---

---

---

---

|                                |                    
|------------------------------- | -------------------
|Marshall Islands                | 522098714         
|(State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization)  | Identification No.)

Registrants telephone number including area code: (203) 6026700Securities registered pursuant to Section 12(b) of the Act:

|Common Stock, par value $.50 per share | New York Stock Exchange             
|-------------------------------------- | ------------------------------------
|Title of Class                         | Name of Exchange on which Registered

---

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


YES X          NO

Indicate by check
      mark if the Registrant is not required to file reports pursuant to Section
      13 or Section 15(d) of the Exchange Act.

YES          NO X

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

YES X          NO

Indicate by check
      mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
      SK is not contained herein, and will not be contained, to the best
      of Registrants knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10K or any amendment
      to this Form 10K.

YES X          NO

Indicate by check
      mark whether the registrant is a large accelerated filer, an accelerated
      filer, or a non-accelerated filer. See definition of accelerated
      filer and large accelerated filer in Rule 12b-2 of the
  Act.

Large Accelerated Filer XAccelerated
    Filer           Non-Accelerated
  Filer

Indicate by check mark whether
      the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
      Act).

YES          NO X

As of the close
      of business on June 30, 2005 the aggregate market value of Registrants
      voting stock, held by nonaffiliates (for the purposes of this disclosure
      only, the registrant has assumed that its directors and executive officers
      and the beneficial owners of 5% or more of its voting common stock as of
      June 30, 2005 are affiliates of the registrant) based on the closing price
on the New York Stock Exchange:

$1,351,873,000Number of shares of the Registrants Common Stock outstanding as of March 10, 2006:71,061,791Documents Incorporated by Reference

Certain information required by Part III of this Annual Report on Form 10-K is incorporated herein by reference from our definitive Proxy Statement for OMI Corporations 2006 Annual
Meeting of Shareholders to be filed with the Securities and Exchange Commission.

---

---



INDEX

---

PART I

|Items    |    |  |                                                                            | Page
|-------- | -- |  | -------------------------------------------------------------------------- | ----
|         |    |  |                                                                            |     
|1        | .  |  | Business                                                                   |     
|         |    |  |                                                                            |     
|1        | A. |  | Risk Factors                                                               |     
|         |    |  |                                                                            |     
|1        | B. |  | Unresolved Staff Comments                                                  |     
|         |    |  |                                                                            |     
|2        | .  |  | Properties                                                                 |     
|         |    |  |                                                                            |     
|3        | .  |  | Legal Proceedings                                                          |     
|         |    |  |                                                                            |     
|4        | .  |  | Submission of Matters to a Vote of Security Holders                        |     
|         |    |  |                                                                            |     
|4        | A. |  | Officers and Directors                                                     |     
|        
|PART II 
|         |    |  |                                                                            |     
|5        | .  |  | Market for Registrants Common Equity and Related                          |     
|         |    |  | Stockholder Matters and Issuer Purchases of Equity Securities              |     
|         |    |  |                                                                            |     
|6        | .  |  | Selected Financial Data                                                    |     
|         |    |  |                                                                            |     
|7        | .  |  | Managements Discussion and Analysis of Results of Operations and          |     
|         |    |  | Financial Condition                                                        |     
|         |    |  |                                                                            |     
|         |    |  | 2005 Financial Summary                                                     |     
|         |    |  | Market Overview                                                            |     
|         |    |  | Critical Accounting Estimates                                              |     
|         |    |  | Results of Operations                                                      |     
|         |    |  | Financial Condition and Capital Resources                                  |     
|         |    |  |                                                                            |     
|7        | A. |  | Quantitative and Qualitative Disclosures about Market Risks                |     
|         |    |  |                                                                            |     
|8        | .  |  | Financial Statements and Supplementary Data                                |     
|         |    |  |                                                                            |     
|9        | .  |  | Changes in and Disagreements with Accountants on Accounting and            |     
|         |    |  | Financial Disclosure                                                       |     
|         |    |  |                                                                            |     
|9        | A. |  | Controls and Procedures                                                    |     
|         |    |  |                                                                            |     
|         |    |  | Managements Report on
          Internal Control Over Financial Reporting |     
|         |    |  |                                                                            |     
|9        | B. |  | Other Information                                                          |     
|        
|PART III
|         |    |  |                                                                            |     
|10       | .  |  | Directors and Executive Officers of the Registrant                         |     
|         |    |  |                                                                            |     
|11       | .  |  | Executive Compensation                                                     |     
|         |    |  |                                                                            |     
|12       | .  |  | Security Ownership of Certain Beneficial Owners and Management and         |     
|         |    |  | Related Stockholder Matters                                                |     
|         |    |  |                                                                            |     
|13       | .  |  | Certain Relationships and Related Transactions                             |     
|         |    |  |                                                                            |     
|14       | .  |  | Principal Accountant Fees and Services                                     |     
|        
|PART IV 
|         |    |  |                                                                            |     
|15       | .  |  | Exhibits and Financial Statement Schedules                                 |     
|         |    |  |                                                                            |     
|         |    |  | SIGNATURES                                                                 |     

ii

---



PART I

Item 1.BUSINESS

General

OMI Corporation was incorporated under the laws of the Republic of the Marshall Islands on January 9, 1998. We have our principal place of business at One Station Place, Stamford, Connecticut
and are listed on the New York Stock Exchange under the symbol OMM. Our telephone number is (203) 6026700.

We separated from our former parent entity in 1998 in a transaction designed to create a shipping company with only internationally flagged vessels. Our predecessor entities, however, date back
to 1960.

Unless the context otherwise requires, in this Form 10-K the Company, OMI, we, us, and our refer to OMI Corporation and its
subsidiaries.

For terms specific to the shipping industry please see Glossary beginning on page 12.

Certifications Regarding Public Disclosures and Listings Standards

The unqualified certifications of the Chief Executive Officer and the Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002 regarding the quality of OMIs
public disclosure are filed with the Securities and Exchange Commission as exhibits 31.1 and 31.2 to this Annual Report on Form 10-K for the year ended December 31, 2005.

In addition, the annual certification of the Chief Executive Officer regarding compliance by the Company with the corporate governance listing standards of the New York Stock Exchange was
submitted without qualification to the New York Stock Exchange following the May 2005 annual shareholder meeting.

It is the Companys policy to make all of its filings with the Securities and Exchange Commission (SEC) , which include this Annual Report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, and all related amendments, available, free of charge, on our website atwww.omicorp.com,Investor Relations. These reports are
available promptly after they are filed electronically with the SEC. You may also read and copy any document we file with the SEC at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the Public Reference Room. Our SEC filings are also available to the public at the SECs web site atwww.sec.gov.

Interested parties may find the Board Guidelines on Corporate Governance Issues, the charters of our Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee and
the Companys Corporate Code of Ethics on our website. The information on our website is not incorporated by reference into this report.

The Form 10-K contains statements which may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws,
that are intended to be covered by the safe harbor provided for under these sections. These statements may include words such as may, assume, forecast, predict, strategy,
believe, estimate, project, intend, expect, plan, anticipate, budget, potential, or continue, and similar expressions in
connection with any discussion of the timing or nature of future operating or financial performance or other events. For a description of the Forward Looking Statements that may appear in this Form 10-K, and risks and uncertainties associated with
their Forward Looking Statements, see page 58.

We disclaim any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under
applicable securities laws.

1

---



Description of Business

Development of OMIs Business

We are a leading seaborne transporter of crude oil and refined petroleum products operating in the international shipping markets. The Company owns and has on order only double hull tankers. As
  of December 31, 2005, our modern fleet comprised 45 double hull vessels with an average age of approximately 2.9 years,1compared to an industry average age of
  approximately 8.6 years.

Our customers include many of the worlds largest commercial and government owned oil companies and oil trading companies. To serve our customers with high-quality, modern vessels, we
embarked on a fleet renewal program beginning in 1998 that has substantially reduced the age of our fleet, while at the same time expanding the fleet and concentrating our vessels into two core categories: Suezmax tankers and petroleum product
carriers. As a result of our renewal program, our current fleet comprises 462double hull vessels of which 33 are product carriers, which primarily transport refined
petroleum products from refinery locations to consuming locations, and 13 are Suezmax tankers (approximately 160,000 dwt each), which transport oil from production and storage locations to refinery locations. Our product carriers are smaller to
mid-size tankersnamely, handysizes (25,000-40,000 dwt), handymaxes (40,000-50,000 dwt) and Panamaxes (50,000-80,000 dwt).

In January 2005, we sold our last two non-double hull vessels. Thereafter, the Company sold two 1998-built Suezmax tankers, and time chartered in two 2005-built Suezmax tankers. We received
delivery of five new product carriers during 2005 and three additional ones thus far in 2006. During the first quarter of 2006, we agreed to sell and bareboat charter back two Panamax product carriers and three Suezmax tankers (one of which will be
time chartered-in), scheduled to be delivered by early in the second quarter of 2006. We expect to take delivery of two more new product carriers in May 2006.

The following sets forth a summary of our fleet as of March 10, 2006:

|Crude Oil Fleet:             |  | Number of Vessels |    | Aggregate dwt
|---------------------------- |  | ----------------- | -- | -------------
|1998-2005 built Suezmaxes(a) |  |                   | 13 |              
|                             |  |                   |    |              
|Product Carrier Fleet:       |  |                   |    |              
|1999-2006 built handysizes   |  |                   | 18 |              
|2000-2006 built handymaxes   |  |                   | 13 |              
|2003 built Panamaxes(b)      |  |                   | 2  |              
|                             |  |                   |    |              
|Total                        |  |                   | 33 |              
|                             |  |                   |    |              
|Total Fleet                  |  |                   | 46 |              
|                             |  |                   |    |              

---

|(a) | Five Suezmax tankers are chartered-in. One charter expires in December 2006, one in 2010 and 2011 and two in 2012.
|--- | ------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                   
|(b) | Two Panamax product carriers were agreed to be chartered-in, with the charters expiring in 2010.                  
|   





---

|1 | All averages referring
            to vessel age in this Form 10-K are based on deadweight tons (dwt).
            Dwt, expressed in metric tons each of which is equivalent to 1000
            kilograms, refers to the total weight a vessel can carry when loaded
            to a particular load line. Unless otherwise indicated, when we refer
            to our fleet, we include those vessels chartered in on time charters,
    which number four.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|2 | During the first quarter of 2006, the Company agreed to sell and bareboat charter back the Panamax product carriers OTTAWA and TAMAR, to sell and time charter back the Suezmax tanker POTOMAC and to sell the Suezmax
  tankers SACRAMENTO and HUDSON. The deliveries of such vessels to the new owners are expected to occur by early in the second quarter of 2006, but this Form 10-K reflects all such deliveries having been made.                         
| 

2

---



Our Strategy

Our strategy includes the following initiatives:

Concentration in Two Vessel Categories

We have chosen to concentrate our fleet in two categories: Suezmax tankers, because they offer size advantages over aframax tankers and geographic flexibility relative to VLCCs, and product
carriers because new refineries are not generally being built near the areas of greatest demand for petroleum products. The large scale of our product carrier and Suezmax fleets relative to many of our competitors enables us to realize economies of
scale and increase vessel utilization, and concentrated fleets allow us to more efficiently spread overhead costs, including costs associated with our customers inspecting and approving, or vetting, our vessels and complying with
environmental and other regulations. By gaining expertise in operating, supplying and maintaining selected vessel classes, our crews and management are more efficient and effective. Large and concentrated fleets also improve utilization by affording
greater opportunities for backhauls, which are voyages from areas near discharge locations to areas nearer normal load locations. Backhauls reduce the amount of ballast time, i.e. voyages without cargo.

Balanced Chartering in Spot and Time Charter Markets

Our first economic concern is financial security. We use time charters and occasional sales of vessels to maintain a strong financial position regardless of strong or weak tanker markets. This
strategy makes us less profitable in strong markets (and more profitable in weak markets) than we would be if we kept all or nearly all of our fleet in the spot market. However, some of our time charter contracts have profit sharing agreements,
which enables us to capture the upside when spot rates are high. We actively manage the balance between our spot and time charters to maintain cash flow stability without losing our ability to participate in strong spot markets. Our general
objective is for revenue from our time chartered vessels to cover the following fixed expenses: company-wide general and administrative expense, total interest expense and operating expenses of the time chartered vessels. Our balanced chartering
strategy helped us to be profitable even in the weak market conditions that prevailed from the second quarter of 2001 into the fourth quarter of 2002, a time during which many of our competitors had quarterly or longer periods in which they lost
money.

We also believe that when historically high rates for multiple year time charters are available, the Company should take advantage of the situation and lock in those rates. During 2005 and
2006, we have increased the amount of contracted revenue significantly, with more vessels on charter and more long-term revenue contracted than in the past. We have 33 of our 46 vessels on time charter.

The following table reflects our contracted TC revenue through 2009:

|Time Charter Revenue: |  |        |       |      |   |       |  |      |       |      |   |       |  |   |     
|--------------------- |  | ------ | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ----- |  | - | ----
|                      |  | Actual |       |      |   |       |  |      |       |      |   |       |  |  
|(in millions)         |  | 2005   |       | 2006 |   | 2007  |  | 2008 |       | 2009
|                      |  |        |       |      |   |       |  |      |       |      |   |       |  |   |     
|TC Revenue            |  | $      | 139.8 |      | $ | 207.6 |  | $    | 197.4 |      | $ | 148.2 |  | $ | 73.6
|Number of Vessels(a)  |  |        | 21    |      |   | 30    |  |      | 27    |      |   | 17    |  |   | 10  

---

|      |                                                                                                                                        
|----- | ---------------------------------------------------------------------------------------------------------------------------------------
|Note: | TC revenue is the amount contracted to date in the table above and does not include projections (such as for profit sharing) other than
|      | for expected delivery dates of newbuildings and offhire relating to drydock.                                                           

3

---



Our use of time charters also mitigates in part the seasonality of the spot market business. Ten of our thirteen Suezmax tankers operate in the spot market, which allows us to capitalize on a
strong charter rate environment, as has been the case since 2003. Generally, spot markets are strongest in the first and fourth quarters of the calendar year, and weaker in the second and third quarters. We also have several contracts of
affreightment (COAs), which are agreements whereby the shipowner is hired to move an agreed amount of cargo on an agreed route at a set price per ton, similar to spot charters. COAs can have a fixed rate or marketrelated rate. Our
existing COAs are of shorter duration than most of our time charters, but serve the same function. Finally, in late 2004, we commenced trading in freight futures or the paper market. We can take a long position, which is
similar in effect to chartering in a vessel (i.e. it is speculative) or a short position, which is similar in effect to time chartering out a vessel. COAs and freight futures are additional means of balancing risks in our
business.

We have been successful with a fleet growth strategy, and our preference would be to continue building our fleets of Suezmax tankers and product carriers as market conditions and opportunities
warrant, while maintaining a prudent debt-to-total capitalization ratio. However, from late 2004 until now, the values of tankers in the sale/purchase market have risen while our stock price has remained relatively flat, and rather than acquiring
additional vessels, the Company has acquired a substantial number of shares of its common stock (15,035,000 shares at a cost of $269,933,000 from January 1, 2005 to December 31, 2005). We have determined that repurchasing our stock has been more
attractive than buying additional assets. At the same time, we have sold our four oldest Suezmax tankers and done sales with charters back of a Suezmax tanker and two Panamax product carriers as well as having sold our last two non-double hull
vessels. We have acquired two Suezmaxes via seven year time charters and taken delivery of eight product carriers previously ordered or purchased.

The Company has maintained a stable total debt-to-total capitalization, which was 54% at December 31, 2005 and has remained between 50% and 55% for the past five years. With approximately
$300 million from sales of five vessels being received in the first half of 2006, we expect to reduce outstanding indebtedness substantially.

Working with other companies in our industry provides us with superior market information, scheduling efficiencies and access to expertise. It provides opportunities to reduce ballast time that
may result in higher earnings for our vessels. Our spot market tankers are marketed through a marketing alliance known as Alliance Chartering LLC (Alliance) with another large Suezmax tanker operator, Frontline Ltd. Since December 2003,
our spot market Suezmax tankers have been pooled in the Gemini Pool (Gemini), which currently includes OMIs Suezmaxes and seven Suezmaxes owned by other participants. This pool for double hull Suezmax vessels is operated by Gemini
Tankers LLC, a wholly owned subsidiary of OMI, and marketed by Alliance.

4

---



The following tables set forth additional detail about our fleet. All vessels are double hull. Our current fleet consists of two segments: crude oil and product carrier (clean)
vessels.

EXISTING FLEET

|                      |  |                |  | Year  |  |           |  | Charter   
|--------------------- |  | -------------- |  | ----- |  | --------- |  | ----------
|Name of Vessel        |  | Type of Vessel |  | Built |  | Dwt       |  | Expiration
|                      |  |                |  |       |  |           |  |           
|CRUDE OIL FLEET:      |  |                |  |       |  |           |  |           
|                      |  |                |  |       |  |           |  |           
|Wholly-Owned:         |  |                |  |       |  |           |  |           
|                      |  |                |  |       |  |           |  |           
|ARLENE                |  | Suezmax        |  | 2003  |  | 165,293   |  | SPOT      
|INGEBORG              |  | Suezmax        |  | 2003  |  | 165,293   |  | SPOT      
|SOMJIN                |  | Suezmax        |  | 2001  |  | 160,183   |  | SPOT      
|DELAWARE              |  | Suezmax        |  | 2002  |  | 159,452   |  | SPOT      
|DAKOTA                |  | Suezmax        |  | 2002  |  | 159,435   |  | SPOT      
|ADAIR                 |  | Suezmax        |  | 2003  |  | 159,199   |  | SPOT      
|ANGELICA              |  | Suezmax        |  | 2004  |  | 159,106   |  | SPOT      
|JANET                 |  | Suezmax        |  | 2004  |  | 159,100   |  | SPOT      
|                      |  |                |  |       |  |           |  |           
|                      |  |                |  |       |  | 1,287,061 |  |           
|                      |  |                |  |       |  |           |  |           
|Chartered-in:         |  |                |  |       |  |           |  |           
|                      |  |                |  |       |  |           |  |           
|POTOMAC               |  | Suezmax        |  | 2000  |  | 159,999   |  | May-12(P) 
|CAPE BONNY            |  | Suezmax        |  | 2005  |  | 159,062   |  | SPOT      
|CAPE BASTIA           |  | Suezmax        |  | 2005  |  | 159,156   |  | Apr-09    
|OLIVER JACOB          |  | Suezmax        |  | 1999  |  | 157,327   |  | SPOT      
|MAX JACOB             |  | Suezmax        |  | 2000  |  | 157,327   |  | May-12(P) 
|                      |  |                |  |       |  |           |  |           
|                      |  |                |  |       |  | 792,871   |  |           
|                      |  |                |  |       |  |           |  |           
|Total Crude Oil Fleet |  |                |  |       |  | 2,079,932 |  |           
|                      |  |                |  |       |  |           |  |           
|CLEAN FLEET:          |  |                |  |       |  |           |  |           
|                      |  |                |  |       |  |           |  |           
|Wholly-Owned:         |  |                |  |       |  |           |  |           
|                      |  |                |  |       |  |           |  |           
|NECHES                |  | Handymax       |  | 2000  |  | 47,052    |  | Oct-07    
|SAN JACINTO           |  | Handymax       |  | 2002  |  | 47,038    |  | Apr-08    
|MOSELLE               |  | Handymax       |  | 2003  |  | 47,037    |  | Feb-09    
|GUADALUPE             |  | Handymax       |  | 2000  |  | 47,037    |  | Apr-08    
|AMAZON                |  | Handymax       |  | 2002  |  | 47,037    |  | Apr-08    
|THAMES                |  | Handymax       |  | 2005  |  | 47,036    |  | Oct-06    
|ROSETTA               |  | Handymax       |  | 2003  |  | 47,015    |  | Mar-09    
|LAUREN                |  | Handymax       |  | 2005  |  | 46,955    |  | Dec-07(P) 
|JEANETTE              |  | Handymax       |  | 2004  |  | 46,955    |  | Mar-08(P) 
|HORIZON               |  | Handymax       |  | 2004  |  | 46,955    |  | Dec-08    
|KANSAS(1)             |  | Handymax       |  | 2006  |  | 46,922    |  | Apr-09(P) 
|WABASH(2)             |  | Handymax       |  | 2006  |  | 46,893    |  | Mar-08(P) 
|BRAZOS                |  | Handymax       |  | 2005  |  | 46,889    |  | Dec-08    
|RUBY                  |  | Handysize      |  | 2004  |  | 37,384    |  | SPOT      
|ORONTES               |  | Handysize      |  | 2002  |  | 37,383    |  | May-10    
|OHIO                  |  | Handysize      |  | 2001  |  | 37,278    |  | May-10    
|GARONNE               |  | Handysize      |  | 2004  |  | 37,278    |  | Apr-09(P) 
|ASHLEY                |  | Handysize      |  | 2001  |  | 37,270    |  | SPOT      
|MARNE                 |  | Handysize      |  | 2001  |  | 37,230    |  | SPOT      
|GANGES                |  | Handysize      |  | 2004  |  | 37,178    |  | SPOT      
|LOIRE                 |  | Handysize      |  | 2004  |  | 37,106    |  | Feb-09(P) 

5

---



Our Fleet (continued)

|                    |  |                |  | Year  |  |           |  | Charter   
|------------------- |  | -------------- |  | ----- |  | --------- |  | ----------
|Name of Vessel      |  | Type of Vessel |  | Built |  | Dwt       |  | Expiration
|                    |  |                |  |       |  |           |  |           
|FOX                 |  | Handysize      |  | 2005  |  | 37,006    |  | May-10(P) 
|RHINE(3)            |  | Handysize      |  | 2006  |  | 36,993    |  | SPOT      
|TEVERE              |  | Handysize      |  | 2005  |  | 36,990    |  | Jul-10(P) 
|SAONE               |  | Handysize      |  | 2004  |  | 36,986    |  | Jul-09(P) 
|TRINITY             |  | Handysize      |  | 2000  |  | 35,834    |  | Mar-10    
|MADISON             |  | Handysize      |  | 2000  |  | 35,828    |  | Mar-10    
|RHONE               |  | Handysize      |  | 2000  |  | 35,775    |  | May-07(P) 
|CHARENTE            |  | Handysize      |  | 2001  |  | 35,751    |  | Sep-06(P) 
|ISERE               |  | Handysize      |  | 1999  |  | 35,438    |  | Sep-06(P) 
|SEINE               |  | Handysize      |  | 1999  |  | 35,407    |  | Aug-08    
|                    |  |                |  |       |  |           |  |           
|                    |  |                |  |       |  | 1,270,936 |  |           
|                    |  |                |  |       |  |           |  |           
|Chartered-in:       |  |                |  |       |  |           |  |           
|                    |  |                |  |       |  |           |  |           
|TAMAR               |  | Panamax        |  | 2003  |  | 70,362    |  | Jul-08    
|OTTAWA              |  | Panamax        |  | 2003  |  | 70,297    |  | Apr-08    
|                    |  |                |  |       |  |           |  |           
|                    |  |                |  |       |  | 140,659   |  |           
|                    |  |                |  |       |  |           |  |           
|Total Clean Fleet   |  |                |  |       |  | 1,411,595 |  |           
|                    |  |                |  |       |  |           |  |           
|Total Current Fleet |  |                |  |       |  | 3,491,527 |  |           
|                    |  |                |  |       |  |           |  |           

---



The following two product carriers are to be delivered in 2006:

|                                         |  | Type of  |  | Date To Be |  | Charter |  |           
|---------------------------------------- |  | -------- |  | ---------- |  | ------- |  | ----------
|Name of Vessel                           |  | Vessel   |  | Delivered  |  | Dwt     |  | Expiration
|                                         |  |          |  |            |  |         |  |           
|Vessels Under Construction:              |  |          |  |            |  |         |  |           
|REPUBLICAN                               |  | Handymax |  | Apr-06     |  | 47,000  |  | May-09(P) 
|PLATTE                                   |  | Handymax |  | May-06     |  | 47,000  |  | Jun-09    
|                                         |  |          |  |            |  |         |  |           
|Total Vessels Under Construction         |  |          |  |            |  | 94,000  |  |           
|                                         |  |          |  |            |  |         |  |           
|Total Fleet with Vessels to be Delivered |  |          |  | 3,585,527  |  |        
|                                         |  |          |  |            |  |        

---

During the first quarter of 2006, the Company agreed to sell and bareboat charter back the Panamax product carriers OTTAWA and TAMAR, to sell three Suezmax tankers, the POTOMAC (which will be
time chartered back to OMI), the SACRAMENTO and HUDSON. The deliveries are expected to occur by early in the second quarter of 2006, and the current fleet list reflects all such deliveries having been made.

