipment under capital lease is included within “depreciation and amortization
expense” in the consolidated statement of operations. Vessels and equipment 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.

Vessel residual values – owned vessels and vessels under capital leases
On July 1, 2009, the Company effected a change in estimate related to the estimated scrap rate for all of its owned
vessels and for leased vessels where the Company has an interest in the residual value. The scrap rate was amended
from an average of $222 per lightweight tonne to $281 per lightweight tonne for VLCC’s and from an average of
$378 per lightweight tonne to $281 per lightweight tonne for Suezmax’s. The resulting change in salvage values has
been applied prospectively and reduced depreciation by approximately $0.1 million for the six months ended
December 31, 2009. This change also resulted in an increase in net income of approximately $0.1 million with no
impact in earnings per share for the year ended December 31, 2009.

Newbuildings
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 installments and other capital
expenditures together with capitalized interest and associated finance costs. No charge for depreciation is made until
the vessel is available for use.

Interest expense
Interest costs are expensed as incurred except for interest costs that are capitalized. Interest is capitalized on all
qualifying assets that require a period of time to get them ready for their intended use. Qualifying assets consist of
vessels constructed for the Company’s own use.

F-11
 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 recoverable. 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 disposal. If the future net undiscounted 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 capitalized and amortized on a straight-line basis over the term of
the relevant loan. The straight line basis of amortization approximates the effective interest method in the
Company’s consolidated statement of operations. Amortization of loan costs is included in interest expense. If a
loan is repaid early, any unamortized portion of the related deferred charges is charged against income in the period
in which the loan is repaid.

Trade accounts receivable

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

Revenue and expense recognition

Revenues and expenses are recognized on the accruals basis. Revenues are generated from freight billings, time
charter and bareboat charter hires. Voyage revenues and expenses are recognized ratably over the estimated length
of each voyage and, therefore, are allocated between reporting periods based on the relative transit time in each
period. The impact of recognizing voyage expenses ratably over the length of each voyage is not materially different
on a quarterly and annual basis from a method of recognizing such costs as incurred. 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 recognizes revenue ratably from when product is discharged (unloaded) at the end of one voyage to when
it is discharged after the next voyage. However, the Company does not recognize revenue if a charter has not been
contractually committed 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. Profit share income represents vessel earnings earned by the Company’s customers in excess of
market rates. Profit share expense represents amounts due to Ship Finance based on 20% of the excess of vessel
revenues earned by the Company over the base hire paid to Ship Finance for chartering in the vessels.

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. Revenues
allocated by these pools are included in voyage charter revenues in the consolidated statements of operations.

Gain on sale of assets

Gain on sale of assets includes gains from the sale of vessels, gains from the termination of leases and gains from
the sale of heavy lift conversion projects. Gains from the sale of assets are recognized when the vessel has been
delivered and all risks have been transferred and are determined by comparing the proceeds received with the
carrying value of the vessel. Gains from the termination of leases are recognized when the lease is effectively
terminated and the vessel has been redelivered to the owner. Gains from sale of heavy lift conversion projects are
recognized as each converted vessel is delivered. The amount recognized is the gain allocated to each vessel that is
not contingent upon future events. Deferred gains are recorded as Current or Long-term Liabilities as applicable.

F-12
 Drydocking
Normal vessel repair and maintenance costs are expensed when incurred. The Company recognizes 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 recognized as
assets or liabilities with changes in fair values recognized in “interest expense” in the consolidated statements of
operations unless related to discontinued operations, in which case these are shown in “discontinued 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 recognized as assets or liabilities with changes in fair values recognized in “mark to market of
derivatives” in the consolidated statements of operations.

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 realized.

Foreign currencies
The functional currency of the Company and the majority of its subsidiaries is the U.S. dollar as the majority of
revenues and expenditures are denominated in U.S. dollars. The Company’s reporting currency is also U.S. dollars.
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.

Share-based payments
The Company accounts for share based payments in accordance with SFAS 123(R) Share-Based Payments (“FAS
123(R)”) (codified in ASC 718). Accordingly, the Company expenses the fair value of stock options issued to
employees over the period in which 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 recognizes a profit when its subsidiary or associate issues stock to third parties at a price per share in
excess of its carrying amount if such profit is realizable. If such profit is not realizable, it is recorded as an increase
to contributed surplus. Following the issuance of FAS 141(R), (codified in ASC 805), applied prospectively from
January 1, 2009, the effect of changes in ownership interest arising on consolidated subsidiaries are treated as equity
transactions. Only gains or losses arising on deconsolidation will be recognized in the consolidated statements of
operations.

F-13
3. RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the Financial Accounting Standards Board (‘FASB’) issued Statements No. 141(R), Business
Combinations, (“FAS 141(R)”), (codified in ASC 805), and No. 160 Noncontrolling Interests in Consolidated
Financial Statements, (“FAS 160”), (codified in ASC 810). Together these statements can affect the way companies
account for future business combinations and noncontrolling interests. ASC 805 requires, amongst other changes,
recognition of subsequent changes in the fair value of contingent consideration in the Statement of Operations rather
than against Goodwill, and transaction costs to be recognized immediately in the Statement of Operations. ASC 810-
10-65-1 clarifies the classification of noncontrolling interests in consolidated balance sheets and the accounting for
and reporting of transactions between the reporting entity and holders of such noncontrolling interests. In particular
the noncontrolling interest in subsidiaries should be presented in the consolidated balance sheet within equity, but
separate from the parent’s equity. Similarly the amount of net income attributable to the parent and to the minority
interest be clearly identified and presented on the consolidated statement of income. Both these Statements are
effective for transactions completed in fiscal years beginning after December 15, 2008. Adoption of these
Statements by the Company in the financial statements beginning January 1, 2009 did not have a material effect on
the Company’s consolidated financial statements except that noncontrolling interests is classified as a component of
equity.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1 Guidance on Interim Fair Value Disclosures,
(codified in ASC 825), which expands the fair value disclosures required for all financial instruments within the
scope of this topic to interim periods for publicly traded entities. Entities must disclose the method(s) and significant
assumption used to estimate the fair value of financial instruments in financial statements on an interim basis and to
highlight any changes in the methods and significant assumptions from prior periods. The guidance is effective for
interim and annual periods ending after June 15, 2009 and adoption of this FSP did not have a material effect on our
consolidated financial statements.

In April 2009, the FASB issued FSP FAS 115-2 Recognition and Presentation of Other-Than-Temporary
Impairments, (codified in ASC 320) which provides additional guidance to highlight and expand on the factors that
should be considered in estimating fair value when there has been a significant decrease in market activity for a
financial asset. The guidance is effective for interim and annual periods ending after June 15, 2009. Adoption of
this FSP did not have a material effect on our consolidated financial statements.

In May 2009, the FASB issued Statement No. 165 Subsequent Events, (“FAS 165”), (codified in ASC 855). This
Statement provides guidance on management’s assessment of subsequent events. The guidance clarifies that
management must evaluate, as of each reporting period, events or transactions that occur after the balance sheet date
“through the date that the financial statements are issued or are available to be issued.” Management must perform
its assessment for both interim and annual financial reporting periods. The new guidance is effective prospectively
for interim and annual periods ending after June 15, 2009. Adoption of the Statement did not have a material effect
on the Company’s consolidated financial statements. In February 2010, the FASB amended the subsequent events
guidance issued in May 2009 to remove the requirement for SEC filers to disclose a date through which subsequent
events have been evaluated in both issued and revised financial statements. The amendment is effective upon
issuance. The adoption of this guidance did not have a material effect on our consolidated financial statements.

In June 2009, the FASB issued Statement No. 168, Statement on Codification and Hierarchy of Generally Accepted
Accounting Principles, (‘FAS 168’), (codified in ASC 105). The Statement is a replacement for FAS 162. The
GAAP hierarchy will be modified to include only two levels of GAAP; authoritative and nonauthoritative. The
Statement is effective for financial statements issued for interim and annual periods ending after September 15,
2009. The adoption of this Statement did not have a material effect on the Company’s consolidated financial
statements.