Segment Information

Consistent with industry practice, we use time charter equivalent, or TCE revenue, which comprises revenue from vessels operating on time charters (TC) and voyage revenue less
voyage expenses from vessels operating on voyage charters in the spot market (spot). TCE revenue serves as a measure for analyzing fluctuations between financial periods and as a method of equating revenue generated from a voyage charter
to time charter revenue. TCE revenue also serves as an industry standard for measuring revenue and comparing results among competitors.

The following is a summary by percent of Time Charter Equivalent Revenues by major operating segments (also refer to Note 12 of Notes to Consolidated Financial Statements appearing elsewhere in
this Form 10-K) for each of the three years in the period ended December 31, 2005:

6

---



|                                  | For the Years Ended December 31,
|--------------------------------- | --------------------------------
|                                  | 2005                            
|                                  |                                 
|Time Charter Equivalent Revenues: |                                 
|Crude Oil Fleet                   | 60                              
|Product Carrier Fleet             | 40                              
|                                  |                                 
|Total                             | 100                             
|                                  |                                 

There are two central aspects to the operation of our fleet:

- Commercial Operations, which involves chartering a vessel; and
- Technical Operations, which involves maintaining, crewing and insuring a vessel.

Our office staff, either directly or through a subsidiary, provides the following services:

- commercial operations and technical supervision;
- safety monitoring;
- vessel acquisition, construction management and oversight; and
- financial, accounting and information technology services.

We arrange voyage charters for vessels that we operate in the spot market and time charters for vessels for which we seek longer term commitments. Under a voyage charter, the owner of a vessel
provides the vessel for the transport of goods between specific ports in return for the payment of an agreed-upon freight per ton of cargo or, alternatively, a specified total amount. All operating costs are borne by the owner of the vessel. A
single voyage charter is often referred to as a spot market charter, which generally lasts from two to ten weeks. Our vessels in the spot market may spend time idle waiting for business or may have to be laid up if the
markets are especially weak for protracted periods.

Under a time charter, the owner of the vessel provides the vessel to the charterer to use for a fixed period of time in return for the payment of a specified daily or monthly hire rate.
Operating costs, such as for crews, maintenance and insurance are typically paid by the vessel owner, while voyage costs, such as fuel and port charges, are paid by the charterer. Once we have time chartered a vessel, trading of the vessel and the
commercial risk shift to the customer.

We charter our vessels for varying periods, ranging from a single voyage, as in the case of our spot market charters, to multiple years, as in the case of our long-term time charters. In
general, our time charters afford us greater assurance that we will be able to cover a fixed portion of our costs. In addition, there is also a profit sharing element in fifteen of our existing time charters that allows us to further capitalize on
the upside of the spot market without undue risk. Operating vessels in the spot market affords us greater speculative opportunity to capitalize on fluctuations in the spot market: when vessel demand is high, we earn higher rates; but when demand is
low, our rates are lower and potentially insufficient to cover costs. Spot market rates are volatile and are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand, and other factors
beyond our control.

As a general matter, spot rates are high during the fourth and first quarters of the year, due to increases in demand for heating oil in the Northern Hemisphere, and effectively reduced supply of vessels due to dislocations resulting
  from harsher weather.

Our Suezmax tankers are commercially managed by Alliance Chartering LLC, a marketing alliance operated in conjunction with Frontline Ltd., another large Suezmax tanker operator. Alliance
currently manages approximately 40 Suezmax tankers, including the Suezmax fleets of Frontline Ltd. and several smaller owners. The overall size and quality of the fleet give us access to market information and improve our vessel
utilization.

7

---



Alliance operates through Frontlines offices in Oslo, Norway and through our offices in Stamford, Connecticut. The Oslo office commences trading at the time of its opening and transfers
trading to our Stamford office later in the day. Our vessels may load at any oil production area and discharge at any refinery suitable for Suezmax vessels. Typical voyages chartered through Alliance for our Suezmax tankers are for loading crude oil
in North Sea or West African ports and discharging it at refineries in the East or Gulf Coasts of the United States. Alliance employs objective criteria when it selects a vessel for a particular charter. Each vessel owner receives the revenues from
voyages it performs.

Under an arrangement that commenced in December 2003, we have pooled all of our spot market Suezmax tankers with Suezmax tankers owned by several shipowners in a pool called Gemini
Tankers. The pool now has eighteen Suezmaxes. Alliance commercially manages the vessels in the pool and revenues are paid into the pool for the vessel performing the charter. Revenues received by the pool are shared by the Company and the
other shipowners according to an agreed formula.

Our product carriers are available for spot market voyages, contracts of affreightment or time charters and are commercially managed by us. Thirty of our 35 product carriers (including the two
to be delivered to us) are on time charter. The charterers of time chartered vessels decide where to send the vessels to load and discharge. We trade our other product carriers in the spot market.

All of our owned vessels are operated and managed on a technical basis by our wholly owned subsidiary, OMI Marine Services LLC, which has offices in Houston, Texas and Stamford, Connecticut.
Technical management involves crewing, maintaining and insuring the vessels and arranging for vetting by customers, potential customers and others. OMI Corporation provides certain services to OMI Marine Services LLC, including arranging insurance
and providing claims services. OMI Marine Services LLC currently obtains crews through Orinoco Maritime Consultancy India Pvt. Ltd. (OMCI), an unaffiliated crewing agent in Mumbai, India. OMCI provides crews, most of whom are from India.
In addition to operating the vessels during voyages, the crews perform general maintenance, sometimes with the help of additional personnel. A portion of our technical management is subcontracted to the crewing agent who has access to many seamen
who have previously served on our vessels and therefore have knowledge of our ships and experience with our operations.

Contractual arrangements between us and our Indian agent provide us with the ability to ensure that the standards of recruiting and training that we require are followed and that the training
of crew members includes continuous updating and emphasizes awareness of, and adherence to, applicable environmental and safety regulations. As part of this relationship, we jointly sponsor and hold monthly training seminars for crew members in
India to discuss and promote environmental and safety compliance. Many of our crew members frequently crew on our vessels and have attended our jointly sponsored seminars to improve their shipboard skills and heighten their environmental
awareness.

Our vessels are inspected often by customers, potential customers, regulatory authorities and by us. We also drydock our vessels periodically as required by applicable regulations or earlier,
as appropriate. Our employees prepare specifications for and observe the performance of the drydockings to ensure proper performance. The five Suezmax vessels we charter-in are managed by their respective owners or their appointees, who provide
crews and all technical services for these vessels and also obtain required vettings from major oil companies. We will manage the two Panamax product carriers under terms of the bareboat charters.

The international shipping industry is highly competitive with many market participants. There are approximately 3,300 tankers aggregating approximately 326 million dwt, and the largest tanker
owner has less than 5.0% of the total market dwt. The refined petroleum products transport segment is even more fragmented than the crude oil transport segment with the largest fleet being approximately 2.6% of the segment.

8

---



In the spot market, our vessels compete with all other vessels that satisfy the size and availability requirements specified by a customer. Competition in the spot market is based primarily on
price, although many charterers are becoming more selective with respect to the quality of vessel they charter, focusing on a number of factors, including age, ship specifications, such as double hulls, reliability and quality of operations. Our
competitors in the crude oil and products transport market are mainly privately owned fleets and some government owned fleets. We also compete with oil companies and traders who own or charter-in vessels. Competition for voyage charters may also
include vessels that are in other classes. For example, our Suezmax tankers compete with VLCC tankers in certain markets and with Aframax tankers in other markets.

As in the spot market, the time charter market is price sensitive and also depends on our ability to demonstrate the high quality of our vessels and operations to chartering customers. However,
because of the longer term commitment, customers entering time charters are more concerned about their exposure and image from chartering vessels that do not comply with environmental regulations or that will be forced out of service for extensive
maintenance and repairs.

As of December 31, 2005, we had approximately 68 office employees. Additionally, there are in aggregate approximately 1,250 seagoing personnel on board our vessels at any one time.

Our agent signs labor contracts with labor organizations in India that represent seagoing personnel. We are not a party to these contracts. One of these contracts is with a union representing
the ratings, or non-officer, seagoing personnel and another is with a union representing officers. Our labor relations historically have been good and we expect these positive relations to continue.

No customer provided 10% or more of consolidated revenue in 2005.

In 2004 and 2003, the Company received revenue from Chartering and Shipping S.A. (an affiliate of Total) of $67,327,000 and $34,305,000, respectively; in 2004, we received from Chevron
Transport Corp. $53,966,000; and in 2003, we received from El Paso Corporation $43,254,000 .

We note that a loss of any particular customer is irrelevant in the spot market, as other customers are always available, and relevant in the time charter market only to the extent the time
charter rate with that customer exceeds the then current time charter or spot market rate.

Regulations

Environmental Regulations

Our operations are affected by U.S. federal, state and foreign environmental protection laws and regulations, particularly OPA 90, CERCLA, the U.S. Port and Tanker Safety Act, the Act to
Prevent Pollution from Ships, regulations adopted by the International Maritime Organization (the IMO) and the European Union (the EU), various volatile organic compound emission requirements, the IMO/U.S. Coast Guard
pollution regulations and various Safety of Life at Sea (SOLAS) amendments, as well as the regulations described below. Compliance with these laws and regulations entails additional expense, including vessel modifications and
implementation of certain operating procedures.

OPA 90 affects all vessel owners and operators shipping oil or hazardous material to, from, or within U.S. waters. The law phases out the use of tankers having single hulls and effectively
imposes on vessel owners and operators unlimited liability in the event of a catastrophic oil spill. OPA 90 requires that tankers over 5,000 gross tons calling at U.S. ports have double hulls if contracted after June 30, 1990 or delivered after
January 1, 1994. Furthermore, OPA 90 calls for the phase out of all single hulled tankers by the year 2010 according to a schedule that is based on size and age of the vessel, unless the tankers are retrofitted with double hulls. OPA 90 permits
single hulled tankers to

9

---



operate until the year 2015 if they discharge at the Louisiana Offshore Oil Port (LOOP) or off-load, or lighter, at approved lightering areas more than 60 miles offshore.

Under OPA 90, a vessel owner or operator is liable, without regard to fault, for removal costs and damages, including economic loss without physical damage to property for oil pollution in U.S.
waters. Liability is limited to $1,200 per gross ton of the vessel unless the spill is caused by gross negligence, willful misconduct or a violation of certain regulations, in which case liability is unlimited. In addition, OPA 90 does not
preempt state law; therefore states may and have enacted laws imposing additional liability. Coastal states have enacted pollution prevention, liability and response laws, many providing for unlimited liability.

OPA 90 also requires owners and operators of vessels to adopt contingency plans for reporting and responding to oil spill scenarios up to a worst case scenario and to identify and
ensure, through contracts or other approved means, the availability of necessary private response resources to respond to a worst case discharge. In addition, periodic training programs for shore and response personnel and for vessels
and their crews are required. Our vessel response plans have been approved by the U.S. Coast Guard.

CERCLA applies to the discharge of hazardous substances whether on land or at sea. CERCLA contains liability aspects similar to those of OPA 90 and also imposes liability for cleanup, removal
and natural resource damages. Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million unless the spill is caused by gross negligence, willful misconduct, or a violation of certain regulations, in which case
liability is unlimited.

Under the financial responsibility regulations issued under OPA 90, all vessels entering U.S. waters are required to obtain Certificates of Financial Responsibility or COFRs in the amount of
$1,500 per gross ton for tankers, combining the OPA 90 limitation of liability of $1,200 per gross ton with the CERCLA liability of $300 per gross ton as discussed above. Under the regulations, owners or operators of fleets of vessels
are required to demonstrate evidence of financial responsibility of the tanker having the maximum aggregate liability under OPA 90 and CERCLA. All of our vessels that need COFRs have them.

We believe that we are in compliance with OPA 90, CERCLA and all applicable state regulations in U.S. ports where our vessels call.

Similar laws and regulations have been adopted by the EU and by the IMO, which phase out non-double hulled tankers at different periods from OPA 90. As a result, some vessels that are eligible
to trade internationally will be unable to carry cargo to or from the United States, and some vessels that may trade in the U.S. will be unable to trade elsewhere.

The European Parliaments Regulation No. 1726/2003, effective October 21, 2003, provides for an accelerated phase out of non-double hull tankers. Specific phase-out dates depend upon the
year of construction and whether the tanker has segregated ballast tanks, among other factors. In addition, non-double hull tankers cannot carry heavy grades of oil to or from member ports, and commencing in 2005 all single hull tankers above 15
years of age must comply with a condition assessment program to enter or leave member states ports. In December 2003, IMO announced the adoption of a revised accelerated phase out schedule for single hull tankers along with other measures,
including an extended application of the condition assessment program for single hulled tankers 15 years old or older and a ban on the carriage of certain heavy grades of oil in single hulled tankers, all of which entered into force April 5, 2005.
IMO rules allow flag states to permit single hull tankers with segregated ballast and smaller tankers to operate beyond 2010, but the tanker must not be in operation beyond the date of delivery in 2015 or the date on which the tanker becomes 25
years old, whichever is earlier and must satisfactorily complete a mandated condition assessment program.

We do not have any non-double hull vessels.

Other Regulations

We are also required by various other governmental and quasigovernmental agencies to obtain permits, licenses and certificates for our vessels, depending upon such factors as the country
of registry, the commodity transported, the waters in which the vessel operates, the nationality of the vessels crew, the age of the vessel and

10

---



our status as owner or charterer. We believe that we have, or can readily obtain, all permits, licenses, approvals and certificates necessary to permit our vessels to operate.

Industry regulations require that a vessel be in class as a condition to its initial and continued registration under a country flag. Being certified as in class means
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 country of registry of the vessel and the international conventions to which that
country is a member. Each vessel is inspected by a surveyor of the classification society in three types of surveys: annual surveys, intermediate surveys every two to three years and special surveys every five years. A vessel may be required to be
drydocked as part of an intermediate survey for inspection of the underwater parts. A vessel is required to be drydocked for special surveys. Should any defects be found during any survey, the classification surveyor will issue a recommendation for
appropriate repairs to be made by the shipowner, which have to be made within required time periods. Our vessels have all been certified as being in class by their respective classification societies.

The requirements contained in the International Safety Management Code, or ISM Code, promulgated by the IMO also affects our operations. The ISM Code requires the party with operational control
of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing
procedures for responding to emergencies. OMI Marine Services LLC, our wholly owned subsidiary that is the technical operator of all of our owned vessels, is certified as an approved ship manager under the ISM Code, as is OMCI, to whom work is
subcontracted.

The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessels management with code
requirements for a safety management system. No vessel can obtain a certificate unless its manager has been awarded a Document of Compliance, issued by the vessels flag state, or by an appointed classification society, under the ISM Code. All
of our vessels and OMI Marine Services LLC have received ISM Certification.

Non-compliance with the ISM Code and other IMO regulations may subject the shipowner 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. Both the U.S. Coast Guard and EU authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in U.S. and EU ports, as the case may be.
All of our vessels comply with the IMO regulations that pertain to them.

Our vessels are subject to both scheduled and unscheduled inspections by a variety of governmental and private entities, each of which may have unique requirements. These entities include the
local port authorities such as the U.S. Coast Guard, harbor master or equivalent, classification societies, flag state administration or country of registry, charterers, and particularly terminal operators and major oil companies that conduct
frequent vessel inspections.

We believe that our current insurance coverage is adequate to protect us against the accident-related risks involved in the conduct of our business and that we maintain appropriate levels of
environmental damage and pollution insurance coverage, consistent with currently prevailing industry practice at commercially acceptable rates. We often do not purchase other available insurances, such as loss of hire, when in our view they are not
commercially attractive. Not all risks can be insured against and we cannot assure that any specific claim will be paid or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the future.

We have arranged for insurance covering our vessels in line with currently prevailing industry practice for fleets comparable to ours. Our insurance policies include:

Hull and Machinery.We maintain marine hull and machinery and war risks insurance, and increased value coverage, which includes the risk of actual or
constructive total loss for all of our vessels. Each of our vessels is insured for approximately its fair market value, with deductibles generally ranging from $100,000 to $200,000 per vessel per incident.

11

---



Protection and Indemnity (P&I) Insurance.We maintain P&I insurance for pollution and spillage of up to $1 billion, and for war
and terrorist-related acts of $200 million, in each case per occurrence per vessel. P&I insurance is provided by mutual marine indemnity associations, or P&I Clubs, formed by shipowners to provide protection from large
financial loss to one member by contribution towards that loss by all members. Each P&I Club has capped its exposure to each of its members at $4.25 billion; each members potential exposure to the P&I Club is not otherwise limited.
Deductibles vary up to $25,000 per claim, depending on the nature of the claim. As with other forms of mutual insurance, the members of each P&I Club share in the benefits if the overall results of the P&I Club are favorable and are
liable for additional payments when and if required.

Although the replacement costs of comparable new vessels may be above the book value of OMIs fleet, the market value of OMIs fleet may be below book value when market conditions are
weak and exceed book value when markets are strong. In common with other shipowners, OMI continually considers asset redeployment, which at times includes the sale of vessels at less than their book value.

OMIs results of operations and cash flow may be significantly affected by future charter markets.

We believe that we currently qualify under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the Code), for an exemption from U.S. federal income tax on
substantially all of our shipping income. This exemption may be lost if 50% or more of our stock is owned, for more than half the number of days during the taxable year, by persons who actually or constructively own 5% or more of our stock and we
cannot qualify for an exemption from such rule. We can give no assurance that changes in the ownership of our stock will permit us to qualify for the Section 883 exemption in the future. If we do not qualify for an exemption pursuant to Section 883
of the Code, we will be subject to U.S. federal income tax, likely imposed on a gross basis at 4%, on our U.S. source shipping income, which constitutes not more than 50% of our gross shipping income. In such a case, our net income and cash flow
will be reduced by the amount of such tax.

We are subject to various other taxes, such as on our non-shipping income in the United States, and certain local taxes.

Under current law, we will not be subject to income taxation under the laws of the Republic of the Marshall Islands, and distributions to us by our subsidiaries also will not be subject to any
Republic of the Marshall Islands tax.

GLOSSARY OF SHIPPING TERMS

|Aframax  | means a tanker of 80,000 to 120,000 dwt.                          
|-------- | ------------------------------------------------------------------
|        
|Backhaul | when a vessel loads a cargo near the vessels prior discharge     
|         | port and transports the cargo near the next load port.            
|        
|Bareboat | means a charter from another vessel owner for use by the          
|         | Company, and the Company is responsible for the vessel            
|         | expenses, drydocking and capital improvements of the vessel.      
|        
|Ballast  | a vessel is in ballast when it is steaming without cargo and is   
|         | usually loaded down with seawater for stability.                  
|        
|Bunker   | fuel oil used to operate a vessels engines and generators.       
|        
|b/d      | means barrels per day.                                            
|        
|Charter  | is a contract entered into with a customer for the use of a vessel
|         | for a specific voyage at a specific rate per unit of cargo, or for
|         | a specific period of time at a specific rate per unit (day or     
|         | month) of time.                                                   

12

---



|Charterer                        | means the customer who hires a vessel to perform charter.         
|-------------------------------- | ------------------------------------------------------------------
|                                
|Chartered-in                     | means a charter from another vessel owner for use by the          
|                                 | Company; if the charter is a time charter the owner is            
|                                 | responsible for the vessel expenses, drydocking and capital       
|                                 | improvements of the vessel, and if it is a bareboat charter, we   
|                                 | are responsible for such expenses.                                
|                                
|Classification Societies         | are organizations that establish and administer standards for     
|                                 | the design, construction and operational maintenance of           
|                                 | vessels. As a practical matter, vessels cannot trade unless       
|                                 | they meet these standards.                                        
|                                
|Commercial operations            | refers to the process of employment, or chartering, of a vessel   
|                                 | and associated functions, including seeking and negotiating       
|                                 | employment, billing and collecting revenues, issuing voyage       
|                                 | instructions, purchasing fuel and appointing port agents.         
|                                
|Contract of Affreightment or COA | COA is the abbreviation for Contract of Affreightment, which      
|                                 | is an agreement providing for the transportation of a specific    
|                                 | quantity of cargo over a specific time period but without         
|                                 | designating specific vessels or voyage schedules, thereby         
|                                 | allowing flexibility in scheduling. COAs can either have a fixed  
|                                 | rate or a market-related rate. An example would be two            
|                                 | shipments of 70,000 tons per month for the next two years at      
|                                 | the prevailing spot rate at the time of each loading.             
|                                
|Crude oil tanker                 | means a tanker vessel designed to carry crude oil or low          
|                                 | grade oil products.                                               
|                                
|Demurrage income                 | refers to income included in voyage revenue, and is the           
|                                 | revenue earned when the loading and discharging time exceeds      
|                                 | the stipulated time in the voyage charter and is not the          
|                                 | responsibility of the shipowner.                                  
|                                
|Double bottomed                  | refers to a vessel with an inner and outer bottom separated by    
|                                 | void space.                                                       
|                                
|Double hull                      | refers to a vessel with an inner and outer side and bottom        
|                                 | separated by void space.                                          
|                                
|Double sided                     | refers to a vessel with an inner and outer side separated by void 
|                                 | space.                                                            
|                                
|Drydocking                       | is the performance of repairs and maintenance while a vessel      
|                                 | has been taken out of the water. During drydockings, which        
|                                 | are required to be carried out periodically, certain mandatory    
|                                 | Classification Society inspections are carried out and relevant   
|                                 | certifications issued. Normally, as the age of a vessel increases,
|                                 | the cost of drydocking increases.                                 
|                                
|dwt                              | means deadweight ton, which is a unit of a vessels capacity      
|                                 | for cargo, fuel oil, stores and crew. A vessels dwt or total     
|                                 | deadweight is the total weight the vessel can carry when          
|                                 | loaded to a particular load line.                                 
|                                
|Gross ton                        | means the volume of the interior of a vessel including all        
|                                 | spaces except the void areas related to a double hulled, double   
|                                 | sided or double bottomed vessel, expressed in a ton equal to      
|                                 | 100 cubic feet.                                                   

13

---



|Handymax                     | is a vessel of 40,000 to 50,000 dwt.                              
|---------------------------- | ------------------------------------------------------------------
|                            
|Handysize                    | is a vessel of 25,000 to 40,000 dwt.                              
|                            
|Hull and machinery insurance | is the basic asset coverage insurance for repair or replacement   
|                             | of a damaged or lost vessel.                                      
|                            
|Ice class                    | refers to a vessel designed and built to be able to trade in areas
|                             | in which there is ice. Ice Class 1A, 1B and 1C vessels can        
|                             | operate in ice areas no greater than 80cm thick, 60cm thick       
|                             | and 40cm thick, respectively. The vessels do not break ice, but   
|                             | may follow ships that do.                                         
|                            
|IMO                          | the abbreviation for International Maritime Organization, an      
|                             | agency of the United Nations, which is the body that is           
|                             | responsible for the administration of internationally developed   
|                             | maritime safety and pollution treaties, including MARPOL          
|                             | 73/78.                                                            
|                            
|Lay-up                       | means taking a vessel out of service, generally for an extended   
|                             | period.                                                           
|                            
|Lightering                   | is the process of discharging a vessels cargo into smaller       
|                             | vessels.                                                          
|                            
|Lightweight                  | means the weight of the hull and superstructure in long tons.     
|                            
|MARPOL 73/78                 | is the International Convention for the Prevention of Pollution   
|                             | from Ships, 1973, as modified by the Protocol of 1978 relating    
|                             | thereto, which includes regulations aimed at preventing and       
|                             | minimizing pollution from ships by accident and by routine        
|                             | operations.                                                       
|                            
|Newbuilding                  | means a newly constructed vessel.                                 
|                            
|OPA 90                       | is the abbreviation for the U.S. Oil Pollution Act of 1990.       
|                            
|Off-hire                     | is any period in which a vessel under charter is not earning      
|                             | revenue.                                                          
|                            
|Orderbook                    | refers to vessels under contract to be constructed, usually       
|                             | expressed by number of vessels or dwt.                            
|                            
|Panamax                      | means a vessel of 50,000 to 80,000 dwt.                           
|                            
|Pool                         | is a grouping of vessels in which the financial results are       
|                             | aggregated, then distributed among pool members according         
|                             | to an agreement.                                                  
|                            
|Product carrier              | means a tanker that is used to transport refined oil products,    
|                             | such as gasoline, jet fuel or heating oil.                        
|                            
|P&I insurance                | is insurance obtained through a mutual association or P&I        
|                             | Club formed by shipowners to provide protection from large       
|                             | financial loss to one member by contribution towards that loss    
|                             | by all members.                                                   
|                            
|Scrapping                    | is the process by which a vessel is stripped of equipment and     
|                             | broken up, generally for reprocessing of its steel.               

14

---



|Sister ship                    | is a vessel built to the same plans and specifications as another
|------------------------------ | -----------------------------------------------------------------
|                               | vessel.                                                          
|                              
|Slow steaming                  | means slowing the speed of the vessel, which saves fuel.         
|                              
|Special survey                 | refers to the inspection of a vessel by a Classification Society 
|                               | surveyor that takes place every four to five years.              
|                              
|Spot market                    | is the market for immediate chartering of a vessel.              
|                              
|Suezmax                        | means a vessel of 120,000 to 200,000 dwt, which generally        
|                               | transports about one million barrels of oil.                     
|                              
|Tanker                         | means a vessel designed to carry liquid bulk commodities.        
|                              
|Technical operations           | refers to the process of operation of a vessel, including        
|                               | physically maintaining the vessels, maintaining certifications,  
|                               | and supplying stores, spares, and lubricating oils.              
|                               | Responsibilities also generally include selecting, engaging and  
|                               | training crew, and arranging insurance coverage.                 
|                              
|Time charter                   | is a charter under which a charterer pays a fixed daily or       
|                               | monthly rate for a fixed period of time for use of the vessel.   
|                               | Subject to any restrictions in the charter, the charterer decides
|                               | the type and quantity of cargo to be carried and the ports of    
|                               | loading and unloading. The charterer pays all voyage expenses    
|                               | such as fuel, canal tools, and port charges, while the shipowner 
|                               | pays all normal vessel expenses.                                 
|                              
|Time Charter Equivalent or TCE | the Time Charter Equivalent or TCE is voyage revenues less     
|                               | voyage expenses, and serves as an industry standard for          
|                               | measuring and managing fleet revenue.                            
|                              
|Tonne-mile                     | means tonnes carried by a vessel multiplied by the distance      
|                               | traveled.                                                        
|                              
|Tonne                          | means a metric ton which is 1,000 kilograms or 2,204.6 pounds.   
|                              
|Trading                        | means finding business and negotiating terms.                    
|                              
|ULCC                           | means an Ultra Large Crude Carrier, of greater than 320,000      
|                               | dwt.                                                             
|                              
|Vessel expense                 | refers to fixed expenses (as opposed to voyage expenses) to      
|                               | operate the vessel, such as crew, maintenance and repair, and    
|                               | insurance.                                                       
|                              
|Vetting                        | refers to the process by which a vessel or company is inspected  
|                               | and appraised.                                                   
|                              
|VLCC                           | means a Very Large Crude Carrier, of 200,000 - 320,000 dwt,      
|                               | which generally transports two million barrels or more of        
|                               | crude oil.                                                       
|                              
|Voyage Spot charter          | is a charter under which a charterer pays a transportation       
|                               | charge for the movement of a specific cargo between two or       
|                               | more specified ports. The shipowner pays all vessel and          
|                               | voyage expenses. Vessels performing voyage charters are said     
|                               | to be in the spot market.                                        

15

---



|Voyage expense     | refers to expenses incurred due to a vessel traveling (as  
|------------------ | -----------------------------------------------------------
|                   | opposed to vessel expenses) to a destination, such as fuel 
|                   | cost, port fees and canal fees.                            
|                  
|War risk insurance | is insurance for repair or replacement of a damaged or lost
|                   | vessel due to risks of war.                                

Item 1A.RISK FACTORS

The Company is subject to all of the business risks facing public companies, including business cycles and trends in the general economy, financial market conditions, changes in interest rates,
demand variations and volatility, potential loss of key personnel, supply of critical parts for vessels causing disruptions, government legislation and regulation, and natural causes.

Management believes that the most significant potential risk factors faced by the Company, not necessarily in order of priority, are the following:

THE NATURE OF OUR BUSINESS AND OUR FLEET MAKES OUR OPERATIONS DEPENDENT 
UPON FLUCTUATIONS IN THE OIL AND PETROLEUM PRODUCTS MARKETS

Our operating fleet consists of crude oil tankers and refined petroleum product carriers. As a result, our business is sensitive to changes in factors affecting the petroleum business and the
transportation of crude oil and refined petroleum products.

The demand for tanker capacity to transport crude oil and other petroleum products is influenced by among other factors:

- increases and decreases in crude oil production, particularly by OPEC and other key producers, and in the demand for crude oil and petroleum products;
- global and regional economic and political conditions;
- developments in international trade;
- environmental concerns and regulations;
- weather;
- substitution by, and availability of, alternate energy sources; and
- changes in seaborne and other transportation patterns.

A change in any one of these factors could materially affect the demand for tanker capacity and charter rates. Historically, the crude oil and petroleum products markets have been volatile as a
result of the many conditions and events that affect these factors.

THE INTENSE COMPETITION AND POTENTIAL FINANCIAL RESOURCES OF OUR
COMPETITORS COULD AFFECT OUR MARKET POSITION

Competition in virtually every aspect of our business is intense. Competition in the ocean shipping industry varies primarily depending on the nature of the contractual relationship and the
kind of commodity being shipped. We compete with other tanker owners, including major oil companies, and independent companies. Some international fleets are government-owned and some of our competitors have greater financial resources than we do.
There can be no assurance that our competitive position will not erode in the future.

To the extent that we enter new geographic areas or tanker market segments or provide new services, there can be no assurance that we will be able to compete successfully in entering such
markets or market segments or in providing such services. New markets may involve competitive factors that differ from those of our current market segments and may include participants that have greater financial strengths and capital resources than
those available to us, which could limit our ability to profitably compete.

16

---



AN INCREASE IN THE SUPPLY OF TANKER CAPACITY WITHOUT AN INCREASE IN DEMAND 
FOR TANKER CAPACITY WOULD LIKELY CAUSE CHARTER RATES TO DECLINE, WHICH 
COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR REVENUES AND
PROFITABILITY

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

OUR EXPOSURE TO THE SPOT MARKET COULD CAUSE OUR RESULTS OF OPERATIONS TO 
MATERIALLY DECLINE

A significant portion of our revenue is traditionally generated in the spot market. The spot market is highly competitive and spot rates are subject to significant fluctuations. In the past,
there have been situations where available spot rates declined below the operating costs for our vessels. Spot rates are affected by world economics, international events, weather conditions, strikes, government policies, supply and demand, and many
other factors beyond our control. We cannot assure you that spot charters will be available at rates that will be sufficient to enable our vessels to be operated profitably.

OPERATION OF TANKERS CARRIES INHERENT RISKS THAT MAY NOT ALL BE COVERED BY 
INSURANCE

The operation of any ocean-going vessel, and the transportation of crude oil and refined petroleum products, carry inherent risks. These risks include: the possibility of catastrophic marine
disasters and property losses caused by adverse weather conditions, mechanical failures, collisions, human error, war, terrorism, piracy, labor stoppages, business interruptions due to political action, hostilities, boycotts and other circumstances
or events including spills and other environmental mishaps, as well as other liabilities arising from owning and operating vessels in international trade. Our business is affected by these risks and others, including collisions, property loss to the
vessels, or cargo loss or damage.

We cannot assure you that all risks are adequately insured against, that any particular claim will be paid or that we will be able to procure adequate insurance coverage at commercially
reasonable rates in the future. In particular, more stringent environmental regulations at times in the past have resulted in increased costs for, and in the lack of availability of, insurance against the risks of environmental damage or
pollution.

Under the terms of our vessel liability insurance programs, we are subject to calls payable to cover losses incurred by other members of the insurance associations. A catastrophic loss by one
ship owner might result in us being required to pay a significant amount to the marine indemnity associations, which could adversely impact our business and financial condition.

WE ARE SUBJECT TO POLITICAL AND OTHER RISKS THAT MAY AFFECT CHARTER RATES 
AND OUR VOYAGES

Due to the international nature of our business and the fact that our vessels operate around the world, we are exposed to many risks, including changing economic, political and social
conditions in countries where we do business or where our vessels are registered or flagged as well as war, terrorism or piracy. These factors may affect charter rates and the length and safety of voyages and ultimately may adversely affect our
results of operations. In addition, because of such inherent risks, our ships may be precluded from sailing into areas of hostility.

Additionally, as our corporate headquarters are located in the United States and as most of our officers and directors are U.S. citizens, we are subject to U.S. laws that restrict the countries
with which our vessels may trade. U.S. law restricts our ability to send vessels to ports in certain countries including Iran, which is a significant oil exporting country. The countries subject to U.S. trade restrictions may change over time. To
the extent that our competitors may accept charters to and from these countries, they have a competitive advantage over us.

17

---



ENVIRONMENTAL REGULATIONS EXPOSE US TO LIABILITY, AND COMPLIANCE WITH SUCH 
REGULATIONS COULD REQUIRE SIGNIFICANT EXPENDITURES AND AFFECT OUR CASH 
FLOW AND NET INCOME

Our operations are affected by extensive and changing international, national and local environmental protection laws, regulations, treaties and conventions in force in the countries in which
our vessels operate as well as the countries of their registration. 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.

The United States Oil Pollution Act of 1990 (OPA 90) affects all vessel owners shipping oil or hazardous material to, from or within the United States. OPA 90 allows for potentially
unlimited liability without regard to fault for owners, operators and bareboat charterers of vessels for oil pollution in U.S. waters. Similarly, the International Convention on Civil Liability for Oil Pollution Damage, which has been adopted by
most countries outside of the U.S., imposes liability for oil pollution in international waters. OPA 90 expressly permits individual states to impose their own liability regimes with regard to hazardous materials and oil pollution incidents
occurring within their boundaries.

OPA 90 provides for the phase out of all non-double hulled tankers that carry oil in bulk in U.S. waters. The International Maritime Organization and the European Union also have adopted
similar regulations applicable to vessels in international waters. The Company does not have any non-double hull vessels at this time and is therefore not adversely affected by these regulations.

SEASONAL VARIATIONS IN OPERATING RESULTS AND SIGNIFICANT CHANGES IN CHARTER 
RATES MAY AFFECT OUR REVENUES AND PROFITABILITY

We operate our tankers in markets that have historically exhibited seasonal variations in demand and, therefore, spot rates. Tanker markets are typically stronger in the winter months as a
result of increased oil consumption in the northern hemisphere and unpredictable weather patterns in the winter months and other seasonal factors affecting supply, which tend to disrupt vessel scheduling. The oil price volatility resulting from
these factors has historically led to increased oil trading activities. As a result, our revenues and profitability have historically been weakest during the second quarter and early part of our third quarter.

ADDITIONAL LAWS AND REGULATIONS MAY LIMIT OUR ABILITY TO DO BUSINESS OR 
INCREASE OUR COST TO DO BUSINESS

We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our vessels. The kinds of permits, licenses and
certificates required depend upon such factors as the country of registry, the commodity transported, the waters in which the vessel operates, the nationality of the vessels crew, the age of the vessel and our status as owner or charterer. New
laws and regulations, environmental or otherwise, may be adopted that could limit our ability to do business or increase the cost of our doing business and that may have a material adverse effect on our operations.

BECAUSE THE MARKET VALUE OF VESSELS MAY FLUCTUATE SIGNIFICANTLY, WE MAY 
INCUR LOSSES WHEN WE SELL VESSELS, WHICH COULD ADVERSELY AFFECT OUR 
FINANCIAL RESULTS

The market value of oil tankers may vary significantly over time based upon various factors, including: general economic and market conditions affecting the tanker industry; number of vessels
in the world fleet, types and sizes of vessels available, changes in trading patterns affecting demands for particular sizes and types of vessels, cost of newbuildings, prevailing level of charter rates, the laws and regulations governing the
shipping industry, and technological advances in vessel design and propulsion. Declining vessel values could affect our ability to replace existing financings upon their expiration as well as raise cash generally, and thereby could adversely impact
our liquidity. In addition, declining vessel values could result in a breach of certain loan covenants, which could give rise to events of default under the relevant financing agreements. There can be no assurance that the market value of our
vessels will not decline, nor can there be any assurance that the market value of the vessels that are currently under construction or on order will not decline during the construction process.

18

---



OUR VESSELS COULD BE ARRESTED BY MARITIME CLAIMANTS, WHICH COULD RESULT IN A 
SIGNIFICANT LOSS OF EARNINGS AND CASH FLOW FOR THE RELATED OFF-HIRE PERIOD

Crew members, suppliers of goods and services to our vessels, 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 maritime lienholder may enforce its lien by either arresting or attaching a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could result in a significant loss of earnings and
cash flow for the related off-hire period.

In addition, international vessel arrest conventions and certain national jurisdictions allow so-called sister ship arrests, that allow the arrest of vessels that are within the
same legal ownership as the vessel that is subject to the claim or lien. Certain jurisdictions go further, permitting not only the arrest of vessels within the same legal ownership, but also any associated vessel. In nations with these
laws, an association may be recognized when two vessels are owned by companies controlled by the same party. Consequently, a claim may be asserted against us, any of our subsidiaries or our vessels for the liability of one or more of the
other vessels we own.

TERRORIST ATTACKS, INCREASED HOSTILITIES OR WAR COULD LEAD TO FURTHER 
ECONOMIC INSTABILITY, INCREASED COSTS AND DISRUPTION OF OUR BUSINESS

Terrorist attacks, such as the attacks that occurred in the United States on September 11, 2001 and the bombings in Spain on March 11, 2004, and the current conflicts in Iraq and Afghanistan
and other current and future conflicts, may adversely affect our business, operating results, financial condition, ability to raise capital and future growth. The long-term impact that terrorist attacks and the threat of terrorist attacks may have
on the petroleum industry in general, and on us in particular, is not know at this time. Uncertainty surrounding continued hostilities in the Middle East or other sustained military campaigns may affect our operations in unpredictable ways,
including disruptions of petroleum supplies and markets, and the possibility that infrastructure facilities could be direct targets of, or indirect casualties of, an act of terror.

Changes in the insurance markets attributable to terrorist attacks may make certain types of insurance more difficult for us to obtain. Moreover, the insurance that may be available to us may
be significantly more expensive than our existing insurance coverage. Instability in the financial markets as a result of terrorism or war could also affect our ability to raise capital.

COMPANY SPECIFIC RISK FACTORS

AFFECTS OF INDEBTEDNESS

The shipping industry is capital intensive, traditionally using substantial amounts of indebtedness to finance vessel acquisitions, capital expenditures and working capital needs. Our lenders
have imposed financial and other covenants that require liens on the vessels financed and the cash flow they generate and limit borrowing availability based on the value of the collateral pledged. Bank borrowings are generally at variable rates,
causing us to be sensitive to changes in prevailing interest rates. This may influence our ability to raise additional capital to fund our operations or vessel acquisitions.

Our substantial leverage and financial covenants could affect our ability to incur additional indebtedness or engage in certain transactions.

The degree to which we are leveraged now or in the future could have important consequences to common stockholders, including the following:

- our ability to obtain additional financing for working capital, capital expenditures and vessel acquisitions may be impaired;
- a substantial portion of our cash flow from operations may have to be dedicated to the payment of the principal of and interest on our indebtedness;
- our leverage may make us more vulnerable to economic downturns and may limit our ability to withstand competitive pressures;

19

---



- we have a higher level of indebtedness than some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in planning for, or responding to, changing
conditions in our industry, including increased competition or regulation;
- rising interest rates could have a material adverse effect on us since a substantial portion of our indebtedness bears interest at variable rates; and
- if we are unable to service our debt our creditors could accelerate our debt and foreclose on our fleet.

WE MAY BECOME SUBJECT TO U.S. FEDERAL INCOME TAXATION ON OUR U.S.-SOURCE 
SHIPPING INCOME

We believe that we currently qualify under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the Code), for an exemption from U.S. federal income tax on
substantially all of our shipping income. This exemption may be lost if 50% or more of our stock is owned, for more than half the number of days during the taxable year, by persons who actually or constructively own 5% or more of our stock and we
cannot qualify for an exemption from such rule. We can give no assurance that changes in the ownership of our stock will permit us to qualify for the Section 883 exemption in the future. If we do not qualify for an exemption pursuant to Section 883
of the Code, we will be subject to U.S. federal income tax, likely imposed on a gross basis at 4%, on our U.S.-source shipping income, which constitutes not more than 50% of our gross shipping income. In such a case, our net income and cash flow
will be reduced by the amount of such tax.