In June 2009, the FASB issued Statement No. 167, Amendments to FASB Interpretation No. 46(R) (“FAS 167”)
(codified in ASC 810). The amended guidance requires companies to qualitatively assess the determination of the
primary beneficiary of a variable-interest entities (“VIEs”) based on whether the entity (1) has the power to direct
the activities of the VIE that most significantly impact the entity’s economic performance and (2) has the obligation
to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the
entity that could potentially be significant to the VIE. It also requires additional disclosures for any enterprise that
holds a variable interest in a VIE. The new accounting and disclosure requirements become effective for the
Company from January 1, 2010. The Company is currently assessing the impact of this amendment on its
consolidated financial statements.
F-14
4. DECONSOLIDATION OF SHIP FINANCE

The Company distributed the majority of its remaining shareholding of Ship Finance in March 2007 and no longer
consolidates Ship Finance as of March 31, 2007. FIN 46(R) (codified in ASC 810) was applied to Ship Finance as a
holding company and to each of its subsidiaries. The Company was determined to be the primary beneficiary of the
holding company Ship Finance as a result of the variable interests held by the Company and its related parties.
Consequently, Ship Finance and its subsidiaries were consolidated until Frontline distributed the majority of its
remaining shares in Ship Finance.

Under this guidance, the primary beneficiary should reconsider whether it is still the primary beneficiary if it sells or
otherwise disposes of its variable interests to unrelated parties. As such, the Company’s distribution of shares in
March is a reconsideration event and it was determined that the Company was no longer the primary beneficiary of
Ship Finance. Accordingly, the Company is no longer consolidating Ship Finance as of March 31, 2007.

Prior to the deconsolidation of Ship Finance, items of expenditure incurred by Ship Finance which have been
recorded in the Company’s consolidated statement of cash flows for the year ended December 31, 2007 include:

 Purchase of the container ship Horizon Hawk for $56.8 million

 Payments totaling $126.5 million relating to Ship Finance’s second jack up rig West Prospero
 Cash from debt draw downs totaling $127.2 million
 Debt repayments totaling $122.4 million

5. SEGMENT INFORMATION

The Company and the chief operating decision maker (“CODM”) measure performance based on the Company’s
overall return to shareholders based on consolidated net income. The CODM does not review a measure of operating
result at a lower level than the consolidated group. Consequently, the Company has only one reportable segment:
tankers. The tankers segment includes crude oil tanker vessels and OBO or oil/bulk/ore vessels. Both types of vessel
are managed as part of this one segment.

The Company’s management does not evaluate performance by geographical region as this information is not
meaningful.

The Company operates in two markets, the wet market whereby crude oil is transported, and the dry market whereby
dry cargo is transported. An analysis of revenues from these services is as follows:

(in thousands of $) 2009 2008 2007

Total operating revenues – wet market 989,7731,955,4271,171,000
Total operating revenues – dry market 124,983 130,228 120,170

During the year ended December 31, 2009, the Company reported total revenue from one customer of $250.1
million which represented approximately 22% of consolidated operating revenues (2008: one customer which
represented approximately 20% and 2007: one customer which represented approximately 19%). No other
customers represent more than 10% of consolidated operating revenues for the periods presented.

6. INCOME TAXES

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.

F-15
 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 income tax in
their respective jurisdictions. The tax paid by subsidiaries of the Company that are subject to income tax is not
material.

The Company adopted FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”),
(codified in ASC 740) on January 1, 2007. The Company has not recognized any additional liabilities or expenses
under ASC 740 for 2009 or 2008 and does not have any unrecognized tax benefits, material accrued interest or
penalties relating to income taxes.

7. EARNINGS PER SHARE

The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares outstanding
during the year. The computation of diluted EPS assumes 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 $) 2009 2008 2007

Net income from continuing operations attributable to Frontline 102,701 698,770 564,976
Ltd.
Discontinued operations - - 5,442
Net income attributable to Frontline Ltd. 102,701 698,770 570,418

The components of the denominator for the calculation of basic EPS and diluted EPS are as follows:

(in thousands) 2009 2008 2007

Weighted average number of ordinary shares outstanding - basic 77,859 76,353 74,825
Stock options 8 89 42
Weighted average number of ordinary shares outstanding - diluted 77,867 76,442 74,867

There were no anti-dilutive options in 2009, 2008 and 2007.

The effect on EPS related to discontinued operations is as follows:

(in thousands of $) 2009 2008 2007

Discontinued operations – containers and rigs - - 5,442
Basic and diluted EPS – containers and rigs - - $0.07

8. LEASES

As of December 31, 2009, the Company leased in fifty vessels on long-term time charters and bareboat charters
from third parties and related parties. Four of these leases are classified as operating leases and forty-six as capital
leases. In addition to these, eight Suezmax vessels were leased in at floating charter rates and can be terminated by
giving one month written notice and a further three are leased on short-term fixed rate charters. With the exception
of the Company’s long-term leases with Ship Finance, the Company’s long-term leases of vessels generally contain
optional renewal periods and purchase and put options.

F-16
 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,
2010 73,102
2011 33,244
2012 6,714
2013 1,739
2014 1,601
2015 and later 1,423
Total minimum lease payments 117,823

Total rental expense for operating leases was $171.5 million, $222.2 million and $59.0 million for the years ended
December 31, 2009, 2008 and 2007, respectively.

The following table discloses information about the terms of the Company’s long-term leases for vessels contracted
in which are accounted for as operating leases:

Extended Extended Lessor’s

Lease Lease Company’s Put
Expiry of Periods at Periods at Purchase Option
Mandatory Lessor’s Company’s Option Exercise
Vessel Type Lease Period Option Option Periods Date
2008- 2010- 2007-
Front Warrior (Suezmax) 2007 2011 2011 2011 2011
Hampstead (VLCC) 2012 none none none none
Kensington (VLCC) 2011 none none none none

The lease for Front Warrior was extended for an additional two years at the lessor’s option on January 1, 2008. The
lease for Front Warrior was extended for a further two year period (2010-11) at the Company’s option on December
31, 2008. The minimum lease payments for this optional period have been included in the analysis above.

A liability for put options on vessels leased on 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 recognized 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, 2009, no
such liability had arisen.

Six of the 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)
(codified in ASC 810), these special purpose entities were not consolidated by Frontline. One of these leases is
accounted for as an operating lease and five 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. As of December 31, 2009, the original cost to the lessor of the assets under such arrangements was
$383.0 million (2008: $618.5 million). As of December 31, 2009 and 2008, the Company's residual value guarantees
associated with these leases, which represent the maximum exposure to loss, are $55.0 million and $85.0 million,
respectively.

F-17
The following table discloses information about the Company’s activity with these non-consolidated lessor entities
in the three year period ended December 31, 2009:

(in thousands of $) 2009 2008 2007

Repayments of principal obligations under capital leases 35,215 32,599 28,857
Interest expense for capital leases 27,202 29,807 32,605
Charterhire expense for operating leases 5,963 6,064 5,311

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, 2009 are as follows:

(in thousands of $)
2010 276,552
2011 158,031
2012 77,741
2013 42,720
2014 3,578
2015 and later -
Total minimum lease revenues 558,622

As of December 31, 2009, the Company leased out 37 of its vessels to third parties on time and bareboat charters
with initial periods ranging between four months and eleven years. All of these vessels are leased out on operating
leases.

The cost and accumulated depreciation of the vessels leased to third parties as of December 31, 2009 were
approximately $2,066.1 million and $704.3 million, respectively, and as of December 31, 2008 were approximately
$2,069.6 million and $597.8 million, respectively. Three of the vessels currently leased to third parties are leased in
on operating leases by the Company.

9. MARKETABLE SECURITIES

Marketable securities held by the Company are equity securities considered to be available-for-sale securities.

(in thousands of $) 2009 2008

Cost 85,815 85,815
Accumulated other-than-temporary impairment (25,134) (25,134)
Accumulated net unrealized gain (loss) 2,239 (543)
Fair value 62,920 60,138

An other-than-temporary impairment was recorded against securities held in Overseas Shipholding Group Inc.
(“OSG”) and the OSG shares were written down to fair value of $59.3 million as of December 31, 2008. This other-
than-temporary impairment was recorded in “Impairment of securities”. Net unrealized gain on marketable
securities, including a component of foreign currency translation, included in comprehensive income is $2.2 million
(2008 – net unrealized loss of $0.5 million).

(in thousands of $) 2009 2008 2007

Proceeds from sale of available-for-sale securities - 3,286 162,392
Realized gain (including amounts classified in discontinued - - 49,023
operations)
Realized loss (including amounts classified in discontinued - (221) (40)
operations)

The cost of sale of available-for-sale marketable securities is calculated on an average cost basis. Realized gains and
losses are recorded as gain on sale of securities in the consolidated statement of operations.

F-18
10. TRADE ACCOUNTS RECEIVABLE, NET

Trade accounts receivable are presented net of allowances for doubtful accounts relating to freight and demurrage
claims amounting to $2.1 million and $3.2 million as of December 31, 2009 and 2008, respectively.

11. OTHER RECEIVABLES

(in thousands of $) 2009 2008

Agent receivables 3,074 2,751
Claims receivables 6,740 5,098
Deposit for newbuilding installment 27,986 -
Other receivables 14,335 9,649
52,135 17,498

Other receivables are presented net of allowances for doubtful accounts amounting to $nil and $nil as of December
31, 2009 and 2008 respectively.

12. LONG-TERM INVESTMENTS

(in thousands of $) 2009 2008

Investment in Navig8 20,020 20,020

The investment in Navig8 consists of preference shares and ordinary shares shown at cost. The Company has a
15.8% voting interest in Navig8. Both the preference shares and ordinary shares are unlisted.

13. NEWBUILDINGS

(in thousands of $) 2009 2008

Newbuildings 413,968 454,227

The carrying value of newbuildings represents the accumulated costs which the Company has paid by way of
purchase installments and other capital expenditures together with capitalized loan interest. Interest capitalized in
the cost of newbuildings amounted to $22.7 million in 2009 (2008: $18.0 million, 2007: $10.4 million).

As of December 31, 2009, there were ten newbuilding contracts representing costs of $414.0 million. During 2009
six newbuilding contracts were cancelled with the associated costs being transferred to four of the remaining
contracts. Two contracts were completed during 2009. The VLCC Front Kathrine was delivered on January 8, 2009
at a total cost of $110.2 million and the VLCC Front Queen was delivered on May 18, 2009 at a total cost of $110.4
million. These costs are now included within Vessels and Equipment, net. As of December 31, 2008 there were
eighteen newbuilding contracts representing costs of $454.2 million.

14. VESSELS AND EQUIPMENT, NET

(in thousands of $) 2009 2008

Cost 799,023 519,016
Accumulated depreciation (120,329) (80,855)
Net book value at end of year 678,694 438,161

Included in the above amounts as of December 31, 2009 and 2008 is equipment with a net book value of $2.4
million and $2.4 million, respectively.

During 2009, the Company took delivery of two VLCC double hull newbuildings at a cost of $220.6 million, and
purchased a secondhand VLCC double hull vessel which was previously accounted for as a vessel under capital
lease.

F-19
In 2008, the Company purchased five second hand Suezmax double hull vessels at a cost of $247.3 million.

Depreciation expense for vessels and equipment was $38.8 million, $17.1 million and $46.3 million for the years
ended December 31, 2009, 2008 and 2007, respectively, including amounts recorded in discontinued operations.
Depreciation expense for the year ended December 31, 2007 includes $32.1 million relating to vessels leased from
Ship Finance, which are now accounted for as vessels under capital leases.

15. VESSELS UNDER CAPITAL LEASE, NET

(in thousands of $) 2009 2008

Cost 2,763,382 3,099,974
Accumulated depreciation (1,022,716) (999,257)
Net book value at end of year 1,740,666 2,100,717

Depreciation expense for vessels under capital lease was $198.5 million, $206.4 million and $174.9 million for the
years ended December 31, 2009, 2008 and 2007, respectively.

The outstanding obligations under capital leases are payable as follows:

(in thousands of $)
Year ending December 31,
2010 405,253
2011 299,765
2012 217,142
2013 214,392
2014 212,436
2015 and later 1,221,308
Minimum lease payments 2,570,296
Less: imputed interest (704,835)
Present value of obligations under capital leases 1,865,461

As of December 31, 2009, the Company held 46 vessels under capital leases (2008 – 51 vessels), of which 38 (2008
– 39 vessels), are leased from Ship Finance. These leases are for initial terms that range from 6 to 22 years. The
remaining periods on these leases at December 31, 2009 range from 5 days to 17 years.

The Company has purchase options over five 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 amortized over the lease terms. The leases on three of these vessels were
terminated in December 2009 and the Company did not exercise the purchase options on them. These three vessels
are being chartered in for a minimum period of eleven months from January 1, 2010 and are being accounted for as
operating leases. A gain of $24.9 million arising on the termination of these three capital leases has been deferred
and will be recognized over the minimum lease period in 2010. This deferred gain is included in Other Current
Liabilities.

On January 2, 2009 the lease agreement between Buckingham Shipping Plc, a subsidiary of ITCL, and Dresdner
Kleinwort Leasing was terminated and the outstanding lease obligation was settled in full using restricted cash. At
January 2, 2009 the total obligation including accrued interest that was settled from resticted cash funds was $69.7
million. The vessel was sold to another subsidiary of ITCL on January 2, 2009 and was, therefore, transferred from
leased to owned vessels at net book value.

The following table discloses information about the terms of the Company’s capital leases for vessels excluding
those leased from Ship Finance:

F-20
 Extended
Lease Lessor’s Put
Expiry of Periods at Option
Mandatory Lessor’s Company’s Purchase Exercise
Vessel Type Lease Period Option Option Periods Date

Front Eagle (VLCC) 2013 2014-2015 2010 to 2015 2015

Front Melody (Suezmax) 2011 2012-2015 2011 to 2015 2015
Front Symphony (Suezmax) 2011 2012-2015 2011 to 2015 2015
Front Tina (VLCC) 2011 2012-2015 2011 to 2015 2015
Front Commodore (VLCC) 2011 2012-2015 2011 to 2015 2015
British Progress (VLCC) 2010 none Note (1)(2) None
British Purpose (VLCC) 2010 none Note (1)(3) None
British Pride (VLCC) 2011 none Note (1)(4) 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 amortized so that the remaining balance at the date the put option becomes exercisable is equal to the put
option amount. An additional liability is recognized 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, 2009 no such additional liability had arisen.
NoteThe Company does not have options to purchase the vessel but it has first refusal if the vessel’s owner offers the vessel for sale.
1.
NoteThe capital lease for the British Progress was terminated on January 15, 2010.
2.
NoteOn March 12, 2010, the lessor gave notice that it will terminate the capital lease for the British Purpose on July 15, 2010.
3.
NoteThe lessor has the right to terminate the lease for the British Pride at the end of the fixed period being July 30, 2011.
4.

The Company’s capital leases for vessels leased from Ship Finance are long-term, fixed rate leases, which extend for various periods
depending on the age of the vessels. The following table discloses information about the terms of these leases:

Expiry of Lessor’s Put

Mandatory Company’s Optional Company’s Purchase Option
Vessel Type Lease Period Termination Date Option Periods Exercise Date
OBO (8 vessels) 2015 none none none
Non double hull Suezmax and VLCC (6 2013 2010 none
vessels) none
Double hull Suezmax (6 vessels) 2018-2025 none none none
Double hull VLCC (18 vessels) 2016-2027 none none none

In conjunction to the leases with Ship Finance, the Company has also entered into charter ancillary agreements whereby the Company
agrees to pay Ship Finance a profit sharing payment equal to 20% of the charter revenues earned by the Company in excess of the
daily base charterhire paid to Ship Finance. Subsequent to 2010, non-double hull vessels will be excluded from this profit sharing
calculation. In the year ended December 31, 2009, total profit share due to Ship Finance was $33.0 million (2008: $111.0 million).

The Company is obligated to ensure that a charter service reserve be held which can only be used to make charter payments to Ship
Finance and for reasonable working capital purposes to meet short-term voyage expenses. The charter reserve is based on the number
of vessels that the Company charters from Ship Finance. As of December 31, 2009, the total charter service reserve is $184.3 million
(2008: $216.1 million) and the balance is recorded as restricted cash in the Company’s consolidated balance sheet.