The Company uses forward freight agreements (FFAs) as a hedge to protect against declines in rates for vessels in the spot market. We also speculate with FFAs by taking long
positions (if the rates increase (decrease) we have a gain (loss)). To the extent we make trades in FFAs and our market analysis is incorrect, we may reduce potential gains or incur losses.

WE DEPEND ON OUR KEY PERSONNEL AND MAY HAVE DIFFICULTY ATTRACTING AND 
RETAINING SKILLED EMPLOYEES

Our success depends to a significant extent upon the abilities and efforts of our key personnel. The loss of the services of any of our key personnel or our inability to attract and retain
qualified personnel in the future could have a material adverse effect on our business, financial condition and operating results.

WE MAY FACE UNEXPECTED DRYDOCK COSTS FOR OUR VESSELS

Vessels must be drydocked periodically. The cost of repairs and renewals required at each drydock are difficult to predict with certainty and can be substantial. Our insurance does not cover
these costs. In addition, vessels may have to be drydocked in the event of accidents or other unforeseen damage. Our insurance may not cover all of these costs. Large drydocking expenses could significantly decrease our profits.

WE MAY NOT BE SUCCESSFUL MAINTAINING OUR BUSINESS

Maintaining our business, and growing it as opportunities arise, is critical to our strategy. We may not be successful in expanding our operations and any expansion may not be profitable. Our
future growth will depend upon a number of factors, both within and outside of our control. These include:

- our identification of new markets;
- our acceptance by new customers;
- our identification and acquisition on favorable terms of acquisition candidates;
- our successful integration of any acquired businesses with our existing operations;
- our ability to hire and train qualified personnel; and
- our ability to obtain required financing.

20

---



The failure to effectively implement our growth strategy and deal with these factors could harm our business, financial condition and results of operations.

WE MAY NOT BE ABLE TO RENEW TIME CHARTERS WHEN THEY EXPIRE

Our ability to maintain long-term business is predicated upon our vessels and operations being of high quality and upon the reputation of the Company and management. Loss of quality, or
perception of such loss, may inhibit our ability to obtain new long-term business, which is essential to our strategy. Most of our vessels operate on time charters. We cannot assure you that these time charters will be renewed, or if renewed, that
they will be renewed at favorable rates. If, upon expiration of the existing time charters, we are unable to obtain time charters or voyage charters at rates comparable to those received under existing charters, our profitability may be adversely
affected.

If a time charter is terminated before expiration due to default or agreement, the vessel may be redelivered to us at times when we are unable to obtain rates that are as profitable as those on
the terminated time charter, or not profitable at all. Several charterers have time charters on more than one of our vessels. Termination of several charters at one time, under the above circumstances, could materially impact our
profitability.

Our Board of Directors currently intends on paying a quarterly dividend. Any determination by the Board to pay dividends in the future will be at their discretion and will depend upon the
results of our operations, financial condition, capital restrictions, covenants and other factors deemed relevant by the Board of Directors.

THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE

The market price of our common stock may be volatile. Factors that could cause that volatility include:

- fluctuations in our annual or quarterly financial results or those of our competitors;
- failures of our operating results to meet the estimates of securities analysts or the expectations of our stockholders or changes by securities analysts in their estimates of our future
earnings;
- the perceived risks associated with our possible future issuances of additional shares of common stock, unfavorable publicity; and
- changes in environmental and other laws or regulations that adversely affect our industry or us.

WE MAY ISSUE PREFERRED STOCK WHOSE TERMS COULD ADVERSELY AFFECT THE 
VOTING POWER OR VALUE OF OUR COMMON STOCK

Our certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more series of preferred stock having such preferences, powers and relative,
participating, optional and other rights, including preferences over our common stock respecting dividends and distributions, as our Board of Directors may determine. The terms of one or more series of preferred stock could adversely impact the
voting power or value of our common stock. For example, we might afford holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified
transactions.

PROVISIONS IN OUR CORPORATE DOCUMENTS COULD DELAY OR PREVENT A CHANGE IN 
CONTROL OF OUR COMPANY, EVEN IF SOME OF OUR STOCKHOLDERS BELIEVED IT WOULD BE BENEFICIAL

The existence of some provisions in our corporate documents could delay or prevent a change in control of our Company, if the board of directors were opposed to the change of control. Our
certificate of incorporation and bylaws contain provisions that may make acquiring control of our Company difficult, including:

- provisions relating to the classification, nomination and removal of our directors;
- provisions limiting the right to call special meetings of our stockholders; and
- the authorization given to our board of directors to issue and set the terms of preferred stock.

In addition, we have adopted a stockholder rights plan that would cause extreme dilution to any person or group who attempts to acquire a significant interest in OMI without advance approval of
our Board of Directors.

21

---



OUR INFORMATION TECHNOLOGY SYSTEMS ARE CRITICAL TO OUR BUSINESS AND A 
FAILURE OF THOSE SYSTEMS COULD MATERIALLY HARM OUR BUSINESS

We depend on our ability to store, retrieve, process and manage a significant amount of information. If our information technology systems fail to perform as expected, or if we suffer an
interruption, malfunction or loss of information processing capabilities, it could have a material adverse effect on our business.

FAILURE TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE 
WITH SECTION 404 OF THE SARBANES-OXLEY ACT COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS, STOCK PRICE AND INCREASE OUR COSTS

The Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act) has required changes in some of our corporate governance, securities disclosure and compliance practices. In response to the
requirements of the Sarbanes-Oxley Act, the SEC and the NYSE have promulgated new rules on a variety of subjects. These developments may make it more difficult for us to attract and retain qualified members of our Board of Directors or qualified
executive officers. Compliance with these new rules has increased our legal and accounting costs, in 2005 and 2004, which were the first two years of compliance. We expect our compliance costs to continue; however, absent significant changes in
related rules (which we cannot assure), we anticipate these costs may be lower in future years as we become more efficient in our compliance processes. Additionally, if we cannot provide reliable financial reports or prevent fraud, our business and
operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.

WE ARE NOT A U.S. CORPORATION, AND THE HOLDERS OF SECURITIES MAY BE SUBJECT TO 
THE UNCERTAINTIES OF A FOREIGN LEGAL SYSTEM IN PROTECTING THEIR INTERESTS

Our corporate affairs are governed by our articles of incorporation and by-laws and by the corporate laws of the Marshall Islands. There have been few judicial cases interpreting the respective
corporate laws of the Marshall Islands. Our security holders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would security holders of a corporation
incorporated in a U.S. jurisdiction.

IT MAY NOT BE POSSIBLE FOR OUR INVESTORS TO ENFORCE U.S. JUDGMENTS AGAINST US

Substantially all of our assets and those of our subsidiaries are located outside the United States. As a result, it may be difficult or impossible for U.S. investors to serve process within
the United States upon us or to enforce judgment upon us for civil liabilities in U.S. courts. In addition, you should not assume that courts in the countries in which we or our subsidiaries are incorporated or where our or the assets of our
subsidiaries are located would:

- enforce judgments of U.S. courts obtained in actions against us or our subsidiaries based upon the civil liability provisions of applicable U.S. federal and state securities laws;
or
- enforce, in original actions, liabilities against us or our subsidiaries based upon these laws.

Item 1B.UNRESOLVED STAFF COMMENTS

None.

Item 2.PROPERTIES

OMI leases office space adequate for its needs in Stamford, Connecticut; Houston, Texas; and London, England. For a description of other non-real properties, see Our Fleet in Part I, Item 1. Business
section.

OMI and certain subsidiaries are defendants in various actions arising from shipping operations. Such actions are covered by insurance or, in the opinion of management, the ultimate resolution
of these matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company. Management accrues an estimate of expense for any matters that are considered probable of occurring based on the
facts and circumstances.

22

---



Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the security holders of the Company during the fourth quarter of 2005.

Set forth below is certain information with respect to our management and directors as of March 10, 2005.

|Name                    |  | Age |  | Position                                                    
|----------------------- |  | --- |  | ------------------------------------------------------------
|Craig H. Stevenson, Jr. |  | 52  |  | Chairman of the Board, Chief Executive Officer              
|Robert Bugbee           |  | 45  |  | President and COO; Director                                 
|Kathleen C. Haines      |  | 51  |  | Senior Vice President, Chief Financial Officer and Treasurer
|Cameron Mackey          |  | 38  |  | Senior Vice President, OMI Marine Services LLC              
|Fredric S. London       |  | 58  |  | Senior Vice President, General Counsel and Secretary        
|Stavros Skopelitis      |  | 59  |  | Vice President                                              
|James D. Woods          |  | 74  |  | Director                                                    
|James N. Hood           |  | 71  |  | Director                                                    
|Michael Klebanoff       |  | 85  |  | Director                                                    
|Philip J. Shapiro       |  | 53  |  | Director                                                    
|Donald C. Trauscht      |  | 72  |  | Director                                                    

There is no family relationship by blood, marriage or adoption between any of the above individuals and any other executive officer or any OMI director.

The term of office of each officer is until the first meeting of directors after the annual stockholders meeting next succeeding his election and until his respective successor is chosen
and qualified.

There are no arrangements or understandings between any of the above officers and any other person pursuant to which any of the above was elected as an officer.

The following descriptions of occupations or positions that the executive officers and directors of the Company have held during the last five years:

Craig H. Stevenson, Jr.was appointed President and Chief Executive Officer of the Company and elected Chairman of the Board in 1998, when the Company
was spun off from OMI Corp. (Old OMI). He was President until January 2002 when Mr. Bugbee was promoted from Executive Vice President to President of the Company. Mr. Stevenson had been Chief Executive Officer of Old OMI since January
1997 and President of Old OMI since November 1995.

Robert Bugbeewas elected President effective January 25, 2002. He was previously elected Executive Vice President effective January 1, 2001, Director
and Senior Vice President in 1998 and Chief Operating Officer in March 2000. He was Senior Vice President of Old OMI from August 1995 to June 1998. Mr. Bugbee joined Old OMI in February 1995.

Kathleen C. Haineswas elected Senior Vice President in January 2001 and Chief Financial Officer in August 2000. She was elected Vice President and
Controller of the Company in 1998. She had been Vice President of Old OMI since January 1994.

Cameron Mackeywas elected Senior Vice President of OMI Marine Services LLC in 2004. He had been working in Business Development at OMI since June 2002.
Prior thereto he was obtaining an MBA and working on tankers in varying capacities for another owner.

Fredric S. Londonwas elected Senior Vice President, Secretary and General Counsel of the Company in 1998. He had been Senior Vice President, Secretary
and General Counsel of Old OMI since December 1991.

Stavros Skopelitiswas elected Vice President and Economist of the Company in 1998. He had been Vice President and Economist of Old OMI since May 1996.
He was elected Assistant Vice President and Economist of Old OMI in January 1994.

James D. Woodsis Chairman Emeritus of Baker Hughes Inc., one of the largest companies in the oilservices industry, and worked for it and its
predecessor from 1955 to 1997. From January 1989 until January of 1997 Mr. Woods was Chairman of the Board and Chief Executive Officer of Baker Hughes Inc. Mr. Woods is also a director

23

---



of National Oilwell Varco Inc., Esco Technologies, Inc., USEC, Inc., Complete Production Services and Foster Wheeler, Ltd.

James N. Hoodis self employed. He was President and Chief Executive Officer of Teekay Shipping Corporation from 1992 to 1998, Director of Teekay
Shipping Corporation from 1993 to 1998 and consultant to Teekay Shipping Corporation from 1998 to 2000. In addition to his 23 years of shore service in various senior management positions, Captain Hood served at sea for 19 years, including four
years of command experience.

Michael Klebanoffis a private investor. He was President of Old OMI from 1969 to 1983 and was Chairman of the Board of Old OMI from 1983 until November
1995.

Philip J. Shapirowas elected director on April 3, 2002. Since 1998 he has been the President and Chief Executive Officer of Liberty Maritime
Corporation, the largest privately held independent operator of U.S. flag dry bulk vessels.

Donald C. Trauschtwas elected director on December 1, 2000. He has been Chairman of the Board of BW Capital Corporation since 1966. From 1967 to 1995,
Mr. Trauscht held a number of positions at Borg Warner Corporation, including Chairman and Chief Executive Officer. Mr. Trauscht is a director of Esco Technologies, Inc. and Bourns, Inc.

24

---



PART II

Item 5.MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER 
                  MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

OMI trades on the New York Stock Exchange under the symbol OMM. As of March 10, 2005 the number of stockholders of record of OMI common stock was approximately 2,181. The high and
low sale prices of the common stock, as reported by the New York Stock Exchange, were as follows:

|2005 Quarter |  | 1st |       | 2nd |   | 3rd   |  | 4th
|------------ |  | --- | ----- | --- | - | ----- |  | ---
|             |  |     |       |     |   |       |  |    
|High         |  | $   | 21.30 |     | $ | 19.94 |  | $  
|Low          |  | $   | 15.21 |     | $ | 16.70 |  | $  
|             |  |     |       |     |   |       |  |    
|2004 Quarter |  | 1st |       | 2nd |   | 3rd   |  | 4th
|             |  |     |       |     |   |       |  |    
|High         |  | $   | 11.55 |     | $ | 12.88 |  | $  
|Low          |  | $   | 8.76  |     | $ | 9.36  |  | $  

Payment of Dividends to Stockholders

The Company paid dividends on its common stock in the amount of $0.08 per share on April 12, 2005 (to holders of record on March 22), on July 13, 2005 (to holders of record on June 23) and
October 12, 2005 (to holders of record on September 29). The Company paid a dividend of $0.08 per share on January 11, 2006 to holders of record on December 30, 2005. In 2005, aggregate payments for dividends were $25.9 million. The Company
currently intends to pay a regular quarterly dividend; however, any determination to pay dividends in the future will be at the discretion of the Board of Directors and will depend upon OMIs results of operations, financial condition,
covenants and other factors deemed relevant by the Board of Directors.

During 2004, the Board of Directors declared quarterly dividends aggregating $0.22 per share to shareholders of record at designated dates aggregating $18.6 million (the fourth quarter
dividend of $6.0 million was declared in November 2004 and paid on January 11, 2005).

During 2005, OMI repurchased common stock under four authorities: (1) in December 2004, the Board of Directors (the Board) approved the purchase of up to 4,250,000 of the
outstanding shares of the Companys common stock; (2) in August 2005, the Board approved the purchase of up to 3,000,000 of the outstanding shares; (3) in September 2005, the Board authorized $70,000,000 to be expended on the repurchase of
common stock; and (4) in October 2005, the Board authorized $70,000,000 to be expended on the repurchase of common stock. As of December 31, 2005, the Company had repurchased an aggregate of 15,035,000 shares at an aggregate of $17.95 per
share and $159,000 remained available for repurchase under the October $70,000,000 authority.

During February 2006, the Board approved a repurchase program, authorizing $70,000,000 to be expended on the repurchase of common stock.

The following table shows the fourth quarter 2005 stock repurchase activity:

|              |  |              |  |                |       |                 | Total Number of  |                    |                   
|------------- |  | ------------ |  | -------------- | ----- | --------------- | ---------------- | ------------------ | ------------------
|              |  |              |  |                |       |                 | Shares Purchased |                    | Maximum Number    
|              |  |              |  |                |       |                 | As Part of       |                    | of Shares that May
|              |  | Total Number |  |                |       |                 | Publicly         |                    | Yet Be Purchased  
|              |  | of Shares    |  | Average Price  |       | Announced Plans |                  | Under the Plans or
|Period        |  | Purchased    |  | Paid per Share |       | or Program      |                  | Programs          
|              |  |              |  |                |       |                 |                  |                    |                   
|October 2005  |  | 3,599,000    |  | $              | 17.46 |                 | 3,599,000        |                    | 3,699,000         
|November 2005 |  | 3,417,000    |  |                | 18.43 |                 | 3,417,000        |                    | 282,000           
|December 2005 |  | 275,000      |  |                | 18.64 |                 | 275,000          |                    | 9,000             
|              |  |              |  |                |       |                 |                  |                    |                   
|Total         |  | 7,291,000    |  | $              | 17.96 |                 | 7,291,000        |                    |                   
|              |  |              |  |                |       |                 |                  |                    |                   

---

25

---



Restricted Stock

During the year ended December 31, 2005, the Company awarded 622,847 shares of restricted stock to senior officers, directors and employees pursuant to the Companys 2003 Stock Incentive
Plan; 592,847 shares were awarded in May 2005, with an average grant date fair value of $19.00 per share and 30,000 shares were awarded in February 2005 (20,000 shares were forfeited during the same period) with an average grant date fair value
of $18.30 per share.

Equity Compensation Plans

The following table summarizes information, as of December 31, 2005, relating to equity compensation plans of the Company pursuant to which grants of options and restricted stock have been
granted from time to time:

EQUITY COMPENSATION PLAN INFORMATION

|                                   |  |                         |  |                      |  | Number of securities   
|---------------------------------- |  | ----------------------- |  | -------------------- |  | -----------------------
|                                   |  |                         |  |                      |  | remaining available for
|                                   |  |                         |  |                      |  | future issuance under  
|                                   |  | Number of securities to |  | Weighted-average     |  | equity compensation    
|                                   |  | be issued upon exercise |  | exercise price of    |  | plans (excluding       
|                                   |  | of outstanding options, |  | outstanding options, |  | securities reflected in
|                                   |  | warrants and rights     |  | warrants and rights  |  | column (a))            
|                                   |  |                         |  |                      |  |                        
|Plan category                      |  | (a)                     |  | (b)                  |  | (c)                    
|                                   |  |                         |  |                      |  |                        
|Equity compensation plans approved |  |                         |  |                      |  |                        
|by security holders                |  | 79,000                  |  | $5.21                |  | 2,656,881              
|Equity compensation plans not      |  |                         |  |                      |  |                        
|approved by security holders       |  |                        |  | N/A                  |  |                       
|                                   |  |                         |  |                      |  |                        
|Total                              |  | 79,000                  |  | $5.21                |  | 2,656,881              
|                                   |  |                         |  |                      |  |                        

26

---



Set forth below is selected financial data for the periods and dates indicated. The following data should be read in conjunction with, and is qualified in its entirety by reference to,
Managements Discussion and Analysis of Results of Operations and Financial Condition and our consolidated financial statements and the notes thereto included elsewhere in this Form 10-K.

|                                                 |  |                                              
|------------------------------------------------ |  | ---------------------------------------------
|                                                 |  | For the Years Ended December 31,             
|                                                 |  |                                              
|Income Statement Data:                           |  | 2005                                         
|                                                 |  |                                              
|                                                 |  | (in thousands, except per share data, ratios,
|                                                 |  | number of vessels and average age of fleet)  
|Revenue                                          |  | $                                            
|Operating Expenses:                              |  |                                              
|Voyage Expense                                   |  |                                              
|Vessel Expense                                   |  |                                              
|Charter Hire Expense                             |  |                                              
|Depreciation and Amortization                    |  |                                              
|General and Administrative                       |  |                                              
|Provision for Settlement and                     |  |                                              
|Related Expenses                                 |  |                                              
|Provision for Impairment Loss on Vessels         |  |                                              
|(Gain) Loss on Disposal of
          VesselsNet |  |                                              
|Operating Income                                 |  |                                              
|Interest Expense                                 |  |                                              
|Net Income                                       |  |                                              
|                                                
|Share and Per Share Data:                        |  |                                              
|Basic Earnings per Common Share                  |  | $                                            
|Diluted Earnings per Common Share                |  | $                                            
|Weighted Average Shares Outstanding:             |  |                                              
|Basic                                            |  |                                              
|Diluted                                          |  |                                              
|Cash Dividends Declared per Common Share         |  | $                                            
|                                                
|Balance Sheet Data at End of Year:               |  |                                              
|Cash and Cash Equivalents                        |  | $                                            
|Vessels Held for Sale                            |  |                                              
|Vessels and Other PropertyNet                   |  |                                              
|Construction in Progress (Newbuildings)          |  |                                              
|Total Assets                                     |  |                                              
|Current Portion of Long-Term Debt                |  |                                              
|Long-Term Debt, Non-Current Portion              |  |                                              
|Total Stockholders Equity                       |  |                                              
|                                                
|Other Data:                                      |  |                                              
|Time Charter Equivalent Revenue(a)               |  | $                                            
|EBITDA(b)                                        |  |                                              
|Capital Expenditures:                            |  |                                              
|Vessels, Other Property and Construction in      |  |                                              
|Progress Payments                                |  |                                              
|Payments for Drydocking                          |  |                                              
|Ratio of Total Debt to Total Capitalization(c)   |  |                                              
|Ratio of Earnings to Fixed Charges(d)            |  |                                              
|                                                
|Fleet Data at End of Year:                       |  |                                              
|Number of Vessels                                |  |                                              
|Average Age of Fleet (Years)                     |  |                                              