16. EQUITY METHOD INVESTMENTS

As of December 31, the Company had the following participation in investments that are recorded using the equity method:

2009 2008
Front Tobago Shipping Corporation 40% 40%
CalPetro Tankers (Bahamas I) Limited 100% 100%
CalPetro Tankers (Bahamas II) Limited 100% 100%
CalPetro Tankers (IOM) Limited 100% 100%

Golden Fountain Corporation was liquidated during the year ended December 31, 2008 and the Company received a final dividend on
liquidation of $0.1 million.
F-21
Summarized balance sheet information of investees which the Company accounts for under the equity method as of
December 31, is as follows:

(in thousands of $) 2009 2008

Current assets 18,137 18,518
Non current assets 44,904 54,712
Current liabilities 10,843 11,083
Non current liabilities 47,629 57,155

Summarized statement of operations information of investees which the Company accounts for under the equity
method as for the three years ended December 31, is as follows:

(in thousands of $) 2009 2008 2007

Net operating revenues 5,047 5,836 35,020
Net operating income 4,694 5,493 5,197
Net (loss) income (544) (483) 5,232

Dividends totaling $nil were received from equity method investees in the year ended December 31, 2009 (2008:
$0.3 million)

The Company has determined that under FIN 46(R) (codified in ASC 810), it is not the primary beneficiary of the
VIEs CalPetro Tankers (Bahamas I) Limited (“CalPetro BI”), CalPetro Tankers (Bahamas II) Limited (“CalPetro
BII”) and CalPetro Tankers (IOM) Limited (“CalPetro IOM”) and as such, these entities are being accounted for
under the equity method. 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 (“ITC”), a wholly
owned subsidiary of ITCL, which in turn is a 82.47% owned subsidiary of the Company. In April 2006, Chevron
cancelled its bareboat contract with CalPetro Tankers (Bahamas III) Limited (“CalPetro BIII”). Under FIN 46(R)
(codified in ASC 810) this was considered to be a reconsideration event and the Company began consolidating the
VIE into its accounts from that date. Prior to this date, CalPetro BIII, was also equity accounted. The Company does
not guarantee the debt of these entities and the net assets of the three entities that are not consolidated total $3.3
million (2008: $3.7 million). The Company’s exposure is limited to its share of the net assets of these three entities
while the Chevron charters are still in place. Refer to Note 28. ‘Commitments and Contingencies’.

In January 2007, the Company had a 33.3% investment in Sealift and accounted for this investment under the equity
method. In May 2007, the Company’s investment was reduced to 17.1% and as a result of the Company’s inability
to exercise significant influence, the investment was accounted for as marketable securities from that date until
October 2007, when these securities were sold.

In February 2007, the Company had a 28.3% investment in Sea Production and accounted for this investment under
the equity method until it sold its entire shareholding in June 2007.

In November 2007, the Company sold its entire investment in International Maritime Exchange ASA (“IMAREX”)
for net proceeds of $50.5 million resulting in a gain on sale of $41.9 million which has been reported in gain from
sale of securities.

17.DEFERRED CHARGES

(in thousands of $) 2009 2008

Debt arrangement fees 6,837 4,966
Accumulated amortization (2,167) (885)
4,670 4,081

F-22
18. ACCRUED EXPENSES

(in thousands of $) 2009 2008

Voyage expenses 14,392 14,353
Ship operating expenses 20,966 24,423
Administrative expenses 4,068 4,260
Interest expense 22,456 25,216
Taxes 376 318
Other 3,321 3,100
65,579 71,670

19. OTHER CURRENT LIABILITIES

(in thousands of $) 2009 2008

Accrued charterhire 724 718
Deferred gain on termination of capital leases 24,917 -
Newbuilding installment payable 10,460 -
Other 8,226 11,192
44,327 11,910

The Company terminated three capital leases in December 2009, entering into new operating leases in the same
month for the same vessels. The gain on the termination of the capital leases has been deferred and will be
recognized over the new minimum lease period, ending December 1, 2010.

20. DEBT

(in thousands of $) 2009 2008

US Dollar denominated floating rate debt due through 2020 558,121 568,013
US Dollar denominated fixed rate debt:
- Serial Notes: 6.5% to 6.68% due through 2010 1,200 6,300
- First Preferred Mortgage Term Notes: 8.52% due 2015 10,884 11,328
- First Preferred Mortgage Term Notes: 7.84% and 8.04% due through 2021 313,711 321,095
883,916 906,736
Credit facilities 666 1,411
Total debt 884,582 908,147
Less current portion of long-term debt (123,884) (293,471)
760,698 614,676

The outstanding debt as of December 31, 2009 is repayable as follows:

(in thousands of $)
Year ending December 31,
2010 123,884
2011 63,774
2012 67,827
2013 149,717
2014 43,923
2015 and later 435,457
884,582

The weighted average interest rate for floating rate debt denominated in US dollars was 2.67% as of December 31,
2009 (2008: 4.02%).

In July and August 2008, ITCL, purchased three tranches of the Windsor Petroleum Transport Corporation 7.84%
term notes on the open market. The bonds that were repurchased have not been cancelled. The term notes above
have been presented net of the bonds owned by ITCL.

F-23
US DOLLAR DENOMINATED FLOATING RATE DEBT

$65.0 million term loan facility

In June 2006, the Company entered into a $80.0 million secured term loan facility. The facility bears interest at
LIBOR plus a margin. The facility was partially refinanced for $65.0 million in June 2009 and matures in June
2013. 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. At December 31, 2009 the balance outstanding on the loan
was $52.9 million.

$21.6 million term loan facility

In July 2008, the Company, through the ITCL group entered into a $21.6 million secured term loan facility. The
facility bore interest at LIBOR plus a margin. The facility contained a covenant that requires ITCL to maintain a
positive working capital balance and was guaranteed by Geveran Trading Co. Ltd, a related party for an annual fee
of 2% of the facility drawn down. This facility was repaid in June 2009.

$50.0 million loan facility

In August 2008, the Company, through ITCL entered into a $50.0 million secured loan facility with $19.0 million
drawn down as at December 31, 2008. The remaining facility expired in September 2008. The facility bore interest
at LIBOR plus a margin. The facility contained a covenant that requires ITCL to maintain a positive working capital
balance and was guaranteed by Geveran Trading Co. Ltd, a related party for an annual fee of 2% of the facility
drawn down. This facility was repaid in June 2009.

$33.0 million loan facility

In June 2009, the Company, through ITCL entered into a $33.0 million secured loan facility with the full amount
drawn down at the year end. The loan bears interest at LIBOR plus a margin and falls due in June 2010. The facility
requires ITCL to maintain a minimum level of free cash, a certain level of market adjusted net worth and positive
working capital.

$129.6 million term loan facility

In June 2008, the Company entered into a $129.6 million pre-delivery secured term loan facility. This loan was
refinanced in June 2009 and falls due in June 2010. At December 31, 2009 the balance outstanding on the loan was
$34.8 million. The loan bears interest at LIBOR plus a margin. The facility contains a minimum value covenant and
covenants that require the Company to maintain a minimum level of free cash, a certain level of market adjusted net
worth and positive working capital.

$180.0 million term loan facility

In September 2008, the Company entered into a $180.0 million secured term loan facility falling due in September
2013. At December 31, 2009 the balance outstanding on the loan was $136.6 million.. The loan bears interest at
LIBOR plus a margin. The facility contains a minimum value covenant and covenants that require the Company to
maintain a minimum level of free cash, a certain level of market adjusted net worth and positive working capital.

$420.0 million term loan facility

In June 2008, the Company entered into a $420.0 million pre and post delivery secured term loan facility falling due
in 2017. At the year end, the Company had drawn down $257.0 million. This facility bears interest at LIBOR plus a
margin. The facility contains a minimum value covenant and covenants that require the Company to maintain a
minimum level of free cash, a certain level of market adjusted net worth and positive working capital.

$146.4 million term loan facility

In May 2009, the Company entered into a $146.4 million pre and post delivery secured term loan facility falling due
in 2020. At the year end, the Company had drawn down $43.9 million. This facility bears interest at LIBOR plus a
margin. The facility contains a minimum value covenant and covenants that require the Company to maintain a
minimum level of free cash, a certain level of market adjusted net worth and positive working capital.

F-24
US DOLLAR DENOMINATED FIXED RATE DEBT

ITCL is the holding company for three separate structures involved in financing and leasing transactions. One of
these structures has Serial Notes with maturity dates through 2010 and all of these structures have Term Notes
maturing between 2015 and 2021. The Notes are collateralized by first preferred mortgages on the vessels owned by
the ITCL subsidiaries. As of December 31, 2009, the effective interest rate for the Term and Serial Notes was 7.93%
(2008 - 7.90%).

7.84% and 8.04% First Preferred Mortgage Term Notes

The 7.84% First Preferred Mortgage Term Notes due 2021 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,
2010 10,422
2011 15,152
2012 19,145
2013 20,700
2014 22,376
2015 and later 225,916
313,711

The Notes include certain covenants that, among other things, prohibit the separate structures from (i) incurring any
indebtedness other than the existing Notes and obligations to the respective charterers, and in the case of one of the
structures obligations to the lessor and related support bank, (ii) making any investments (other than the prescribed
restricted investments), loans or advances outside the current structure or (iii) creating any liens other than to secure
its obligations under the Notes and other relevant documents related to the Notes and leasing transactions.

8.52% First Preferred Mortgage Term Notes

Principal is repayable on the 8.52% First Preferred Mortgage Term Notes due 2015 in accordance with a remaining
seven year sinking fund schedule. Of the four entities reporting these term loans, only one entity, CalPetro BIII is
consolidated as the remaining three entities are accounted for under the equity method under FIN 46(R) (codified in
ASC 810). As discussed above, CalPetro BIII’s initial 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:

(in thousands of $)
Year ending December 31,
2010 730
2011 790
2012 850
2013 930
2014 1,010
2015 and later 6,574
10,884

Assets pledged
(in thousands of $) 2009 2008
Vessels and newbuildings 1,090,310 783,592
Marketable securities 61,920 -
Restricted bank deposits (excluding amounts held in charter service reserve) 315,721 365,151

In addition, the Company has pledged its shares in ITCL and $37.8 million of repurchased bonds in its ITCL
subsidiary against its $33.0 million loan facility.

F-25
21. SHARE CAPITAL

Authorized share capital:

(in thousands of $, except share data) 2009 2008
125,000,000 ordinary shares of $2.50 each 312,500 312,500

Issued and fully paid share capital:

(in number of shares) 2009 2008
At January 1 77,858,502 74,825,169
Issued during the year - 3,033,333
At December 31 77,858,502 77,858,502

(in thousands of $) 2009 2008

At January 1 194,646 187,063
Issued for cash - 7,583
At December 31 194,646 194,646

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

In July 2008, the Company generated $211.1 million through a share placement of three million shares at $70.37 per
share. Share issuance costs of $3.9 million have been deducted from additional paid in capital. In June 2008, 33,333
shares were issued at a price of $26.57 under the share option plan generating $0.9 million.

In September 2008, the Company’s shareholders at the Annual General Meeting approved a stock split which would
result in authorized share capital of 625,000,000 ordinary shares of $0.50 per share. No record date was set for the
stock split and the stock split had not taken place at December 31, 2009.

22. ACCUMULATED OTHER COMPREHENSIVE LOSS

The activity in Accumulated Other Comprehensive Loss is summarized as follows:

Unrealized
investment Translation
(in thousands of$) gains (losses) adjustments Total
Balance at December 31, 2006 271 (4,696) (4,425)
Translation adjustment for the year - 1,324 1,324
Net unrealized losses for the year (324) - (324)
Realized losses reclassified to net income (271) - (271)
Balance at December 31, 2007 (324) (3,372) (3,696)
Translation adjustment for year - (1,312) (1,312)
Net unrealized losses for the year (25,574) - (25,574)
Other-than-temporary impairment 25,134 - 25,134
Realized gains reclassified to net income 221 - 221
Balance at December 31, 2008 (543) (4,684) (5,227)
Translation adjustment for year - 759 759
Net unrealized gains for the year 2,782 - 2,782
Balance at December 31, 2009 2,239 (3,925) (1,686)

F-26
23. SHARE OPTION PLANS

In November 2006, the Company’s board of directors approved the Frontline Ltd. Share Option Scheme (the
“Frontline Scheme”). In September 2009, this plan was modified and approved at the Company’s Annual General
Meeting. The Frontline Scheme permits the board of directors, at its discretion, to grant options to acquire shares in
the Company to employees and directors of the Company or its subsidiaries and 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 in the period from the date of grant until the date the option is exercised, provided the subscription
price is never 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 authorized for awards of equity share options and
authorized, unissued or treasury shares of the Company may be used to satisfy exercised options.

The Company had previously granted 760,000 options of which 142,000 had been forfeited prior to vesting. During
2009 the remaining 618,000 options were cancelled and concurrently replaced with new options. As prescribed by
ASC 718, this has been accounted for as a modification of previous award of equity instruments. In addition, a
further grant of options for 45,000 shares was awarded in 2009. The fair value of the option modification and the
new options granted is estimated on the date of the modification or new grant using a Black-Scholes option
valuation model, with the following assumptions:

2009 2008
Risk free interest rate 1.35% 2.25%
Expected life 3.5 years 3.5 years
Expected volatility 61% 41%
Expected dividend yield 0% 0%

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 95% of all options granted in 2009 will vest.

The following summarizes share option transactions related to the Frontline Scheme:

Number of Options Weighted Average

(in thousands except per share data) Exercise Price
Options outstanding as of December 31, 2006 100.0 NOK 238.50
Granted - -
Exercised - -
Forfeited - -
Options outstanding as of December 31, 2007 100.0 NOK 162.36
Granted 760.0 NOK 243.00
Exercised (33.3) NOK 135.90
Forfeited (201.7) NOK 198.49
Options outstanding as of December 31, 2008 625.0 NOK 208.78
Granted 663.0 NOK 145.00
Exercised - -
Forfeited (7.0) NOK 205.42
Cancelled (618.0) NOK 203.94
Options outstanding as of December 31, 2009 663.0 NOK 144.16
Exercisable options as at:
December 31, 2009 Nil Nil
December 31, 2008 Nil Nil
December 31, 2007 33.3 NOK 162.36

F-27
The weighted average exercise price is adjusted for dividends in accordance with the terms of the plan. The remaining contractual
term for the options outstanding at December 31, 2009, 2008 and 2007, is 4.8 years, 4.2 years and 3.8 years, respectively.

The total fair value of share options vested in the years ended December 31, 2009, 2008 and 2007 was $nil, $nil and $0.5 million,
respectively.

The weighted average grant-date fair value of options granted during 2009 is $9.92 per share (2008: $15.37 per share, 2007: $nil). The
weighted average modification-date fair value of options modified in 2009 is $3.10 per share (2008: $nil, 2007: $nil). The exercise
price of all options is reduced by the amount of dividends declared.

The total incremental cost of options modified in 2009 is $1.8 million which will be recognized as stock compensation expense over
the vesting period.

As of December 31, 2009, there was $3.2 million (2008: $4.4 million) in unrecognized compensation cost related to non-vested
options granted under the Frontline Scheme. The compensation expense is recognized over a period of three years in accordance with
vesting conditions. Compensation expense recognized in the years ended December 31, 2009, 2008 and 2007 was $3.0 million, $4.3
million and $0.9 million, respectively.

24. FINANCIAL INSTRUMENTS

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 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;
 a translation risk, that is, 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.

Accordingly, such risk may have an adverse effect on the Company’s financial condition and results of operations. The Company has
not entered into derivative contracts for either transaction or translation risk.

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, 2009
and 2008, the Company had no such contracts outstanding. The Company incurred a loss on forward contracts of $nil in 2009 (2008:
$2.4 million) included in “mark to market of derivatives”.

Contracts to purchase and sell securities

During the year, the Company did not enter into any contracts to purchase or sell securities. In 2008 the Company entered into forward
contracts and a total return swap in relation to the purchase and sale of securities in Overseas Shipholding Group (“OSG”). 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, 2009 and 2008, the Company had no such contracts outstanding. In 2008, the Company incurred a
loss on these contracts of $15.0 million (2007: $nil) included in “mark to market of derivatives”.