---

27

---



|(a) | Consistent with general practice in the tanker shipping industry, we use TCE revenue (defined as voyage and time charter revenues less voyage expenses) as a measure of equating revenue generated from a voyage charter to
  revenue generated from a time charter. TCE revenue, a non-GAAP measure, provides additional meaningful information in conjunction with Revenues, the most directly comparable GAAP measure because it assists us in making operating decisions about the
  deployment of our vessels and their performance. Voyage expenses comprise all expenses relating to particular voyages, including bunker fuel expenses, port fees, canal tolls and brokerage commissions. Under time-charter contracts the charterer pays
  the voyage expenses (except brokerage commissions), whereas under voyage charter contracts the shipowner pays the voyage expenses. The following table reconciles Revenue with TCE revenue.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

|                                |  | For The Years Ended December 31,
|------------------------------- |  | --------------------------------
|                                |  |                                 
|                                |  | 2005                            
|                                |  |                                 
|                                |  | (in thousands)                  
|Revenue                         |  | $                               
|Less: Other Revenue             |  |                                 
|                                |  |                                 
|Voyage and Time Charter revenue |  |                                 
|Voyage Expenses                 |  |                                 
|                                |  |                                 
|TCE Revenue                     |  | $                               
|                                |  |                                 

|(b) | OMIs definition of EBITDA is income before interest, taxes, and depreciation and amortization. We use EBITDA in order to provide meaningful additional information that enables management to monitor and evaluate our
  ongoing operating results and trends and to provide investors with an understanding of operating performance over comparative periods. EBITDA should not be construed as a substitute for income from operations, net income or cash flow from operating
  activities (all as determined in accordance with generally accepted accounting principles) for the purpose of analyzing our operating performance, financial position and cash flows as EBITDA is not defined by generally accepted accounting
  principles. OMI has presented EBITDA, however, because it is commonly used by certain investors and analysts to analyze and compare companies on the basis of operating performance and to determine a companys ability to service and/or incur
  debt. OMIs computation of EBITDA, however, may not be comparable to similar
  titled measures of other companies. The following is a reconciliation of net
  income, as reflected in our Consolidated Statements of Income, to EBITDA:
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

|                              |  | For The Years Ended December 31,
|----------------------------- |  | --------------------------------
|                              |  |                                 
|                              |  | 2005                            
|                              |  |                                 
|                              |  | (in thousands)                  
|Income                        |  | $                               
|Add (Subtract):               |  |                                 
|Interest Expense              |  |                                 
|Benefit for Income Taxes      |  |                                 
|Depreciation and Amortization |  |                                 
|                              |  |                                 
|EBITDA                        |  | $                               
|                              |  |                                 

|(c) | Ratio of Total Debt to
            Total Capitalization was calculated as debt (current debt plus long-term
    debt) divided by capitalization (debt plus stockholders equity.)
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(d) | The ratios of earnings to fixed charges were calculated as follows:                                                                                                              
|   

|                                        |  | For The Years Ended December 31,
|--------------------------------------- |  | --------------------------------
|                                        |  |                                 
|                                        |  | 2005                            
|                                        |  |                                 
|                                        |  | (in thousands, except ratios)   
|Earnings:                               |  |                                 
|Earnings from continuing operations(1)  |  | $                               
|Add:                                    |  |                                 
|Fixed Charges(2)                        |  |                                 
|Amortization of capitalized interest(3) |  |                                 
|Distributions from joint ventures(4)    |  |                                 
|Subtract:                               |  |                                 
|Capitalized interest                    |  |                                 
|                                        |  |                                 
|Total Earnings                          |  | $                               
|                                        |  |                                 
|                                       
|Fixed Charges:(2)                       |  |                                 
|Interest expense                        |  | $                               
|Capitalized interest                    |  |                                 
|Capitalized expense relating to debt    |  |                                 
|Estimate of interest in rental expense  |  |                                 
|                                        |  |                                 
|Total Fixed charges                     |  | $                               
|                                        |  |                                 
|                                       
|Ratio of Earnings to Fixed Charges      |  |                                 

The ratios of earnings to fixed charges were calculated based on information from our records. For purposes of these tables,earnings is calculated by adding: (1) pre-tax income from continuing operations
before income or loss from equity investees; (2) fixed charges; (3) amortization of capitalized interest; and (4) distributed income of equity investees; and then subtracting capitalized interest. Fixed charges is calculated by adding:
interest expensed and capitalized; amortized capitalized expenses related to indebtedness; and an estimate of the interest within rental expense.

28

---



Item 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION

The following presentation of managements discussion and analysis of results of operations and financial condition should be read in conjunction with our consolidated financial
statements, accompanying notes thereto and other financial information appearing elsewhere in this Form 10-K.

2005 Financial Summary

OMIs revenue is derived from our investment in modern vessels used to provide seaborne transportation services for crude oil and petroleum products in the international shipping markets.
Our customers include major independent and state-owned oil companies, major oil traders, government entities and various other entities.

We own or charter-in a fleet of 46 vessels (see Our Fleet in the Business section, Item 1), including three newbuildings delivered and five vessels contracted for sale (two bareboat chartered
and one time chartered back) in the first quarter of 2006. We will take delivery of two more newbuilding product carriers in the second quarter of 2006. We are focused on maintaining a high quality fleet that is concentrated primarily in two vessel
types: Suezmax tankers, which generally carry crude oil (we refer to these as our crude oil fleet or Suezmax fleet) from areas of oil production to refinery areas, and product carriers, which generally carry refined petroleum
products (which we refer to as our product carrier fleet), such as gasoline and aviation fuel, from refineries to distribution areas. As of December 31, 2005, the average age of our vessels was 2.9 (1) years.

Note (1): All averages referring to vessel age are weighted averages based on deadweight tons (dwt) and are calculated as of December 31, 2005, based on our operating fleet of 45
vessels. Dwt, expressed in metric tons each of which is equivalent to 1000 kilograms, refers to the total weight a vessel can carry when loaded to a particular load line.

During 2005 we increased our operating fleet with the delivery of seven newbuildings, two of which are chartered-in, which is reflective of our commitment to our strategy of acquiring quality,
modern vessels.

The following table illustrates highlights for the year ended December 31, 2005, in comparison to the years ended December 31, 2004 and 2003:

|Highlights                                          |  | 2005                                                              |        | 2004 |   | 2003  
|--------------------------------------------------- |  | ----------------------------------------------------------------- | ------ | ---- | - | ------
|                                                    |  |                                                                   |        |      |   |       
|                                                    |  | (dollars in millions, shares in thousands, except per share data)
|Net Income                                          |  | $                                                                 | 275.2  |      | $ | 245.7 
|TCE Revenue*                                        |  | $                                                                 | 514.1  |      | $ | 483.6 
|Basic Earnings Per Common Share                     |  | $                                                                 | 3.39   |      | $ | 2.87  
|Weighted Average Shares OutstandingBasic           |  |                                                                   | 81,112 |      |   | 85,712
|Dividends Declared                                  |  | $                                                                 | 0.32   |      | $ | 0.22  
|Cash Provided by Operating Activities               |  | $                                                                 | 303.5  |      | $ | 273.2 
|Capital Expenditures for Vessels and other property |  | $                                                                 | 148.6  |      | $ | 675.6 
|Cash paid for repurchase of common stock            |  | $                                                                 | 269.9  |      | $ | 141.4 

---

OMIs net income and earnings per share for the year ended December 31, 2005 were the highest in the Companys history.

29

---



Consolidated TCE revenue earned for the year ended December 31, 2005 increased 6% over the year ended December 31, 2004. Although spot daily TCE rates for the Suezmax fleet were 25% lower in
2005 compared to 2004, (see Market Overview for explanations of high rates in 2004), there was a significant increase in operating days in 2005 due to the 2004 and 2005 acquisitions and deliveries of ships. The following table has the average daily
TCE rates earned in the spot market for OMIs Suezmax vessels over the last five years. The table illustrates the volatility and seasonality of rates.

|               |  | Suezmax Fleet  Daily TCE rate
|-------------- |  | ------------------------------
|Period         |  | 2005                          
|               |  |                               
|Twelve Months  |  | $48,060                       
|Fourth Quarter |  | 56,555                        
|Third Quarter  |  | 31,419                        
|Second Quarter |  | 43,543                        
|First Quarter  |  | 60,316                        

Our Company benefited from the continued strength of the tanker market during the year ended 2005 with a larger Suezmax and product carrier fleet compared to last year. We have also benefited
from new time charter contracts for our product carriers that were higher than previous time charter contracts.

During 2005, we spent $148.6 million to increase the size of our fleet, and we repurchased 15,035,000 shares of OMIs common stock (which is 18% of the common stock outstanding as of
January 1, 2005). We continued to pay a quarterly dividend, which was originally $0.05 per share when declared in the first quarter of 2004, and has increased to $0.10 per share in the first quarter of 2006.

In an effort to maintain our high quality vessel operations, we have implemented additional initiatives in 2005 that have resulted in increased operating costs (see Breakdown by Fleet section).
We believe that the investment in high quality people operating the ships, appropriate stores and supplies to maintain the ships, training, environmental and other vessel related initiatives is necessary in order to be a high quality operator. We
also believe that our customers prefer OMI because we are a quality operator. We were able to continue long-term relationships through time charter contracts renewed with existing customers, and we have formed new relationships due to the quality of
our tonnage and operations.

OMIs financial performance in 2005 resulted from the following key elements of our business strategy:

| | (1) | concentrate in two vessel categories: Suezmax tankers, which offer size advantages (over Aframaxes and Panamaxes) and geographic flexibility (over VLCCs), and product carriers, which provide an advantage because of
  increasing demand for petroleum products in areas where no additional refineries have recently been built. Our product carrier sizes allow us to participate in most trading areas and over the last few years we have accumulated twelve ice class
  product carriers, further expanding trading capabilities;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) | maintain high quality vessels and standards of operation through improved environmental and safety procedures*, crew training and maintenance and repair procedures;                                                                                                                                                                                                                                                                                                                                                                    
|
| | (3) | manage the balance between the ability to capture upside in stronger spot markets and the predictable revenues from long-term contracts, which cover a large portion of fixed costs;                                                                                                                                                                                                                                                                                                                                                    
|
| | (4) | maintain a balance between available liquidity to purchase vessels as market conditions and opportunities arise and maintaining prudent financial ratios (e.g. leverage ratio);                                                                                                                                                                                                                                                                                                                                                         
|
| | (5) | enter into strategic alliances and operate from geographic locations that provide us with market opportunities to improve our vessel utilization and earnings; and                                                                                                                                                                                                                                                                                                                                                                      
|
| | (6) | monitor and manage the repurchase of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|

---

|* | We believe our operations comply in all material respects with applicable environmental laws. To reduce our exposure, we seek to maintain standards and best practices to meet or exceed these laws and regulations. We have an
  active safety and environment program and we use best practices to ensure our operations are conducted in a safe and ethical manner.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 

30

---



There are many factors that affect tanker rates, including supply and demand for vessels and the cargo that the vessels carry (the supply/demand for crude oil or refined products). Market
conditions (see Market Overview section) and economic and regulatory changes also affect revenues and expenses. The following are several key drivers for our Revenues and Operating income:

| | (1) | spot rates in the Suezmax
          tanker market and product tanker market (including vessels on time
          charters with profit sharing arrangements) (Note: for the next twelve
          months, we estimate a variation of $1,000 per day for
  vessels on spot would increase/decrease net income by $9.2 million or $0.13 per share, $0.06 per share from the product carrier fleet and $0.07
  per share from the Suezmax fleet);
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) | the number of revenue earning operating days of our fleet;                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (3) | marketing our vessels by the formation of strategic alliances (better scheduling of vessels and positioning, resulting in better utilization);                                                                                                                                                                                                                                                                                               
|
| | (4) | capitalizing on our experience and reputation in the industry; and                                                                                                                                                                                                                                                                                                                                                                           
|
| | (5) | managing costs.                                                                                                                                                                                                                                                                                                                                                                                                                              

The Company studies market indicators and trends when making decisions for managing risks, including but not limited to the following: world oil demand (increases / decreases in consumption of
oil), where the supply to meet the demand comes from (long-haul versus short-haul voyages), world oil supply by geographic regions, inventory levels by geographic regions, world tanker newbuildings (orderbook) and deletions
(scrappings and conversions).

The following are several other significant events that occurred during the year ended December 31, 2005 and so far in the first quarter of 2006:

- In January, February and March 2006, three product carrier newbuildings, two handymax (the WABASH and KANSAS) and one handysize (the RHINE) were delivered.
- In January, March, May and July 2005, five product carrier newbuildings, three handymax (the LAUREN, the BRAZOS and the THAMES) and two handysize (the TEVERE and the FOX,) were
  delivered.
- In June and September 2005, we time chartered-in two 2005-built Suezmax vessels (the CAPE BONNY and CAPE BASTIA).

- In March 2006, we agreed to sell two Suezmax vessels, the HUDSON and the POTOMAC for a net sales price
      of $142 million. The POTOMAC will be time chartered back to the Company.
      The vessels are expected to be delivered
      in the second quarter of 2006. The gain on the disposal of approximately $26
      million on the HUDSON will be recognized in the Consolidated
  Statements of Income upon delivery and the gain of
  approximately $27 million on the disposal of the POTOMAC will be deferred
  and amortized over the five year lease
  term.
- In February 2006, we agreed to sell our 1998-built Suezmax vessel, the SACRAMENTO for a net sales price
      of approximately $68 million. The vessel is expected to be delivered
      to the new owners in the second quarter
      of 2006. The gain on the disposal of approximately $27 million will
      be recognized in the Consolidated Statements of Income upon delivery.
- In February 2006, we agreed to sell two 2003-built Panamax vessels, the OTTAWA and the TAMAR for an
      aggregate net sales price of approximately $89 million. The vessels
      are being leased back under bareboat charters (we pay the vessel expenses) for approximately four years each. The gain on the disposals
      aggregating approximately $20 million will be deferred and
  amortized over the lease term. The vessels continue their current time charters, which expire in April and July 2008, respectively.
- In January 2005, we sold our last two non-double hull handysize crude oil carriers, which were built in 1993,
      the TANDJUNG AYU and BANDAR AYU, resulting in a gain on disposal of vessels
      of $2.9 million.

31

---



- In November 2005, we sold two 1998-built Suezmaxes, the PECOS and the SABINE, resulting in a gain on
      disposal of vessels of $55 million.

Time Charter Contacts (see Contracted Time Charter Revenue section)

- In March 2006, OMI entered into a three year time charter contract for a Suezmax vessel, the CAPE BASTIA. The
      vessel will be chartered at a fixed rate, and will add approximately $40.5
  million to the Companys contracted time charter revenue over the three years.
- In January and February 2006, OMI entered into three year time charter contracts for three handymax product carriers (the KANSAS, the REPUBLICAN and the PLATTE). The time charters are
  expected to begin in the second quarter. The
  charters will add approximately $66.9 million to the Companys contracted
  time charter revenue over the three year period, not
  including profit sharing arrangements for two of the vessels.
- During 2005, OMI entered new or renewed time charters for 16 handymax and handysize product carriers, each for a two or three year period, with the exception of one vessel for a one year
  period. Six of the vessels will begin their time charters in 2006 or after their current charter expires and the remaining 10 began in 2005. All the time charters were at fixed rates
  and four have profit sharing arrangements.
- During May 2005, two Suezmax tankers, the SACRAMENTO, now to be replaced by the MAX JACOB, and the SABINE, which was replaced by the POTOMAC in October, began two seven year time
  charter contracts with profit sharing arrangements.

- During the year ended December 31, 2005, we repurchased and retired 15,035,000 shares of common stock under
      Board authorized programs, at an average price of $17.95 per share,
  aggregating $269.9 million.
- Having substantially completed Board authorizations from 2005, in February 2006, the Board authorized another $70
      million for the repurchase of its common stock. OMI currently has 71,061,791
      shares outstanding.

See Outlook for 2006 and Liquidity and Capital Resources sections for more explanations about 2006 activities.

Tanker charter rates are determined in a highly competitive market and depend on the supply of and demand for tanker capacity. Demand for tankers depends primarily on the volume of crude oil
and petroleum products transported as well as the distance over which they are carried. Such demand is a function of world economic conditions and the resulting need for oil, world oil production and consumption patterns, as well as events that
interrupt oil production, trade routes and consumption.

The supply of tankers depends primarily on the level of the orderbook, the fleet age profile, government regulations that affect the level of tanker scrappings and the behavior of tanker users,
as well as the operating efficiency of the existing fleet. Please see Part I, Item 1. Business section, for additional discussion of the tanker industry.

The tanker market was strong in the fourth quarter of 2005, and the average spot TCE for Suezmax tankers in the West Africa to U.S. trade was more than double the preceding quarterly rate but
below the very high rate prevailing in the same period of last year. In addition, the average Suezmax TCE rate in 2005 was the second highest for this period since at least 1990. This was the result of continued, although at a slower rate, world oil
demand growth, colder than normal weather in the Northern Hemisphere and high OPEC oil production, notwithstanding an increase in the world tanker fleet. Freight rates in the crude oil tanker market continue at high levels thus far in the first
quarter of 2006.

32

---



OPEC Crude Oil Production andSuezmax Tanker Earnings



The average OPEC oil production in the fourth quarter of 2005 totaled about 29.8 million barrels per day (b/d), about the same compared to the same period last year. OPEC oil
production, including Iraq, in the first quarter of 2006 is expected to average 29.7 million b/d, about 0.1 million b/d below the preceding quarter and about 0.3 million b/d higher than the same period a year ago.

World oil demand in the fourth quarter of 2005 was 1.2 million b/d higher than the preceding quarter, and 0.3 million b/d higher compared to the same period of last year. World oil demand is
expected to increase further in the foreseeable future due to the usual seasonal oil demand gains in the winter months and further improvement of world economic activity. World oil demand in 2005 increased at a slower rate than the prior year as a
result of persistent high oil prices due to low spare oil production capacity, ongoing geopolitical risks and hurricane related oil production and refinery problems in the Gulf of Mexico.

In 2005, hurricane activity resulted in shutdowns of most of the U.S. crude oil production and refinery capacity in the Gulf of Mexico. It is estimated that about 0.4 million b/d of crude oil
production and about 0.8 million b/d of refinery capacity was out of service at year-end 2005 and that about 0.3 million b/d of crude oil production and 0.4 million b/d of refinery capacity will still be out of service at the end of the first
quarter of 2006. The refinery capacity is expected to be fully restored by the end of the second quarter 2006, though crude oil production would be fully restored during the second half of 2006.

Total preliminary commercial crude oil and petroleum products inventories in the United States, Western Europe and Japan at the end of January 2006 were about 56 million barrels, or 2.6% higher
than the year earlier level, and 3.2% above the average of the last five years. At the same time, crude oil inventories were 4.1% and petroleum products inventories were 2.7% higher than the average of the last five years, respectively. Oil
inventories in terms of days forward consumption throughout 2006 are expected to be higher than the 2005 level, as well as the average of the last five years.

33

---



U.S., W. Europe and Japan Crude Oil Inventories

Note: Inventory figures as of end of January of each year.Source: Industry Sources.


The world tanker fleet totaled 327.0 million dwt at the end of 2005, up by 22.8 million dwt or 7.5% from the year-end 2004 level. The total tanker fleet includes 42.7 million dwt Suezmaxes,
excluding shuttle and U.S. flag Suezmaxes, up by 7.6% from the year-end 2004 level.

The tanker orderbook totaled about 85.0 million dwt, or 26.0% of the existing fleet at the end of 2005. Approximately 23.2 million dwt are for delivery in 2006, 28.7 million dwt in 2007, 23.5
million dwt in 2008 and most of the balance in 2009.

The tanker orderbook includes 65 Suezmaxes of about 10.2 million dwt or 23.9% of the existing internationally trading Suezmax tanker fleet. Twenty-one Suezmaxes are for delivery in 2006, 26 in
2007, 15 in 2008 and the balance in 2009. The Suezmax orderbook for delivery in the next few years represents vessels to replace old tonnage affected by IMO regulations as well as to satisfy an expected increase in demand. It should be noted that
more trades suitable for Suezmaxes are developing and that Suezmax tankers are flexible vessels since they are traded effectively in medium and long haul trades.

At the end of 2005, approximately 29.8 million dwt or 9.1% of the total tanker fleet was 20 or more years old, including 9.4 million dwt or 2.9% of the fleet that was 25 or more years old.
Furthermore, nine Suezmaxes were 20 or more years old, including two that were 25 or more years old. Tanker sales for scrap and for Floating Production Storage Offloading (FPSO) conversion totaled about 6.7 million dwt in 2005, including
six Suezmaxes and six Very Large Crude Carriers (VLCC).

The EU adopted tanker regulations that commenced on October 21, 2003. In response to the EU regulations, the IMO adopted new strict tanker regulations that commenced on April 5, 2005. These
regulations primarily prevent single hull tankers of 5,000 dwt and above from carrying heavy fuel oil from early April 2005, accelerate the phase-out of single hull tankers to 2010, in line with EU rules, and force all single hull tankers to comply
with the Condition Assessment Scheme (CAS) from the age of 15 years, commencing in 2005. However, it allows flag states to permit single hull tankers with segregated ballast (SBT) and smaller tankers to operate beyond 2010, but the
tanker must not be in operation beyond the date of delivery in 2015 or the date in which the tanker becomes 25 years old, whichever is earlier, subject to satisfactory results from CAS. Finally, tankers with only double sides or double bottoms will
be allowed to operate beyond 2010, provided that these tankers were in service on July 1, 2001. Such tankers will not be allowed to operate beyond the date on which they become 25 years old after the date of delivery.

At the end of 2005, there were about 97.1 million dwt of tankers or 29.7% of the total tanker fleet that will be affected by these regulations.

34

---



The strong freight rate environment of the product tanker market continued throughout 2005 and, in the fourth quarter, the average spot TCE for handysize product tankers in the Caribbean was
higher than the preceding quarter rate but below the very high rate prevailing in the same period of last year. In addition, the average rate in 2005 was the second highest level since at least 1990. The product tanker market strength was the result
of continuous growth in the demand for oil, shortage of refinery capacity in consuming areas and the substantial loss of U.S. refinery capacity in the Gulf of Mexico due to hurricane activity during 2005, notwithstanding an increase of the world
product tanker fleet. Freight rates in the product tanker market continue to be strong thus far in the first quarter of 2006.

The world product tanker fleet (which ranges from small 10,000 dwt product carriers to larger than 100,000 dwt for coated Aframax tankers), totaled about 75.0 million dwt at the end of 2005, up
by about 12.3% from the year-end 2004 level. The total product tanker fleet includes about 42.1 million dwt handysize and handymax product tankers, up by 9.0% from year-end 2004 level.

The product tanker orderbook for delivery over the next few years totaled about 28.5 million dwt, or about 38.0% of the existing product tanker fleet at the end of 2005. Approximately 10.1
million dwt are for delivery in 2006, 10.3 million dwt in 2007, 7.3 million dwt in 2008 and the balance in 2009. At the end of 2005, approximately 12.7 million dwt or 17.0% of the existing fleet were 20 or more years old.

The orderbook for handysize and handymax product tankers at the end of 2005 totaled about 12.7 million dwt or 30.2% of the existing handysize and handymax product tanker fleet. Approximately
4.2 million dwt are for delivery in 2006, 4.9 million dwt in 2007, 3.1 million dwt in 2008 and the balance in 2009.

Total preliminary commercial inventories of oil products in the United States, Western Europe and Japan at the end of January 2006 were 25 million barrels or 1.8% higher than the same time a
year ago, and 2.7% above the average of the last five years. At the same time, inventories of middle distillates, the seasonal product, in these areas were 3.7% higher than last year and 5.0% above the last five years average. Commercial middle
distillates in the United States at the end of January 2006 were approximately 11.8% higher than the same time a year ago and 9.2% above the average of the last five years.

U.S., W. Europe and Japan Product Inventories





> Note: Inventory figures as of end of January of each year.Source: Industry Sources.

The tanker market is expected to benefit in the foreseeable future as a result of improving world economic activity, seasonally higher world oil demand in the winter months, shortage of
refinery capacity in the United States, Western Europe and Asia, the loss of U.S. oil production and refinery capacity due to hurricane activity in the Gulf of Mexico during 2005, and possible disruptions due to political instability in short-haul
oil producers Venezuela and Nigeria.

35

---



The policies discussed below are considered by management to be critical to understanding our financial statements and accompanying notes prepared in accordance with accounting principles
generally accepted in the United States of America. We make estimates, judgments, assumptions and form opinions in applying our accounting policies that significantly impact the results we report in our financial statements. Our most critical
accounting estimates include revenue/expense recognition for voyage charters, evaluation for impairment of long-lived assets, depreciation expense and drydock amortization because they generally require us to make estimates or judgments that are
complicated or subjective.

Revenue and Expense Recognition

OMI generates operating revenue from two types of charters, time charters and voyage charters. Time charters are for a specific period of time at a specific rate per day or month and are
generally not as complex or as subjective as voyage charters. Under a voyage charter (also called a spot market charter), we agree to provide a vessel for the transport of specific goods between specific ports in return for the payment of an agreed
upon freight per ton of cargo or, alternatively, for a specified total amount. All operating costs are for our account. Voyage expenses, such as fuel and port charges, are recognized ratably over the duration of the voyage. We recognize voyage
revenue and voyage expenses on the percentage of completion method of accounting, which is the most prevalent method of accounting for voyage revenue and expenses in the shipping industry. Estimated losses under a voyage charter are provided for in
full at the time such losses become evident.

Revenue recognition for voyage charters may be calculated on either a load-to-load basis or on a discharge-to-discharge basis. Our accounting policy for recognition of voyage freight for
vessels operating on voyage charters is on the discharge-to-discharge basis, which is consistent with accounting requirements and industry practice. Under this method, voyage revenue is recognized evenly over the period from the discharge of cargo
for the prior voyage to the discharge of cargo for the current voyage. Management believes that the discharge-to-discharge method is preferable because it eliminates the uncertainty associated with the location of the next load port. This is the
predominant method in the industry.

Management uses judgment to estimate the number of days of a voyage to compute the amount of revenue and expense to recognize at the end of each month using the percentage of completion method
  on a discharge-to-discharge basis. These estimates are generally supported by historical trends, more specifically about the operating capability of the vessel (speed and fuel consumption) and the trading route. Actual results could differ from the
  estimated accruals in the Consolidated Balance Sheets under the classifications Traffic receivables, Prepaid expenses and other current assets and Accrued voyage and vessel liabilities, and also under Voyage revenue and Voyage expense categories
  included in the Consolidated Statements of Income. Collection of voyage revenue (or freight) and time charter revenue are reasonably assured and our allowance for doubtful accounts, included in Traffic receivables in the Consolidated
  Balance Sheets, associated with such revenue is insignificant.

Demurrage income, included in voyage revenue, represents earnings from payments by the charterer to the vessel owner when loading and discharging time exceed the stipulated time in the voyage
charter. Demurrage income is measured in accordance with the provisions of the respective charter agreements and the circumstances under which demurrage claims arise, and it is also recognized when earned ratably over the estimated duration of the
voyage to which it pertains. We also provide a reserve for our demurrage revenues based upon our historical record of collecting these amounts. As of December 31, 2005, the demurrage receivable included in Traffic receivables in the Consolidated
Balance Sheets was $10.2 million, net of $4.3 million, which was the portion of reserve for demurrage. In 2005, we reduced our reserve for demurrage claims by approximately $1.0 million because of our history of collections. We
periodically review the adequacy of this reserve so that it properly reflects our collection. Actual results could differ from estimated reserves that are included in the Consolidated Balance Sheets under the classifications Traffic receivables and
also under the Voyage revenue category included in the Consolidated Statements of Income that are estimates in a period.

Vessels and construction in progress (CIP) payments are recorded at cost. Expenditures for maintenance, repairs and minor renewals are expensed. Major replacements and renewals are
capitalized. The carrying values of our vessels

36

---



may not represent their fair market value at any point in time since the market prices of secondhand vessels have been historically cyclical and tend to fluctuate with changes in charter rates and the cost of newbuildings.
Management reviews vessels for potential impairment when events or circumstances indicate that their values may have declined. In order to evaluate impairment of a vessel, assumptions about the future condition of the vessel and its operations are
made. These assumptions are applied in a model in which we estimate the undiscounted projected future cash flows associated with the vessel and comparisons to the vessels carrying value to determine if a writedown to fair value is required.
This process involves subjective assumptions about future events, and discount factors to be applied to projected cash flows when it is determined that an impairment existed. Estimated values can be affected by many factors beyond the Companys
control such as the overall market and economic trends, new regulations, and other changes. These factors can cause underperformance relative to expected operating results and impact the useful economic lives of the vessels. Consideration,
evaluation and judgments are made for each of these factors when making assumptions about the future performance for each vessel. There were no circumstances or events during the year ended December 31, 2005 that would indicate to management that
impairment existed. Carrying values at December 31, 2005 were determined to be appropriate and reasonable. However, if circumstances or events affecting these assumptions change, it could result in impairment charges in future periods that may be
material.

During 2003 and 2005, laws and regulations were adopted by the EU (which commenced in 2003) and by the IMO (which commenced in 2005). These rules and regulations phase out non-double hull
tankers at different periods from OPA 90. Currently, we only have double hull vessels; therefore, our ships do not have issues of this nature relating to their trading. See the Market Overview section for more details about the impact of
the latest laws and regulations.

Depreciation for financial reporting purposes is provided on the straight-line method based on the estimated useful lives of the assets up to the assets estimated salvage value. We
estimate the useful lives of our vessels to be approximately 25 years. Managements judgment is required in the determination of the estimated depreciable lives that are used to calculate the annual depreciation expense and accumulated
depreciation. Capital expenditures on our vessels relating to significant replacements, improvements or new equipment are depreciated over the shorter of the life of the capitalized asset or the remaining life of the vessel. Capital expenditures
under our policy are based on managements judgment required to determine if such expenditure extends the useful life of the vessel, increases operational efficiency or satisfies current safety and environmental requirements.

Salvage, or scrap value, is based upon a vessels lightweight tonnage (LWT) multiplied by a scrap rate. We use a scrap rate of $175 per LWT, which is in line with industry
standards, to compute each vessels salvage value. The estimated scrap value is used in the computation of depreciation expense and recoverability of the carrying value of each vessel when evaluating for impairment of vessels. Managements
estimates for salvage values may differ from actual results.

The Company uses the deferred method of accounting for drydock expenses that is consistent with accounting requirements and industry practice. Under the deferred method, drydock expenses are
capitalized and amortized until the next drydock or special survey, which we estimate to be approximately a two year period. Management believes the deferred method better matches costs with revenue and best matches the economics. Management uses
judgment when estimating the period between drydocks performed, which can result in adjustments to the estimated amortization of drydock expense. If the vessel is disposed of before the next drydock, the remaining balance in deferred drydock is
written-off as a component of the gain or loss upon disposal of vessels. Our drydock amortization expense was $3.0 million in 2005. This expense is included in Depreciation and amortization expense on
the Consolidated Statements of Income. The deferred drydock balance at December 31,
2005 on the Consolidated Balance Sheets of $5.0 million represents unamortized deferred drydock balances for 12 of our 41 wholly owned vessels.

37

---



Results of Operations

Overview

Our
    analysis and evaluation of our consolidated results of operations focuses
    on the operating performance of our crude oil and product carrier (clean)
    fleets. Our vessels are deployed under medium-to-long-term time charters,
    contracts of affreightment (COAs) or spot market charters (some
    with pool arrangements). Revenues vary with each type of charter and prevailing
    shipping rates. Expenses also vary with each type of charter and further
    depend on the cost of fuel, the ports and canals used and the shipping route.

A time
    charter involves the placing of a vessel at the charterers disposal
    for a set period of time during which the charterer may use the vessel in
    return for the payment by the charterer of a specified daily or monthly hire
    rate. Under a voyage charter in the spot market, the owner of a vessel agrees
    to provide the vessel for the transport of specific goods between specific
    ports in return for the payment of an agreed upon freight per ton of cargo
    or, alternatively, for a specified total amount. All operating costs are
    for the owners account. We also have several COAs, which are agreements
    providing for the transportation of a specific quantity of cargo over a specific
    time period but without designating specific vessels or voyage schedules,
    thereby allowing flexibility in scheduling. COAs can either have a fixed
    rate or a market-related rate.

Voyage,
    time charters and COAs are available for varying periods, ranging from a
    single trip to a long-term arrangement. In general, a long-term charter assures
    the vessel owner of a consistent stream of revenue. Our use of time charters
    also reduces in part the seasonality of the spot market business. Generally,
    spot markets are strongest in the first and fourth quarters of the calendar
    year, and weaker in the second and third quarters. Operating the vessel in
    the spot market affords the owner greater speculative opportunity, which
    may result in high rates when ships are in high demand or low rates (possibly
    insufficient to cover costs) when ship availability exceeds demand. Ship
    charter rates are affected by world economics, international events, weather
    conditions, strikes, governmental policies, supply and demand, and many other
    factors beyond our control.

Consistent
    with industry practice, we use time charter equivalent, or TCE revenue, which
    comprises revenue from vessels operating on time charters (TC)
    and voyage revenue less voyage expenses from vessels operating on voyage
    charters in the spot market (spot). TCE revenue serves as a measure
    for analyzing fluctuations between financial periods and as a method of equating
    revenue generated from a voyage charter to time charter revenue. TCE revenue
    also serves as an industry standard for measuring revenue and comparing results
     among competitors.

Because
    the tanker industry distinguishes vessels in the market primarily on the
    size and design configuration of the vessels, the type of cargo vessels are
    equipped to transport and the arrangements under which the vessels are chartered,
    we present various other measures of our financial performance, including:

- separate analysis of TCE revenue for voyage
        (spot) charters and time charters;
- Vessel Operating Income, which is equal to TCE
        revenue less Vessel expenses, Charter hire expense and Depreciation
        and amortization, by our reportable segments, the Crude oil fleet and Clean
        fleet;
- the number of operating or TCE revenue days,
        which is the number of days our vessels were available for employment
        by our Crude oil fleet and Clean fleet; and
- average daily TCE revenue and average daily
        vessel expense by our Crude oil fleet and Clean fleet.

Vessel
    expenses include operating expenses such as crew related costs, stores, routine
    maintenance and repairs, insurance and miscellaneous. These expenses are
    a function of the fleet size, utilization levels for certain expenses, requirements
    under laws and by charterer, and our standards.

Charter
    hire expense is the payment made to the owner of a vessel time chartered
    or bareboat chartered for our use. Under a time charter, the owner is responsible
    for the vessels operating expenses, in addition to drydock and capital
    expenditures. Under a bareboat charter, the charterer is responsible for
    the vessels operating expenses, in addition to the cost of the drydock.
    In a time charter or bareboat, we are responsible for the voyage expenses
    if the vessel operates in the spot market. Charter hire expense also includes
    the pool charter hire for the non-OMI vessels included in the Gemini Pool.

38

---



Insurance
    expense varies with overall insurance market conditions as well as the insureds
    loss record, level of insurance and desired coverage. During 2004, we had
    modest increases in our Protection and Indemnity (P & I)
    rates, (i.e. liability insurance) while our Hull and Machinery (i.e. asset
    insurance) costs have stayed relatively flat, except for increases due to
    increased values of our Suezmax vessels. P & I rates for coverage in
    2005 were higher as a result of losses from prior years by the P & I
    clubs and will also be higher in 2006 due to general increases and the loss
    record of the Company. War risk premiums based on voyages into designated
    war risk areas are often for the account of the charterers.

For the Year Ended December 31,
      2005 Compared to the Year Ended December 31, 2004

The
    Company earned TCE revenue of $514.1 million for the year ended December
    31, 2005 and $483.5 million for the year ended December 31, 2004. The
    following table summarizes our consolidated TCE results for the year ended
    December 31, 2005, compared to the year ended December 31, 2004:

|                                           |  | For
          the Years Ended |       |      |  
|------------------------------------------ |  | ----------------------------- | ----- | ---- | -
|                                           |  | December
      31,            |       | Net 
|                                           |  | 2005                          |       | 2004 |  
|                                           |  |                               |       |      |  
|                                           |  | (In millions)                
|Time Charter Equivalent
          Revenue: |  |                               |       |      |  
|Voyage and time charter
        revenue    |  | $                             | 650.8 |      | $
|Voyage expenses                            |  |                               | 136.7 |      |  
|                                           |  |                               |       |      |  
|Time charter equivalent
        revenue    |  | $                             | 514.1 |      | $
|                                           |  |                               |       |      |  

The
    following table summarizes TCE revenue by our two reporting segments, the
    crude oil fleet and the product carrier or clean fleet for the year ended
    December 31, 2005, compared to the year ended December 31, 2004:

|                                           |  | For
      the Years Ended |       |      |   |       
|------------------------------------------ |  | ------------------------- | ----- | ---- | - | ------
|                                           |  | December
      31,        |       | Net  |  
|                                           |  | 2005                      |       | 2004 |   | Change
|                                           |  |                           |       |      |   |       
|                                           |  | (In millions)            
|Time Charter Equivalent
          Revenue: |  |                           |       |      |   |       
|Crude Oil Fleet                            |  | $                         | 306.5 |      | $ | 352.3 
|Clean Fleet                                |  |                           | 207.6 |      |   | 131.2 
|                                           |  |                           |       |      |   |       
|Total                                      |  | $                         | 514.1 |      | $ | 483.5 
|                                           |  |                           |       |      |   |       

In
    addition to analyzing TCE revenue by reportable segment, we also analyze
    fluctuations by fleet and type of charter (spot or time). In both 2005 and
    2004, the majority of our tonnage (primarily our Suezmax vessels) operated
    in the spot market, giving us the ability to benefit from the strong spot
    market. As of December 31, 2005, 62% of our vessels dwt, or 18 vessels,
    operated in the spot market and 38% of our dwt, or 27 of our 45 vessels,
    operated under time charters. Eleven of the vessels on time charter were
    under profit sharing arrangements (see Contracted Time Charter Revenue section).
    Assuming no new charters or charter extensions by the end of 2006, we will
    have approximately 53% of our dwt, or 18 vessels, operating in the spot market;
    and 47% of our dwt will be operating under time charters (13 out of 30 vessels time
    charters have profit sharing), without considering renewals for three time
    charters expiring during the year, two of which have profit sharing. Our
    time charters with profit sharing arrangements have floor rates. If earnings
    exceed the floor rate, we share in the profit above that rate equally. This
    enables us to benefit from strong tanker markets while protecting our downside.
    Revenue generated by time charters gives the Company the ability to cover
    certain fixed charges (vessel expenses for vessels on time charter, consolidated
    general and administrative expenses and interest expense).

During
    the year ended December 31, 2005, 73% or $376.6 million of our TCE revenue
    was earned by vessels operating in the spot market and 27%, or $137.5
    million of our TCE revenue was earned by vessels operating on TC. TCE revenue
    increased $30.6 million or 6% for the year ended December 31, 2005 compared
    to the year ended December 31, 2004. The following table summarizes TCE revenue
    by our two reporting segments, the crude oil fleet

39

---



and the clean fleet by
    TCE revenue generated by vessels operating on spot charters for the year
    ended December 31, 2005, compared to the year ended December 31, 2004:

|                                             |  | For
      the Years Ended |       |      |   |       
|-------------------------------------------- |  | ------------------------- | ----- | ---- | - | ------
|                                             |  | December
      31,        |       | Net  |  
|                                             |  | 2005                      |       | 2004 |   | Change
|                                             |  |                           |       |      |   |       
|                                             |  | (In millions)             |      
|TCE Revenue for Vessels
          on Spot:   |  |                           |       |      |   |       
|Crude Oil Fleet                              |  | $                         | 291.9 |      | $ | 340.4 
|Clean Fleet                                  |  |                           | 84.7  |      |   | 12.6  
|                                             |  |                           |       |      |   |       
|Total                                        |  | $                         | 376.6 |      | $ | 353.0 
|                                             |  |                           |       |      |   |       
|                                            
|% Increase in Spot
          Revenue in 2005 |  |                           |       |      |   |       

TCE
    revenue of $376.6 million earned by vessels operating in the spot market
    during 2005 increased $23.6 million compared to TCE revenue of $353.0
    million earned by vessels operating in the spot market during 2004. The increase
    in TCE revenue resulted from an additional $72.1 million earned by the
    clean fleet offset by a decrease of $48.5 million earned by
    the crude oil fleet. Increases in TCE revenue of $72.1 million earned
    by the vessels in the clean fleet operating on spot charters was
    primarily the result of 2,924 more operating days in 2005, 72% of which was
    from seven vessels acquired in 2004 and 2005; the balance was primarily due
    to vessels with expiring time charters that began operating in the spot market.
    Increases in TCE revenue for product carriers operating on spot were offset
    by decreases in TCE revenue of $8.1 million from a single hull vessel
    disposed of in December 2004.

Decreases
    in TCE revenue earned by vessels in the crude oil fleet operating on spot
    charters resulted primarily from a 27% decrease in average daily TCE rates
    in the Suezmax fleet during the year ended December 31, 2005, in addition
    to the decrease in spot revenue earned from two vessels that began time charters
    in the second quarter of 2005 and four vessels sold in 2004 (three Panamax
    vessels and one ULCC).

The
    following table summarizes TCE revenue by our two reporting segments, the
    crude oil fleet and the clean fleet by TCE revenue generated by
    vessels on time charters for the year ended December 31, 2005 compared to
    the year ended December 31, 2004:

|                                           |  | For
      the Years Ended |       |      |   |       
|------------------------------------------ |  | ------------------------- | ----- | ---- | - | ------
|                                           |  | December
      31,        |       | Net  |  
|                                           |  | 2005                      |       | 2004 |   | Change
|                                           |  |                           |       |      |   |       
|                                           |  | (In millions)             |      
|TCE Revenue for Vessels
          on TC:   |  |                           |       |      |   |       
|Crude Oil Fleet                            |  | $                         | 14.5  |      | $ | 11.9  
|Clean Fleet                                |  |                           | 123.0 |      |   | 118.6 
|                                           |  |                           |       |      |   |       
|Total                                      |  | $                         | 137.5 |      | $ | 130.5 
|                                           |  |                           |       |      |   |       
|                                          
|% Increase in TC Revenue
          in 2005 |  |                           |       |      |   |       

TCE
    revenue of $137.5 million earned by vessels on time charter during 2005
    increased $7.0 million compared to TCE revenue of $130.5 million
    earned by vessels on time charter during 2004. Net increases in the product
    carrier fleet were $4.4 million primarily the result of increased TCE
    revenue of $6.6 million earned by five vessels acquired (three vessels
    delivered in 2005 and two in 2004) increasing operating days by 694 days,
    in addition to new or renewed time charter contracts at higher rates and
    higher profit sharing during 2005. Increases in the product carrier fleet
    were partially offset in part by 822 fewer TC days primarily from a vessel
    disposed of in 2004 and vessels previously on time charters that began operating
    in the spot market in the fourth quarter of 2004.

Net
    increases in TCE revenue in the crude oil fleet of $2.6 million resulted
    from increases of $13.6 million earned by two Suezmax vessels that began
    time charters in May 2005 offset by decreases in TCE revenue of approximately $11.0
    million resulting primarily from the disposal of two crude oil carriers in
    January 2005.

Note: For detailed information
      of fluctuations by vessel type, see Breakdown by Fleet sections.

40

---



Vessel
      expenses and charter hire expenseVessel
      expense and charter hire expense increased $39.1 million for the year
      ended December 31, 2005 compared to the year ended December 31, 2004.