Fair Values

The carrying value and estimated fair value of the Company’s financial instruments as of December 31, 2009 and 2008 are as follows:

2009 2008
Carrying Fair Carrying Fair
(in thousands of $) Value Value Value Value
Non-Derivatives:
Cash and cash equivalents 82,575 82,575 190,819 190,819
Restricted cash 500,021 500,021 554,751 554,751
Marketable securities 62,920 62,920 60,138 60,138
Long-term investments 20,020 20,020 20,020 20,020
Floating rate debt and credit facilities 558,787 558,787 569,424 569,424
Serial Notes (6.5% to 6.68%) due through 2010 1,200 1,200 6,300 6,300
Term Loan (8.52%) due 2015 10,884 11,036 11,328 12,979
Term Notes (7.84% and 8.04%) due through 2021 313,711 301,403 321,095 333,659

F-28
 The carrying value of cash and cash equivalents, which are highly liquid, is a reasonable estimate of fair value.
The restricted cash balance includes investments in guaranteed investment contracts that are readily convertible
into cash. Long-term investments consist of unlisted ordinary and preference shares. The Company estimates
that the cost of the long-term investment equates to fair value.

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 of the Term Notes is based on
quoted market prices. Quoted market prices are not available for the Serial Notes, however the Company evaluates
that their cost approximates to fair value.

Marketable securities are measured at fair value on a recurring basis. The fair value of marketable securities is based
on the quoted market prices. This falls within the “Level 1” category of FAS 157 (codified in ASC 820) being
“measurements using quoted prices in active markets for identical assets or liabilities”.

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 (“SEB”), The Bank of New York, DnB Nor Bank
ASA and Nordea Bank Norge (“Nordea”). There is a concentration of credit risk with respect to restricted cash to
the extent that substantially all of the amounts are carried with SEB, 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.

The majority of the vessels’ gross earnings are receivable in U.S. dollars. During the year ended December 31, 2009,
one customer accounted for more than 10% of our consolidated operating revenues (2008 and 2007: one customer).

25. RELATED PARTY TRANSACTIONS

As of March 31, 2007, the Company is no longer consolidating the results of Ship Finance. The majority of the
Company’s leased vessels are leased from Ship Finance and under a Charter Ancillary Agreement; Ship Finance is
entitled to a share of 20% of the Company’s earnings on these leased vessels. A summary of leasing transactions
with Ship Finance during the years ended December 31, 2009 and 2008 (excluding amounts prior to
deconsolidation) is as follows:

(in thousands of $) 2009 2008

Charterhire paid (principal and interest) 331,534 345,551
Payments received for termination of leases 2,386 43,510
Profit share expense 33,018 110,962
Remaining lease obligation 1,462,753 1,609,987

A summary of net amounts earned (incurred) from related parties excluding the Ship Finance lease related balances
above for the years ended December 31, 2009, 2008 and 2007 are as follows:

(in thousands of $) 2009 2008 2007

Seatankers Management Co. Ltd 1,126 1,175 582
Golar LNG Limited 156 17 284
Ship Finance International Limited 2,347 3,430 1,525
Golden Ocean Group Limited 4,253 6,714 2,099
Geveran Trading Co Ltd (405) (366) -
Greenwich Holdings Ltd - - 69
Bryggegata AS (1,300) (1,395) (1,430)
Arcadia Petroleum Limited 42,264 64,784 17,443
Seadrill Limited 322 25 (52)
Seawell Limited 126 - -
Deep Sea Supply Plc 32 - -
Aktiv Kapital ASA 63 - -
CalPetro Tankers (Bahamas I) Limited 45 43 40
CalPetro Tankers (Bahamas II) Limited 45 43 40
CalPetro Tankers (IOM) Limited 45 43 40

F-29
Net amounts earned from related parties comprise office rental income and management, technical and commercial
advisory, newbuilding supervision, corporate and administrative service income and interest income. Net expenses
paid to related parties comprise primarily of rental for office space.

A summary of balances with related parties as at December 31, 2009 and 2008 is as follows:

(in thousands of $) 2009 2008

Receivables
Ship Finance International Limited 26,944 8,351
Seatankers Management Co. Ltd 214 370
Golar LNG Limited 247 381
Northern Offshore Ltd 13 13
Golden Ocean Group Limited 1,119 2,012
Seadrill Limited 160 106
CalPetro Tankers (Bahamas I) Limited 11 35
CalPetro Tankers (Bahamas II) Limited 11 35
CalPetro Tankers (IOM) Limited 11 35
Deep Sea Supply Plc 2 -
Arcadia Petroleum Limited 11 -
28,743 11,338

(in thousands of $) 2009 2008

Payables
Ship Finance International Limited (33,158) (46,540)
Seatankers Management Co. Ltd (96) (119)
Golar LNG Limited (519) (242)
Golden Ocean Group Limited (30) (155)
Geveran Trading Co Ltd - (366)
(33,803) (47,422)

Receivables and payables with related parties comprise unpaid management, technical advisory, newbuilding
supervision, 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. The payable with Ship Finance also includes
unpaid profit share due to Ship Finance. Receivables and payables with related parties are generally settled quarterly
in arrears with the exception of profit share due to Ship Finance which is settled annually.

Ship Finance International Limited, Golar LNG Limited, Northern Offshore Ltd, Norse Energy Group ASA, Seadrill
Limited, Bryggegata AS, Golden Ocean Group Limited, Greenwich Holdings Ltd, Arcadia Petroleum Limited
(“Arcadia”), Geveran Trading Co Ltd (“Geveran”), Deep Sea Supply Plc (“Deep Sea”), Seawell Limited
(“Seawell”), and Seatankers Management Co. Ltd are each subject to the significant influence or indirect control of
John Fredriksen. CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas II) Limited, CalPetro Tankers
(Bahamas III) Limited and CalPetro Tankers (IOM) Limited were all equity accounted until March 31, 2006 at
which point, the Company began consolidating CalPetro (Bahamas III) Limited.

During 2008, the Company engaged in the trading of forward freight agreement trading through Arcadia, a related
party, for which Arcadia was paid commission on each trade. The total amount of commissions paid to Arcadia in
2008 was $12,500. The Company did not engage in forward freight agreement trading in 2009. In addition, the
Company earned freights on chartering vessels to Arcadia in the amount of $42.5 million (2008: $64.8 million).

In November 2008, the Company advanced $60.0 million of the profit share balance, which was paid to Ship
Finance in March 2009. The advance bore interest at a fixed rate.

F-30
In March 2009, Frontline Shipping III Limited (“FSL III”), a wholly owned subsidiary of the Company, and Ship
Finance amended their charter ancillary agreement whereby the charterservice reserve totaling $26.5 million relating
to vessels on charter from Ship Finance may be in the form of a loan to Ship Finance. In March 2009, a loan in the
amount of $26.5 million was drawn down by Ship Finance. The loan bears interest at LIBOR plus a margin and is
due for repayment within 364 days of the loan being provided, or earlier in accordance with the agreement.

Geveran acted as a guarantor for two loan facilities taken out by ITCL that expired in July and August 2009.
Geveran received an annual fee of 2% of the draw down facility for acting as guarantor. Both of these facilities were
refinanced by ITCL in the year, with Frontline Ltd. acting as guarantor.

In September 2009, Ship Finance sold the single hull vessel Front Duchess to a third party and as a result,
terminated the Company’s long-term lease for the vessel. The Company received a termination payment of $2.4
million and recorded a net gain of $3.1 million as a gain on sale of assets.

During the year ended December 31, 2007, the Company held investments in Sea Production and Dockwise and
earned income from these companies in the form of rental income and income earned from the provision of
accounting services totaling $1.0 million. During 2007, the Company disposed of its entire investments in these
companies and they are no longer considered to be related parties.

26. DISPOSAL OF ASSETS

In March 2007, Sealift acquired six single hull vessels, of which four were to be converted to heavy lift vessels, for a
total purchase price of $476.0 million which was based on the estimated market value of the four converted heavy
lift vessels and the two single hull Suezmax vessels. The purchase price included $80.0 million short-term seller’s
credit from the Company which was allocated equally to each of the last two remaining converted heavy lift vessels.
This seller’s credit was payable on delivery of each vessel. The sale of vessels to Sealift included an obligation on
the Company to manage, supervise and pay the conversion costs for the four heavy lift vessels. In addition, the
midsections of the last two vessels were sold for $4.7 million. The gain on sale arising from this transaction was
allocated to each vessel with $60.0 million of the gain being accounted for as an adjustment against the Company’s
investment. The gain was recognized as each vessel was delivered. Two Suezmax vessels and two converted vessels
were successfully delivered to Dockwise in 2007 resulting in a net gain of $60.7 million, which was recorded as a
gain on sale of assets. The remaining two converted vessels were delivered in the second quarter of 2008 resulting in
a net gain of $100.4 million.