- Vessel expensesVessel
        expenses increased $26.3 million for the year ended December 31,
        2005 compared
        to the same period in 2004, primarily as a result of two factors: first,
        for the 17 vessels acquired (12 vessels
        during 2004 and five vessels during 2005, excluding vessels chartered-in)
        offset by the 10 vessels disposed of in
        2004 and 2005, which had higher operating costs than the newbuildings acquired
        and second, higher costs in 2005 related
        to crew expenses, insurance, storing the ships (spare parts and supplies)
        and lube oils contributed to the increase in daily vessel expenses
        in 2005 (38% in the crude oil fleet and 23% in
        the product carrier fleet for the year ended December 31, 2005 compared
        to the year ended December 31, 2004).
- Charter hire expenseCharter
        hire expense increased $12.8 million for the year ended December
        31, 2005 compared to the same period in 2004,
        primarily for two vessels chartered-in for a seven year period in June and
        September 2005 increasing charter hire expense by approximately $8.3
        million, in addition to the charter hire expense for three vessels that commenced operating in the Gemini
        Pool in July, November and December of
        2005.
                     The
    Gemini Pool, which began in December 2003, is a pool for double hull Suezmax
    vessels and is operated by Gemini Tankers LLC (Gemini), a wholly
    owned subsidiary of OMI. As of December 31, 2005, there were 17 Suezmaxes
    (12 from OMI and five from two other shipowners) operating in the pool. The
    earnings of the pool are allocated to the pool members using an agreed upon
    formula. The gross revenues of Gemini are reflected in OMIs consolidated
    revenues, and the offsetting charter hire expense for the five non-OMI vessels
    is included in OMIs consolidated charter hire expense. TCE revenue
    increased by $5.2 million and charter hire expense increased also by
    approximately $5.2 million relating to revenue and expenses of the pool
  members.

Depreciation
      and amortization expenseDepreciation
      and amortization expense of $68.4 million increased $12.2 million
      compared to $56.2 million for the year ended December 31, 2004. Increases
      in depreciation expense in 2005 resulted from the acquisition of 17 vessels
      (in 2004 and 2005), which was partially offset by the disposal of vessels,
      some with a lower depreciable basis (six in 2004 and four in 2005, including
      two Suezmax vessels in November 2005).

General
      and administrative (G&A)G & A
      increased $6.8 million for the year ended December 31, 2005 over the
      comparable period in 2004 primarily as a result of increases in salaries
      of $4.5 million and restricted stock awards expense (non-cash expense)
      of $1.4 million and other corporate requirements. Salaries increased because of additional personnel
      needed for the increased fleet, the London office (which opened in August
      2004), and bonuses. The increase in the restricted stock awards was due
      to grants issued during 2004 and 2005.

(Gain)
      loss on disposal of vessels-netThe
      Gain on disposal of vessels for the year ended December 31, 2005 of $58.0
      million resulted from the disposal of four vessels, two Suezmax vessels
      built in 1998 and two non-double hull handysize crude oil tankers built
      in 1993. For the year ended December 31, 2004, the net gain on disposal
      of vessels of $1.7 million resulted from the disposal of six single
      hull vessels, three Panamaxes, two product carriers and a ULCC vessel.
      The following table illustrates gains and losses on disposals by reportable
      segment for the years ended December 31, 2005 and 2004:

|                                                  |  | For the
    Years Ended |     
|------------------------------------------------- |  | ----------------------- | ----
|                                                  |  | December 31,            |     
|                                                  |  | 2005                    |     
|                                                  |  |                         |     
|                                                  |  | (In millions)           |     
|Gain (loss) on disposal
          of vesselsnet: |  |                         |     
|Crude Oil Fleet                                   |  | $                       | 58.0
|Clean Fleet                                       |  |                         |    
|                                                  |  |                         |     
|Total                                             |  | $                       | 58.0
|                                                  |  |                         |     

41

---



Interest
    expense during the year ended December 31, 2005 increased $9.3 million
    compared to the year ended December 31, 2004. Interest expense was higher
    during the year ended December 31, 2005 primarily because of the 29% increase
    in the average debt balance during the 2005 period as a result of additional
    financing for the acquisition of vessels.

The
    following table is a breakdown of Interest expense for the year ended December
    31, 2005 compared to the year ended December 31, 2004:

|                                           |  | For The
    Years Ended |     
|------------------------------------------ |  | ----------------------- | ----
|                                           |  | December 31,            |     
|                                           |  | 2005                    |     
|                                           |  |                         |     
|                                           |  | (In millions)           |     
|Interest on fixed rate
        debt        |  | $                       | 23.7
|Interest on variable
        rate debt     |  |                         | 20.7
|Capitalized interest                       |  |                         | (3.8
|Amortization of debt
        issuance cost |  |                         | 3.1 
|                                           |  |                         |     
|Interest expense                           |  | $                       | 43.7
|                                           |  |                         |     

Segment InformationDetailed
      Results of Operations

OMIs
    segment information is detailed by its two operating segments, its crude
    oil and clean fleets. OMI also manages its performance by category
    in the tables that follow.

Comparative Year Ended December
        31, 2005 Versus Year Ended December 31, 2004 Results

Vessel
    Operating Income, which is TCE revenue less Vessel expenses, Charter hire
    expense and Depreciation and amortization, decreased $67.7 million for
    the year ended December 31, 2005 compared to the year ended December 31,
    2004. The decrease in Vessel Operating Income during the 2005 period was
    primarily attributable to: (1) the decrease in the Suezmax TCE revenue resulting
    from a 25% decline in the average daily TCE rates earned by Suezmax vessels
    operating in the spot market, (2) two vessels previously operating in the
    spot market during 2004 began operating on long-term time charters at lower
    daily TCE rates beginning in May 2005 and (3) less earnings from four vessels
    disposed of in each of 2004 and 2005.

The
    following table illustrates the crude oil fleet Vessel Operating Income by
    vessel type (other than vessels sold), Average daily TCE, Number of TCE revenue
    days, Average daily vessel expense and Average number of OMI vessels operated
    by the crude oil fleet, owned and chartered-in, for the year ended December
    31, 2005 compared to the year ended December 31, 2004:

42

---



BREAKDOWN
      BYFLEET

|(In millions, except daily TCE rates & expenses,        |  | For The
      Years Ended
|------------------------------------------------------- |  | -------------------------
|number of vessels and number of days)                   |  | December
      31,       
|                                                        |  | 2005                     
|                                                        |  |                          
|CRUDE FLEET:                                            |  |                          
|Suezmaxeson
          spot and time charter:           |  |                          
|TCE revenue(1),(2)                                      |  |                          
|Suezmaxes-on
        spot                               |  | $                        
|Suezmaxes-on
        time charter(3)                    |  |                          
|                                                        |  |                          
|Total TCE
        revenue                               |  |                          
|Vessel expenses                                         |  |                          
|Charter
        hire expense:                           |  |                          
|Pool
        charter hire expense                       |  |                          
|Charter hire expense
        (under operating leases)*  |  |                          
|Depreciation
        and amortization                   |  |                          
|                                                        |  |                          
|Vessel Operating
        Income                         |  | $                        
|                                                        |  |                          
|Suezmaxeson
          spot:                            |  |                          
|Average
        daily TCE                               |  | $                        
|Number of
        OMI TCE revenue days                  |  |                          
|Number pool
        member TCE revenue days(1)          |  |                          
|                                                        |  |                          
|Suezmaxeson
          time charter:                    |  |                          
|Average
        daily TCE                               |  | $                        
|Number of
        OMI TCE revenue days                  |  |                          
|                                                        |  |                          
|Suezmaxeson
          spot and time charter:           |  |                          
|Average
        daily vessel expense(4)                 |  | $                        
|Average
        number of wholly owned vessels          |  |                          
|Average
        number of chartered-in vessels*         |  |                          
|                                                        |  |                          
|Handysize crude oil
          carriers sold in 2005:(5) |  |                          
|TCE revenue(1)                                          |  | $                        
|Vessel expenses                                         |  |                          
|Depreciation
        and amortization                   |  |                          
|                                                        |  |                          
|Vessel Operating
        Income                         |  | $                        
|                                                        |  |                          
|Average
        daily TCE                               |  | $                        
|Number of
        TCE revenue days                      |  |                          
|Average
        number of wholly owned vessels          |  |                          
|                                                        |  |                          
|Other crude carriers
          sold in 2004:(6)         |  |                          
|TCE revenue(1)                                          |  | $                        
|Vessel expenses                                         |  |                          
|Depreciation
        and amortization                   |  |                          
|                                                        |  |                          
|Vessel Operating
        Income                         |  | $                        
|                                                        |  |                          
|Number of
        TCE revenue days                      |  |                          
|                                                       
|Total
          Vessel Operating Income                 |  | $                        
|                                                        |  |                          

|Note: Number of operating or TCE revenue days used to compute Average daily TCE includes waiting days and is reduced only for the days the vessels are out of service due to drydock. Average daily vessel expenses are computed using the number of days in the period that OMI owned the vessel.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                  
|*                                                                                                                                                                                                                                                                                                 
|(1)                                                                                                                                                                                                                                                                                               
|(2)                                                                                                                                                                                                                                                                                               
|(3)                                                                                                                                                                                                                                                                                               
|(4)                                                                                                                                                                                                                                                                                               
|(5)                                                                                                                                                                                                                                                                                               
|(6)                                                                                                                                                                                                                                                                                               

43

---



Vessel
    Operating Income increased $46.7 million for the year ended December
    31, 2005 over 2004. Increases in Vessel Operating Income in the 2005 period
    were primarily attributable to seven product carriers acquired in 2004 and
    five in 2005, in addition to increases in TCE rates for time charters in
    2005 for new or renewed contract rates and additional profit sharing recorded
    at anniversary dates compared to prior year 2004 periods. The increase in
    Vessel Operating Income was offset partially by the decrease in earnings
    for the two single hull product carriers that were disposed of in 2004.

The
    following table illustrates the product carrier fleet Vessel Operating Income
    by vessel type (other than vessels sold), Average daily TCE, Number of TCE
    revenue days, Average daily vessel expense and Average number of OMI vessels
    operated by the product carrier fleet for the year ended December 31, 2005
    compared to the year ended December 31, 2004 (Note: Amounts for certain vessels
    sold include the settlement of certain revenues and expenses):

BREAKDOWN
      BYFLEET

|(In millions, except daily TCE rates & expenses, |  | For The
      Years Ended
|------------------------------------------------ |  | -------------------------
|number of vessels and number of days)            |  | December
      31,       
|                                                 |  | 2005                     
|                                                 |  |                          
|CLEAN FLEET:                                     |  |                          
|Productson time
          and spot charter:     |  |                          
|TCE revenue:(1)                                  |  |                          
|Products-on
        time charter(2)              |  | $                        
|Products-on
        spot(3)                      |  |                          
|                                                 |  |                          
|Total TCE
        revenue                        |  |                          
|Vessel expenses                                  |  |                          
|Depreciation
        and amortization            |  |                          
|                                                 |  |                          
|Vessel Operating
        Income                  |  | $                        
|                                                 |  |                          
|Productson time
          charter:              |  |                          
|Average
        daily TCE                        |  | $                        
|Number of
        TCE revenue days               |  |                          
|                                                 |  |                          
|Productson spot:                                |  |                          
|Average
        daily TCE                        |  | $                        
|Number of
        TCE revenue days               |  |                          
|                                                 |  |                          
|Productson time
          and spot charter:     |  |                          
|Average
        daily vessel expense             |  | $                        
|Average
        number of wholly owned vessels   |  |                          
|                                                 |  |                          
|Productssold
          in 2004:(4)              |  |                          
|TCE revenue(1)                                   |  | $                        
|Vessel expenses                                  |  |                          
|Depreciation
        and amortization            |  |                          
|                                                 |  |                          
|Vessel Operating
        (Loss) Income           |  | $                        
|                                                 |  |                          
|Number of TCE revenue
        days               |  |                          
|                                                
|Total
          Vessel Operating Income          |  | $                        
|                                                 |  |                          

Note: Number of operating or TCE
      revenue days used to compute Average daily TCE includes waiting days and
      is reduced only for the days the vessels are out of service due to drydock.
      Average daily vessel expenses are computed using the number of days in
      the period that OMI owned the vessel.

|(1) | See Part II, Item 6. Selected Financial
            Data, Note (a) for additional information of how the Company uses TCE
          revenue.                                                                                                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | During the year ended
            December 31, 2005, OMI recognized profit sharing revenue of approximately $14.9 million,
          compared to $10.4 million for the year ended December 31, 2004.                                                                                                             
|(3) | In January, March, May and July 2005, two
            handymax and three handysize product carriers were acquired. In February,
            April, July, October and December 2004, four handysize and three handymax
          product carriers were acquired.                                                  
|(4) | During August and December 2004, the two
            single hull vessels were sold, one vessel operated on time charter
            and the other in the spot market. The 2005 balances reflect the settlement
            of demurrage and other vessel expenses relating to the vessels sold
          in 2004.
|   

44

---



For the Year Ended December
        31, 2004 Compared to the Year Ended December 31, 2003

OMIs
    net income of $245.7 million for the year ended December 31, 2004 was
    a record for the Company prior to 2005. Revenue of $564.7 million for
    the year ended December 31, 2004 increased $241.5 million or 75% over
    the comparable year ended December 31, 2003. Average spot rates earned by
    our Suezmax fleet were 88% higher compared to the previous year. The following
    were significant items that occurred during the year ended December 31, 2004:

- In December 2004, we purchased a 2004 built
        1B ice-class product carrier, the RUBY, contracted from another
        owner in September.
- In July and August 2004, we took delivery of
        five Suezmax vessels (the ANGELICA, JANET, ADAIR, ARLENE
        and INGEBORG) and one product carrier (the HORIZON) and agreed to acquire
        seven vessels under construction. One
        of the vessels under construction was delivered in 2004, two were delivered
        in 2005 and the remaining four were scheduled
        for delivery in 2006.
- In February, April and July 2004, OMI took delivery
        of four handysize 1A ice-class product carrier newbuildings
        (the LOIRE, GARONNE, SAONE and GANGES), three of which began five year
        time charters with profit sharing upon
        delivery.
- During March 2004, we contracted for a handymax
        1A ice-class product carrier, (the TEVERE), which was
        delivered in August 2005.

- In May, June, August, November and December
        2004, OMI sold three single hull Panamax vessels (the VOLGA,
        NILE and ELBE), two single hull product carriers (the SHANNON and ALMA),
        and a 1986 built single hull ultra large
        crude carrier (the SETTEBELLO).

- In December 2004, we issued $250 million
        of convertible senior notes due 2024 (Convertible Senior Notes). The
        notes are senior unsecured obligations of OMI Corporation and bear interest
        at the rate of 2.875% per annum. The proceeds
        of the Notes were used to repurchase common stock, pay down outstanding balances
        under the Companys revolving credit facilities and for general
        corporate purposes.
- In November 2004, we entered
        into a 10 year $375
        million credit facility at LIBOR plus a margin payable semi-annually.
        The facility repaid a portion of a $250 million unsecured bridge
        loan (obtained in July 2004 to finance the
        initial payments for seven vessels and seven construction contracts) and
        amended and restated our $245 million
        credit facility. This facility was secured by 13 vessels, nine of which
        were refinanced and four vessels of which
        were acquired in 2004.
- During 2004, OMI drew on various
        term loans aggregating $236.9 million, including a 10 year $142
        million term
        loan obtained in November 2004. The term loans were secured by nine vessels
        acquired in 2004.

The
    Company earned TCE revenue of $483.5 million for the year ended December
    31, 2004 compared to $269.2 million for the year ended December 31, 2003.

45

---



The
    following table summarizes the Companys results of time charter equivalent
    revenue for the year ended December 31, 2004, compared to the year ended
    December 31, 2003:

|                                           |  | For
      the Years Ended |       |      |  
|------------------------------------------ |  | ------------------------- | ----- | ---- | -
|                                           |  | December
      31,        |       | Net 
|                                           |  | 2004                      |       | 2003 |  
|                                           |  |                           |       |      |  
|                                           |  | (In millions)            
|Time Charter Equivalent
          Revenue: |  |                           |       |      |  
|Voyage and time charter
        revenue    |  | $                         | 563.7 |      | $
|Voyage expenses                            |  |                           | 80.2  |      |  
|                                           |  |                           |       |      |  
|Time charter equivalent
        revenue    |  | $                         | 483.5 |      | $
|                                           |  |                           |       |      |  

The
    following table summarizes TCE revenue by our two reporting segments, the
    crude oil fleet and the clean fleet for the year ended
    December 31, 2004, compared to the year ended December 31, 2003:

|                                           |  | For
      the Years Ended |       |      |  
|------------------------------------------ |  | ------------------------- | ----- | ---- | -
|                                           |  | December
      31,        |       | Net 
|                                           |  | 2004                      |       | 2003 |  
|                                           |  |                           |       |      |  
|                                           |  | (In millions)            
|Time Charter Equivalent
          Revenue: |  |                           |       |      |  
|Crude Oil Fleet                            |  | $                         | 352.3 |      | $
|Clean Fleet                                |  |                           | 131.2 |      |  
|                                           |  |                           |       |      |  
|Total                                      |  | $                         | 483.5 |      | $
|                                           |  |                           |       |      |  

The
    following table summarizes TCE revenue by our two reporting segments, the
    crude oil fleet and the clean fleet by TCE revenue generated by
    vessels operating on spot charters for the year ended December 31, 2004,
    compared to the year ended December 31, 2003:

|                                             |  |      | For
          the Years Ended |      |     |        | 
|-------------------------------------------- |  | ---- | ----------------------------- | ---- | --- | ------ | 
|                                             |  |      | December
          31,        |      | Net |       
|                                             |  | 2004 |                               | 2003 |     | Change | 
|                                             |  |      |                               |      |     |        | 
|                                             |  |      | (In millions)                 |     
|TCE Revenue for Vessels
          on Spot:   |  |      |                               |      |     |        | 
|Crude Oil Fleet                              |  | $    | 340.4                         |      | $   | 133.6  | 
|Clean Fleet                                  |  |      | 12.6                          |      |     | 19.9   | 
|                                             |  |      |                               |      |     |        | 
|Total                                        |  | $    | 353.0                         |      | $   | 153.5  | 
|                                             |  |      |                               |      |     |        | 
|% Increase in Spot
          Revenue in 2004 |  |      |                               |      |     |        | 

TCE
    revenue of $353.0 million was earned by vessels operating in the spot
    market during the year ended December 31, 2004 compared to $153.5 million
    earned during the year ended December 31, 2003. The increase in earnings
    of $199.5 million (130%) was the result of: (1) 1,166 more operating
    days in 2004 for five Suezmax vessels acquired in the third quarter of 2004
    and two Suezmax vessels acquired in August 2003, (2) higher spot rates for
    10 Suezmax vessels in 2004 compared to rates achieved in the comparable period
    in 2003, (3) additional TCE revenue relating to 643 operating days generated
    by pool members of the Gemini Tankers Suezmax pool operated by OMI beginning
    in December 2003, (4) additional TCE revenue from 145 operating days from
    four product carriers acquired in 2004 and (5) 100 additional operating days
    from three product carriers whose TCs expired and began operating on
    spot charters.

46

---



The
    following table summarizes TCE revenue by our two reporting segments, the
    crude oil fleet and the clean fleet by TCE revenue generated by
    vessels on time charters for the year ended December 31, 2004, compared to
    the year ended December 31, 2003:

|                                                                 |  | For
    the Years Ended |       |  |      |  
|---------------------------------------------------------------- |  | ----------------------- | ----- |  | ---- | -
|                                                                 |  | December
    31,        |       |  | Net 
|                                                                 |  | 2004                    |       |  | 2003 |  
|                                                                 |  |                         |       |  |      |  
|                                                                 |  | (In millions)          
|TCE Revenue for Vessels
          on TC:                         |  |                         |       |  |      |  
|Crude Oil Fleet                                                  |  | $                       | 11.9  |  |      | $
|Clean Fleet                                                      |  |                         | 118.6 |  |      |  
|                                                                 |  |                         |       |  |      |  
|Total                                                            |  | $                       | 130.5 |  |      | $
|                                                                 |  |                         |       |  |      |  
|% of TC Revenue for
          Vessels on TC to Total TCE Revenue |  |                         | 27%   |  |      |  

TCE
    revenue of $130.5 million was earned by vessels on time charter during
    the year ended December 31, 2004 compared to $115.6 million earned during
    the year ended December 31, 2003. The increase in earnings of $14.9 million
    (13%) was the result of (1) 856 more operating days in 2004 for four product
    carriers acquired in 2004, (2) higher profit sharing recorded on three vessels
    as a result of better market conditions over the past twelve months for product
    carriers and (3) higher time charter revenue for two product carrier extensions
    with higher rates starting in 2004. Increases in TCE revenue earned were
    offset in part by decreases in TC revenue for the expiration of four time
    charters in 2004 resulting in 261 fewer operating days in the fourth quarter
    (three vessels began operating on spot charters and one vessel whose time
    charter had expired was sold in August 2004).

Note: For detailed information
      of fluctuations by vessel type, see Breakdown by Fleet sections.

Vessel
      expenses and charter hire expenseVessel
      expense and charter hire expense increased $43.3 million for the year
      ended December 31, 2004 compared to the year ended December 31, 2003.

- Vessel expensesVessel
            expenses increased $6.0 for the year ended December 31, 2004
            compared to the same period in 2003 primarily as
            a result of vessels acquired offset by a reduction in vessel expenses for the
            disposal of the older single hull vessels, which had higher operating costs
            than the newbuildings acquired.
- Charter hire expenseCharter
            hire expense increased $37.3 million for the year ended December
            31, 2004 compared to the same periods in 2003
            primarily for the charter hire expense for the two vessels that commenced
            operating in the Gemini Pool.

> The
>         gross revenues of Gemini were reflected in OMIs consolidated revenues,
>         and the charter hire expense for the two non-OMI vessels is included in OMIs
>         consolidated charter hire expense. TCE revenue increased by $40.8 million
>         and charter hire expense increased also by approximately $40.8 million
>         relating to revenue and expenses of the pool members consolidated with OMI
>         revenue and expenses. Since Gemini did not commence until December 2003,
>         there was no effect on the first eleven months of 2003.