The Company accounted for its 33.3% investment in Sealift under the equity method. In May 2007, Sealift issued
94.1 million shares to the shareholders of Dockwise in exchange for all the shares and convertible securities of the
entities owned by Dockwise. Sealift also completed a private placement for 39.8 million shares with the Company
subscribing for 5 million shares. Sealift subsequently changed its name to Dockwise. A gain of $43.7 million was
recorded in 2007 as a gain on issuance of shares by associates as a result. Subsequent to this transaction, the
Company accounted for its 17.1% investment in Dockwise as marketable securities. In October 2007, the Company
sold its entire investment in Dockwise for a net gain of $48.7 million which was recorded as gain on sale of
securities.

In January 2008, Ship Finance sold the single hull vessel Front Maple to a third party and as a result, terminated the
Company’s long-term lease for the vessel. The Company received a termination payment of $16.7 million and
recorded a net gain of $17.1 million as a gain on sale of assets.

On March 6, 2008 the Company completed the partial non pro-rata spin off of its subsidiary ITCL and distributed
17.53% of ITCL to the Company’s shareholders. The spin-off resulted in a gain on disposal of $18.0 million which
has been recorded within “other non-operating items, net”.

In May 2008, Ship Finance sold the single hull vessel Front Sabang to a third party and as a result, terminated the
Company’s long-term lease for the vessel. The Company received a termination payment of $26.8 million and
recorded a net gain of $24.8 million as a gain on sale of assets.

In September 2009, Ship Finance sold the single hull vessel Front Duchess to a third party and as a result,
terminated the Company’s long-term lease for the vessel. The Company received a termination payment of $2.4
million and recorded a net gain of $3.1 million as a gain on sale of assets.

F-31
27. NONCONTROLLING 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.

In February 2008, as part of the Company’s planned spin-off of its investment in its Bermuda subsidiary ITCL to the
Company’s shareholders, the Company’s Board of Directors declared a special dividend-in-kind of 17.53% of the
Company’s investment in ITCL with the distribution date being March 6, 2008. Qualifying shareholders received
one share in ITCL for every five shares held in the Company. Non qualifying shareholders received a cash
equivalent of $0.34 per Frontline share held a cash dividend of $14.0 million representing 8.5% of the fair value of
ITCL on the date of distribution. The value of the non-cash dividend was established as $11.4 million, representing
9.0% of the fair value of ITCL on the date of distribution. Fair value was established by using the average price of
ITCL shares over the first five trading days after the shares were listed on the Norwegian OTC market. As of
December 31, 2009 and 2008 the Company owned 82.47% of ITCL.

In March 2007, the Company completed its pro-rata partial spin offs of Ship Finance by the Company as follows:

Distribution Ratio
Distribution % Frontline holding (Ship Finance/ Value of dividend
Date Distributed Frontline shares held) $ millions
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
March 22, 2007 11.1% 3/28 $162.2

The value of the non-cash dividend is valued based on the book value of Ship Finance at the date of distribution. As
a result of the final distribution on March 2007, the Company no longer consolidates Ship Finance and therefore no
longer reports any related noncontrolling interest.

28. 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, 2009, the Company had six 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 have initial periods ranging
from eight to twelve and a half years including options on the lessor’s side to extend the charters for periods that
range up to five years. Five of these charters are accounted for as capital leases and one is accounted for as operating
leases. 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 six of these vessels. The total amount that the Company would be
required to pay under these put options with respect to the operating lease is $9.5 million.

As of December 31, 2009 Chevron charters three vessels on long-term bareboat charters recorded as ’Investments in
unconsolidated subsidiaries and associated companies’. Chevron holds options to purchase each vessel for $1 on
April 1, 2015 provided no earlier optional termination of the bareboat charter has occurred. Non binding notice must
be given one year prior to the termination date and binding notice must be given seven months prior to termination
date. The final termination dates for two of the vessels have passed with no notice of termination given. The
Company has not received notice of Chevron’s intent to terminate the third charter.

As of December 31, 2009, the Company had ten contracts for the construction of six VLCC newbuildings scheduled
for delivery in 2010, 2011 and 2012 and four Suezmax newbuildings scheduled for delivery in 2010. As of
December 31, 2009, the Company was committed to make further installments of $615.7 million as follows:

F-32
 (in thousands of $)
Year ending December 31, Total

2010 381,716
2011 198,000
2012 36,000
615,716

The Company has an option to reduce its newbuilding commitments on two VLCCs by $198.0 million to $54.0
million already paid. A newbuilding installment of $10.5 million paid in January 2010 was accrued in these
financial statements and, therefore, not included in the above commitments.

In January 2008, Golden President Shipping Corporation, a 100% subsidiary of Golden Ocean Group Limited
("Golden Ocean"), had a full and final win in the court case against Bocimar N.V. on the Channel Alliance Time
Charter Party and was awarded $14.7 million plus interest thereon. This amount was originally guaranteed by
Frontline to Golden Ocean in connection with the spin-off in December 2004, and was later paid to Golden Ocean as
it became due according to the charter party. The settlement paid during the year from Bocimar N.V. was therefore
due and paid to Frontline. Proceeds received of $16.6 million were recognized in 2008 in “other non-operating
items, net”.

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.

29. SUPPLEMENTAL INFORMATION

Non-cash investing and financing activities include the following:

(in thousands of $) 2009 2008 2007

Dividends in kind:
Spin-off of Ship Finance - - 162,222
Spin-off of ITCL - 11,475 -

30. DISCONTINUED OPERATIONS

In 2007, due to the deconsolidation of Ship Finance in March 2007, the Company no longer reports results of Ship
Finance’s containerships or jack up rigs.

The operations that were disposed of were recorded as discontinued operations in accordance with the requirements
of FAS 144 Accounting for the Impairment or Disposal of Long-Lived Assets (“FAS 144”, codified in ASC 360) as
the operations and cash flows of the operations were eliminated from the ongoing operations of the Company. The
Company does not have any significant continuing involvement in these dry bulk, containership or jack-up rig
operations in the future.

The following table presents the information required by ASC 205-20-50-1 in respect of discontinued operations:

(in thousands of $) 2009 2008 2007

Carrying amount of assets disposed of - - 524,961
Carrying amount of debt or lease retired - - 317,543

Amounts recorded in discontinued operations:

Operating revenues - - 11,465
Net income - - 5,442

F-33
31. 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:

(in thousands of $) 2009 2008 2007

Pool earnings allocated on a gross basis - 373 34,369
Pool earnings allocated on a net basis 120,904 - -
120,904 373 34,369

32. GAIN ON ISSUANCE OF SHARES BY SUBSIDIARY AND ASSOCIATE

In February 2007, the Company’s wholly owned subsidiary Sea Production completed a private placement for 90.0
million shares at a price of $2 per share, raising a total of $180.0 million. The Company subscribed for 25.5 million
shares which represented a 28.3% investment. A gain of $39.8 million was recorded in the statement of operations
as a result of the issue of shares by Sea Production.

In May 2007, Dockwise, which the Company accounted for under the equity method, completed a private placement
for 39.8 million shares at a price of NOK 30 per share raising a total of NOK 1,194.0 million. The Company
subscribed for five million of these shares and as the subscription was not sufficient to maintain the Company’s
proportionate interest, the Company’s shareholding was reduced from 33.3% to 17.1%. A gain of $43.8 million was
recorded in the consolidated statement of operations as a result. The Company subsequently accounted for its 17.1%
investment as marketable securities. In September 2007, Dockwise issued a further 0.5 million shares. The Company
did not participate in this offering and its shareholding was further reduced to 16.6%. In October 2007, the Company
sold its entire investment in Dockwise for a net gain of $48.7 million which was recorded as gain on sale of
securities.

33. SUBSEQUENT EVENTS

In January 2010, the first Suezmax newbuilding from Rongsheng, the Northia, was delivered.

On January 5, 2010, Front Voyager Inc. gave notice that it would terminate the charter of the Front Voyager. The
termination will take effect April 1, 2010. Front Voyager Inc. is required to pay a termination fee calculated in
accordance with the bareboat charter, which will enable Bahamas III to satisfy its estimated obligations. On March
2, 2010, CPTC received approval from the bondholders through a consent solicitation to amend and clarify certain
indenture and related collateral agreement provisions and definitions to provide for the sale of Front Voyager, and
its release from collateral agreements (‘Sale and Release’). As part of the Sale and Release, the charter for the vessel
will be amended to permit the mandatory redemption of approximately $10,884,000 in aggregate principal amount
of the CPTC 8.52% First Preferred Mortgage Term Notes in connection with the Sale And Release as soon as
possible. A Memorandum of Agreement, dated March 15, 2010, has been signed regarding the sale of the Front
Voyager. Delivery to the buyers is expected in the first half of April 2010.

On January 15, 2010, the lease agreement between Caernarfon Shipping Plc and Dresdner Kleinwort Leasing was
terminated and the outstanding lease obligation was settled in full using restricted cash. At December 31, 2009 the
lease obligation was $70.0 million. The vessel, the British Progress, was sold to Caernarfon Petro Limited, a
previously dormant subsidiary of ITCL, which simultaneously entered into a lease with Caernarfon Shipping Plc.
Therefore, Caernarfon Petro Limited legally owns the vessel at January 15, 2010 subsequent to the termination. The
termination was cash neutral for the Company.

F-34
On February 2, 2010, BP Shipping Plc extended the charter of the British Progress and therefore the charter will
continue to February 2, 2012 at market rate with a minimum rate of $20,000 per day.

On February 25, 2010 Chevron gave non-binding notice of termination of the bareboat charter for the VLCC
Antares Voyager. If Chevron choose to terminate the bareboat charter, a six months binding notice of termination
has to be given in June 2010 and such termination to take effect in December 2010.

In February 2010, the Company’s Board of Directors declared a dividend of $0.25 per share, which will be paid on
or about March 30, 2010.

In February 2010, Frontline purchased the VLCC Front Vista and sold it to a buyer who has secured a 10 year
charter with a state owned oil company at a gross rate of $43,500 per day during the entire charter period. The
purchase price will be settled through instalments over a 10 year period.

In March 2010, the second Suezmax newbuilding from Rongsheng, the Naticina, was delivered.

In March 2010, the Company agreed with Ship Finance to terminate the long term charter party for the single hull
VLCC Golden River. The termination of the charter is expected to take place in April 2010 and Ship Finance will
make a compensation payment to the Company of approximately $2.9 million for the early termination of the
charter party.

On March 12, 2010, the Company was notified that the lease agreement between Sandringham Shipping Plc, a
subsidiary of ITCL, and Dresdner Kleinwort Leasing will be terminated on July 15, 2010. The outstanding lease
obligation will be settled in full using restricted cash. At December 31, 2009 the lease obligation was $69.9 million.
The vessel, the British Purpose, will then be sold to Sandringham Petro Limited, a currently dormant subsidiary of
ITCL, which will simultaneously enter into a lease with Sandringham Shipping Plc. Therefore, Sandringham Petro
Limited will legally own the vessel at July 15, 2010 subsequent to the termination. The termination will be cash
neutral for the Company.

In March 2010, the Company made certain amendments to the charter agreements with Ship Finance relating to 31
double hull crude oil tankers and OBOs, which resulted in our restricted cash deposits being reduced by
approximately $112 million in exchange for a guarantee from us for the payment of charterhire. Withdrawals from
these restricted cash deposits will be prohibited. We also agreed with Ship Finance to make an upfront payment of
charterhire less operating expenses of approximately $73 million covering part of the payments due to Ship Finance
over the next six months. On March 26, 2010, we paid $54.4 million of this balance. The remainder is expected to
be paid before the end of March 2010.

On March 26, 2010, the Company announced the private placement of $225 million of convertible bonds. The
proceeds from the bonds will be used for general corporate purposes, financing of the remaining equity investments
in the Company’s newbuilding program and will improve the Company's ability to react to attractive market
opportunities. The senior, unsecured convertible bonds will have an annual coupon of 4.50%, payable quarterly in
arrears and a conversion price of $39.00. The reference price has been set at $29.7784 (NOK 180.0045). The
applicable exchange rate has been set at 6.0448. The bonds will be issued and redeemed at 100% of their principal
amount and will, unless previously redeemed, converted or purchased and cancelled, mature on April 14, 2015. The
offering of the bonds is expected to close on April 14, 2010.

F-35
 Exhibit 8.1

Significant Subsidiaries at March 29, 2010

Country of Ownership and

Name Incorporation Voting Percentage

Frontline Shipping Limited Bermuda 100%

Frontline Shipping II Limited Bermuda 100%
Frontline Shipping III Limited Bermuda 100%
Key Chartering Inc Liberia 100%
Frontline Chartering Services Inc Liberia 100%
Frontline Management (Bermuda) Ltd Bermuda 100%
ICB Shipping (Bermuda) Limited Bermuda 100%
Frontline Tankers Limited Bermuda 100%
Frontline Corporate Services Ltd United Kingdom 100%
Independent Tankers Corporation Limited Bermuda 82.47%
Independent Tankers Corporation Cayman Islands 100%
Buckingham Shipping Plc Isle of Man 100%
Buckingham Petro Limited Isle of Man 100%
Caernarfon Shipping Plc Isle of Man 100%
Caernarfon Petro Limited Isle of Man 100%
CalPetro Tankers (IOM) Ltd Isle of Man 100%
CalPetro Tankers (Bahamas I) Ltd Bahamas 100%
CalPetro Tankers (Bahamas II) Ltd Bahamas 100%
CalPetro Tankers (Bahamas III) Ltd Bahamas 100%
Golden State Petro (IOM I-A) PLC Isle of Man 100%
Golden State Petro (IOM I-B) PLC Isle of Man 100%
Holyrood Shipping Plc Isle of Man 100%
Sandringham Shipping Plc Isle of Man 100%
Front Sovereign Inc. Liberia 100%
Front Monarch Inc. Liberia 100%
Front Destiny Inc Liberia 100%
Front Dragon Inc Liberia 100%
Front Dynamic Inc Liberia 100%
Front Dynasty Inc Liberia 100%
Front King Inc Liberia 100%
Front Loki Inc Liberia 100%
Front Njord Inc Liberia 100%
Front Odin Inc Liberia 100%
Front Queen Inc Liberia 100%
Front Thor Inc Liberia 100%
Front Alfa Inc Liberia 100%
Front Beta Inc Liberia 100%
Front Delta Inc Liberia 100%
Front Fighter Inc Liberia 100%
Front Hunter Inc Liberia 100%
Front Shanghai Inc Liberia 100%
Front Eagle Corporation Liberia 100%
Front Voyager Inc. Liberia 100%
Golden Channel Corporation Liberia 100%
Kea Navigation Ltd Liberia 100%
Otina Inc. Liberia 100%
Optimal Shipping SA Liberia 100%
Pablo Navigation SA Liberia 100%
Ryan Shipping Corporation Liberia 100%
Saffron Rose Shipping Limited Liberia 100%
Tidebrook Maritime Corporation Liberia 100%
Bandama Investment Ltd Liberia 100%
Sea Team Management Pte. Ltd Singapore 100%
Sea Team Management (India) Pvt. Ltd India 99%
Vista International Finance, Inc. Liberia 100%
Chatham Ship Management, Inc. Liberia 100%
Frontline Management AS Norway 100%
 Exhibit 12.1

CERTIFICATION

I, Jens Martin Jensen 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(s) 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 the annual report that has materially affected, or is reasonably likely to materially
affect, the company's internal control over financial reporting; and

5. The company's other certifying officer(s) 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 functions):

(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: March 29, 2010

Jens Martin Jensen

Principal Executive Officer
 Exhibit 12.2

CERTIFICATION

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(s) 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 the annual report that has materially affected, or is reasonably likely to materially
affect, the company's internal control over financial reporting; and

5. The company's other certifying officer(s) 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 functions):

(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: March 29, 2010

Inger M. Klemp
Principal Financial Officer
 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 year ended
December 31, 2009 as filed with the Securities and Exchange Commission (the "SEC") on or about the date hereof
(the "Report"), I, Jens Martin Jensen, 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: March 29, 2010

Jens Martin Jensen

Principal Executive Officer
 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 year ended
December 31, 2009 as filed with the Securities and Exchange Commission (the "SEC") on or about the date hereof
(the "Report"), I, Inger M. Klemp, 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: March 29, 2010

Inger M. Klemp
Principal Financial Officer

SK 02089 0009 1086005