Depreciation
      and amortization expenseDepreciation
      and amortization expense of $56.2 million increased $5.3 million
      compared to $50.9 million for the year ended December 31, 2003. Increases
      in depreciation expense in 2004 resulted from the acquisition of vessels
      (six in 2003 and eleven in 2004), which was partially offset by the disposal
      of vessels with a lower depreciable basis ( five vessels in 2003 and six
      in 2004).

General
      and administrativeG & A
      increased $8.3 million for the year ended December 31, 2004 over the
      comparable period in 2003 primarily as a result of increases in salaries
      of $4.9 million for new personnel due to increased fleet size and other
      additional corporate requirements as well as bonuses, expenses of the newly
      formed London office (which commenced in August 2004) and additional professional
      fees of $1.6 million relating to Sarbanes Oxley compliance, audit and
      other professional services.

(Gain)
      loss on disposal of vesselsThe
      Gain on disposal of vessels for the year ended December 31, 2004 of $1.7
      million resulted from the disposal of six single hull vessels, three Panamax
      vessels, two product carriers and a

47

---



ULCC vessel. Loss on disposal of
    vessels of $14.4 million for the year ended December 31, 2003 resulted
    from the sale of five single hull handysize product carriers.

Interest
    expense during the year ended December 31, 2004 increased $10.6 million
    compared to the year ended December 31, 2003. Interest expense was higher
    during the year ended December 31, 2004 primarily for two reasons: first,
    the increase in the average debt balance during the 2004 period as a result
    of additional financing for the acquisition of vessels (including increases
    in amortization of debt issuance costs) and second, the increase in fixed
    rate debt (the 7.625% $200 million unsecured Senior Notes issued in November
    2003 that replaced variable rate bank debt based on LIBOR plus a margin).
    Additionally, increases in interest expense in 2004 were reduced by higher
    capitalized interest for more vessels under construction during 2004 compared
    to 2003.

Segment InformationDetailed
      Results of Operations

Comparative Year Ended December
        31, 2004 Versus Year Ended December 31, 2003 Results

Vessel
    Operating Income increased $160.0 million for the year ended December
    31, 2004 compared to the year ended December 31, 2003. The net increase in
    Vessel Operating Income during 2004 was primarily attributable to increases
    in the Suezmax TCE revenue resulting from improved spot rates and increased
    earnings for the five Suezmaxes delivered in July and August of 2004 and
    two Suezmax vessels delivered in August of 2003.

48

---



BREAKDOWN BYFLEET

|(In millions, except daily TCE rates & expenses,      |  | For The Years Ended
|----------------------------------------------------- |  | -------------------
|number of vessels and number of days)                 |  | December 31,       
|                                                      |  | 2004               
|                                                      |  |                    
|CRUDE OIL FLEET:                                      |  |                    
|Suezmaxeson spot:                                    |  |                    
|TCE revenue(1),(2)                                    |  | $                  
|Vessel expenses                                       |  |                    
|Charter hire expense(2)                               |  |                    
|Depreciation and amortization                         |  |                    
|                                                      |  |                    
|Vessel Operating Income                               |  | $                  
|                                                      |  |                    
|                                                     
|Average daily TCE (Spot)                              |  | $                  
|Number of TCE revenue days                            |  |                    
|Number of pool member TCE revenue days(3)             |  |                    
|Average daily vessel expense                          |  | $                  
|Average number of OMI vessels for the period(4)       |  |                    
|Average number of chartered-in vessels for the period |  |                    
|                                                      |  |                    
|Handysize Crude Oil Carriers-on time charter:         |  |                    
|TCE revenue(1)                                        |  | $                  
|Vessel expenses                                       |  |                    
|Depreciation and amortization                         |  |                    
|                                                      |  |                    
|Vessel Operating Income                               |  | $                  
|                                                      |  |                    
|                                                     
|Average daily TCE                                     |  | $                  
|Number of TCE revenue days                            |  |                    
|Average daily vessel expense                          |  | $                  
|Average number of vessels for the period              |  |                    
|                                                      |  |                    
|Other Crude Carriers Sold in 2004:(5)                 |  |                    
|TCE revenue(1)                                        |  | $                  
|Vessel expenses                                       |  |                    
|Depreciation and amortization                         |  |                    
|                                                      |  |                    
|Vessel Operating Income                               |  | $                  
|                                                      |  |                    
|Number of TCE revenue days                            |  |                    
|                                                     
|Total Vessel Operating Income                         |  | $                  
|                                                      |  |                    

Note: Average daily vessel expenses are computed using the number of days in the period that OMI owned the vessel. Number of operating or TCE revenue days used to compute Average daily TCE includes waiting days and is
reduced only for the days the vessels are out of service due to drydock.

|(1) | See Part II, Item 6. Selected Financial Data, Note (a) for additional information of how the Company uses TCE revenue.                                                                                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | TCE revenue and expenses included revenue and expense generated by the Gemini Pool. The Suezmax pool began December 2003 and includes our 15 Suezmaxes and two Suezmaxes owned by another pool member.
|(3) | Number of TCE revenue days for the two Suezmaxes owned by another pool member.                                                                                                                        
|(4) | In July and August 2004, three 2003 built and two 2004 built Suezmax vessels were acquired.                                                                                                           
|(5) | During the fourth quarter of 2004, our ULCC vessel was sold. Our three Panamax vessels were disposed of in the second and third quarters of 2004.                                                     
|   

49

---



Clean Fleet Results of Operations

Vessel Operating Income increased $6.3 million for the year ended December 31, 2004 over 2003. Increases in Vessel Operating Income in 2004 were attributable to the increases for four
product carriers acquired in 2003 and increases for the seven product carriers acquired in 2004. Additionally, increases in profit sharing for three of the five vessels that earned profit sharing in both 2003 and 2004 also contributed to increased
Vessel Operating Income. Increases were offset by decreases in earnings for the disposal of seven single hull product carriers (two in 2004 and five in 2003).

BREAKDOWN BYFLEET

|(In millions, except daily TCE rates & expenses, |  | For The Years Ended
|------------------------------------------------ |  | -------------------
|number of vessels and number of days)            |  | December 31,       
|                                                 |  | 2004               
|                                                 |  |                    
|CLEAN FLEET:                                     |  |                    
|Productson time and spot:                       |  |                    
|TCE revenue:(1)                                  |  |                    
|Products-on time charter(2)                      |  | $                  
|Products-on spot                                 |  |                    
|                                                 |  |                    
|Total TCE Revenue                                |  |                    
|Vessel expenses                                  |  |                    
|Charter hire expense                             |  |                    
|Depreciation and amortization                    |  |                    
|                                                 |  |                    
|Vessel Operating Income                          |  | $                  
|                                                 |  |                    
|Productson time charter:                        |  |                    
|Average daily TCE                                |  | $                  
|Number of TCE revenue days                       |  |                    
|                                                 |  |                    
|Productson spot:                                |  |                    
|Average daily TCE                                |  | $                  
|Number of TCE revenue days                       |  |                    
|                                                 |  |                    
|Productson time and spot charter:               |  |                    
|Average daily vessel expense(3)                  |  | $                  
|Average number of wholly owned vessels(4)        |  |                    
|                                                 |  |                    
|Productssold in 2004:(5)                        |  |                    
|TCE revenue(1)                                   |  | $                  
|Vessel expenses                                  |  |                    
|Depreciation and amortization                    |  |                    
|                                                 |  |                    
|Vessel Operating Income                          |  | $                  
|                                                 |  |                    
|Number of TCE revenue days                       |  |                    
|Average number of wholly owned vessels           |  |                    
|                                                
|Total Vessel Operating Income                    |  | $                  
|                                                 |  |                    

Note: Average daily vessel expenses are computed using the number of days in the period that OMI owned the vessel. Number of operating or TCE revenue days used to compute Average daily TCE includes waiting days and is
reduced only for the days the vessels are out of service due to drydock.

|(1) | See Part II, Item 6. Selected Financial Data, Note (a) for additional information of how the Company uses TCE revenue.                                                                                                                                                                                                                    
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | During the year ended December 31, 2004, OMI recognized profit sharing revenue of approximately $10.4 million compared to $8.4 million for the year ended December 31, 2003.                                                                                                                                                              
|(3) | During the year ended December 31, 2004, $0.4 million in expense was included in the daily vessel expenses relating to the settlement of a claim from 2002.                                                                                                                                                                               
|(4) | In February, April, July, October and December 2004, four handysize and three handymax product carriers were acquired. In January, March, April and July of 2003, two handymax and two Panamax product carriers were
acquired. During 2003, three vessels were sold in the fourth quarter and two vessels were sold in the second quarter.
|(5) | During 2004, two vessels were sold, one in the fourth quarter and one in the third quarter.                                                                                                                                                                                                                                               
|   

50

---



Outlook for 2006

OMIs current 2006 outlook is based on the following agreements, plans and transactions:

- We will continue to balance our mix of contracted time charter revenue for 2006 and beyond.
- We plan to manage operating costs. We anticipate daily vessel expenses to increase approximately 3% (to approximately $7,200 per day) for Suezmax vessels and 11% (to approximately
$6,100 per day) for the product carriers in 2006. Anticipated increases relate to maintenance expense including storing of vessels, especially for vessels acquired in the last
  couple of years. Ongoing safety and environmental programs are also reflected in operating expenses of the vessels.
- We plan to use cash from operating and financing activities as well as proceeds from the sale of vessels, for
      capital expenditures of $104.4 million for five newbuildings being
      delivered in the first half of 2006 (see Capital Expenditures section).
- We plan to also use cash to repurchase our common stock at the discretion of management under the most recent
      Board authority of $70 million.
- We have contracted for the sale of two Panamax vessels and three Suezmax vessels. The Panamax vessels and
      one Suezmax vessel are sale leaseback transactions and will continue to
      operate as part of OMIs fleet until the expiration of the operating leases in 2008 and 2011, respectively. We estimate net proceeds of approximately $89 million from the sale of the
  two Panamax vessels and approximately $210 million from the sale of the three Suezmax vessels upon their deliveries by the second quarter of 2006. Our debt repayment due
  to the disposals of the two Panamaxes and two of the Suezmaxes will be approximately $104
  million, and the available amount of one of
  our credit facilities will be reduced by approximately $32 million for
  the disposal of one of the Suezmaxes.

Financial Condition and Capital Resources

Liquidity

Cash Flows

The following were the net changes in Operating, Investing and Financing Activities for the years ended December 31, 2005 and December 31, 2004:

|                                                       |  | For the Years Ended |        |   |      |   |       
|------------------------------------------------------ |  | ------------------- | ------ | - | ---- | - | ------
|                                                       |  | December 31,        |        |   |      |   |       
|                                                       |  | 2005                |        |   | 2004 |   |       
|                                                       |  |                     |        |   |      |   |       
|                                                       |  | (In millions)       |       
|Condensed Cash Flows                                   |  |                     |        |   |      |   |       
|Provided (Used) By:                                    |  |                     |        |   |      |   |       
|Operating Activities                                   |  | $                   | 303.5  |   |      | $ | 273.2 
|Investing Activities                                   |  |                     | 30.8   |   |      |   | (629.1
|Financing Activities                                   |  |                     | (333.8 | ) |      |   | 348.9 
|                                                       |  |                     |        |   |      |   |       
|Net Increase (Decrease) in Cash and Cash Equivalents   |  |                     | 0.5    |   |      |   | (7.0  
|Cash and Cash Equivalents at the Beginning of the Year |  |                     | 41.8   |   |      |   | 48.8  
|                                                       |  |                     |        |   |      |   |       
|Cash and Cash Equivalents at the End of the Year       |  | $                   | 42.3   |   |      | $ | 41.8  
|                                                       |  |                     |        |   |      |   |       

The primary components of working capital are Cash and cash equivalents (Cash), Traffic receivables and Other prepaid expenses and current assets offset by current liabilities. We
supplement working capital requirements with borrowings under our revolving credit facilities (see Long-Term Debt Obligations) and other borrowings. Cash of $42.3 million at December 31, 2005 increased $0.5 million from $41.8
million at December 31, 2004. During 2005, excess cash was primarily used to repurchase common stock, convertible notes and repay bank debt. Net cash provided by operating activities of $303.5 million for the year ended December 31, 2005
increased $30.3 million compared

51

---



to $273.2 million for the year ended December 31, 2004, primarily from higher net earnings of the Company (see Results of Operations) and decreases in Traffic receivables for cash received during the 2005
period for balances as of December 31, 2004. Our working capital decreased by $19.2 million from $38.8 million at December 31, 2004 to $19.6 million at December 31, 2005. The decrease in working capital was primarily the result of the
increase in Current liabilities of $18.2 million and a decrease in Current assets of $1.0 million. At December 31, 2005, Current liabilities increased primarily because of increases in operating activities as a result of more vessels
operating in 2005. Current assets decreased primarily because of decreases in Traffic receivables. At December 31, 2005, fluctuations relating to certain current assets and liabilities are attributable to timing differences of cash receipts and
disbursements and accruals for revenue and expenses in a particular period and are not necessarily comparable between periods.

Our current intention, subject to the Companys financial condition, the amount of funds generated from operations, the level of capital expenditures and approval by our Board of
Directors, is to continue to pay a regular quarterly dividend to holders of our common stock. It is also our intention to buy back shares opportunistically and repay debt with excess cash. In the year ended December 31, 2005, the Company repurchased
15,035,000 common shares for an aggregate of $269.9 million, under share repurchase programs approved by the Board of Directors (see Acquisition and Retirement of Treasury Stock). Total debt repaid for the year ending December 31, 2005 included
unscheduled payments on bank debt of $185.8 million and early extinguishment of Convertible Notes of $97.3 million (see Long-Term Debt Obligations and Credit Arrangements sections below for more details).

As of December 31, 2005, the Company had total estimated capital commitments to acquire vessels (five product carriers under construction in 2005) of $104.4 million. The Company estimates
expenditures for drydock to aggregate approximately $5.2 million in 2006 (see Capital Expenditures section). During the year ended December 31, 2005, we received proceeds from the disposal of four vessels of approximately $176.4
million.

Vessels, Construction in Progress (CIP) and Other Property

At December 31, 2005, Vessels (including Vessels held for sale), CIP and Other Property-net of $1,572.2 million decreased a net of $32.3 million from $1,604.5 million at December
31, 2004. Capital expenditures of approximately $148.6 million for the year ended December 31, 2005 were primarily for the final payment for five newbuildings, installment payments for vessels under construction, capital improvements and
capitalized interest. Vessels, net of accumulated depreciation, decreased approximately $115.7 million due to the sale of four vessels, two Suezmax vessels in November 2005 and two handysize crude oil carriers in January 2005. Accumulated
depreciation increased by $26.0 million because of the 2005 depreciation and amortization expense of $65.4 million offset by the reduction of $39.4 million related to the four vessels sold during the year.

Cash provided by investing activities was $30.8 million for the year ended December 31, 2005 compared to cash used by investing activities of $629.1 million for the year ended December
31, 2004. During the 2005 period, proceeds from the disposal of vessels of $176.4 million were offset by $148.6 million used for capital expenditures as follows:

- $117.9 million was used for the purchase of five product carrier newbuildings delivered;
- $24.4 million was used for five vessels under construction; and
- $6.3 million was used for capital expenditures for improvements to existing vessels and capitalized interest.

Cash used by investing activities of $629.1 million for the year ended December 31, 2004 was primary for the acquisition of five Suezmax vessels ($353.7 million) and
deposits/installment payments for seven product carriers under construction ($89.8 million), in addition to final payments for the delivery of four product carriers ($91.6 million) and the purchase of three 2004 product carrier ($116.6
million) and other additions, offset by proceeds received from the disposal of six vessels of $59.2 million.

Long-Term Debt Obligations and Credit Arrangements

As of December 31, 2005, long-term debt obligations decreased $44.5 million to $895.9 million from $940.4 million at December 31, 2004. Long-term obligations at December 31, 2005
consisted of the following:

52

---



- Term loans of $347.1 million
      under bank mortgage agreements at variable rates based on the London Interbank
      Offering Rate (LIBOR) plus a margin;(1),(3)
- Term loans of $54.1 million
      under bank mortgage agreements at average fixed rates of 5.31%;
- Reducing revolving facilities
      of $150.0 million under bank mortgage agreements at variable rates
      based on LIBOR plus a margin;(2),(3)
- 7.625% Unsecured Senior Notes
      due December 2013 of $200.0 million; and
- 2.875% Unsecured Convertible Senior Notes due December 2024 of $144.8 million.

Note: As of December 31, 2005, the available undrawn amount under our reducing revolving facilities aggregated $449.2 million.

|(1) | Average interest rates at December 31, 2005 were 5.184% including margins that ranged from 0.675% to 0.80%. Under our loan agreements, LIBOR can range from 30 days to one year.                                                                                                                                         
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Average interest rates at December 31, 2005 were 3.238% including margins that ranged from 0.675% to 0.80%.                                                                                                                                                                                                              
|(3) | As of December 31, 2005, OMI had various interest rate swaps that fix notional amounts aggregating $94.4 million (not including $112.4 million scheduled to begin in 2006) of variable rate debt ranging from 2.90%
to 4.32% (excluding margins) with maturity dates of the swaps ranging from October 2008 to July 2009.
|   

Cash used by financing activities was $333.8 million for the year ended December 31, 2005 compared to cash provided by financing activities of $348.9 million for the year ended December
31, 2004. During the year ended December 31, 2005, we made $316.6 million in principal payments ($33.5 million of scheduled payments, $97.3 million for early extinguishment of 2.875% Convertible Notes, $164.0 million repayment on
revolving credit facilities and $21.8 million in prepayments of a term loan now collateralized by the $320 Facility). During the year ended December 31, 2005, the Company drew down an aggregate of $280 million; $234 million on our
revolving credit facilities ($164.0 million of which was repaid during the year) and $46.0 million relating to the acquisitions of the FOX and TEVERE.

During the year ended December 31, 2005, we paid cash of $269.9 million to repurchase 15,035,000 shares of common stock and $25.9 million for dividends to shareholders in January 2005,
April, July and October 2005.

Cash provided by financing activities was $348.9 million for the year ended December 31, 2004. During the year ended December 31, 2004, we made $673.6 million in principal payments
($274.2 million were scheduled payments and $399.4 million were unscheduled prepayments on our revolving lines of credit) and received $1,049.2 million in proceeds from the issuance of debt ($250.0 million proceeds from 2.875%
Unsecured Convertible Senior Notes issued in December 2004, $165.0 million proceeds from our $375 revolving facility to repay other debt, $250.0 million in proceeds from a bridge loan (used as temporary financing for our third quarter
acquisitions), $147.3 million in draw downs under our $348 revolving facility (used for third quarter acquisitions as well as for working capital purposes), and $236.9 million in proceeds from term loans (which were used for the purchase
of nine vessels).

During the year ended December 31, 2004, we received proceeds of $137.7 million from the issuance of 12,204,000 shares of common stock and the exercise of stock options, which were also
used to fund acquisitions. During 2004, we paid cash in aggregate amount of $141.4 million to repurchase 7,890,000 shares of common stock.

Our debt to total capitalization (debt and stockholders equity) at December 2005 was 54% and net debt (total debt less cash and cash equivalents) to total net capitalization (total
capitalization less cash and cash equivalents) was 53%. As of March 10, 2005, we had approximately $472.2 million in available liquidity (including cash and undrawn available lines of credit). We expect to use cash from operations, undrawn
balances available to us through our revolving facilities, or committed bank debt to finance capital expenditures. Since we have not borrowed all funds available under these two revolving facilities, there are currently no payments due in the next
12 months.

On November 26, 2003, the Company issued $200.0 million of 7.625% Senior Notes (the Notes) due December 1, 2013, with allowances for optional redemptions on or after December 1,
2008. The Notes accrue interest at the rate of 7.625% per year, payable semiannually in arrears on June 1 and December 1. The Notes are general unsecured, senior obligations of the Company.

53

---



All of our loan agreements contain restrictive covenants as to cash, maintenance of specified financial ratios, collateral values and other non-financial restrictions. As of December 31, 2005,
we were in compliance with all covenants.

As of December 31, 2005, we had various interest rate swaps aggregating $206.8 million (which includes notional amounts aggregating $112.4 million for two interest rate swaps that
commence in 2006) with related loans they are designated to hedge on various debt tranches within a range of 2.9% to 4.84% expiring from October 2008 to November 2014. The Company pays fixed-rate interest amounts and receives floating-rate interest
amounts based on three month LIBOR settings (for a term equal to the swaps reset periods). As of December 31, 2005, the Company has recorded an asset of $3.0 million related to the fair market value of these hedges and a corresponding
unrealized gain of $3.0 million to Other comprehensive income (loss).

At December 31, 2005, the FFAs had an aggregate notional value of $3.1 million, which is an aggregate of both long and short positions that extend to March 2006. The fair value of $0.2
million at December 31, 2005 of our forward freight agreements is the estimated net amount that the Company would receive to terminate the agreements at the reporting date.

The Company is exposed to credit loss in the event of non-performance by the counter parties to the interest rate swap agreements and forward freight agreements; however, the Company does not
anticipate non-performance by any of the counter parties.

Currently, OMI has time charter contracts for 32 vessels, 15 with profit sharing arrangements (including two that will expire later in 2006), including three recent contracts agreed to in the
first quarter of 2006. The contracted TC revenue schedule below does not include any estimates for profit sharing in the future periods. We have reduced future contracted revenue for any estimated off-hire days relating to drydocks. The following
table reflects our current contracted time charter revenue through 2012:

|                     |  | 2006                  |  | 2007   |  | 2008   |  | 2009  |  | 2010-2012
|-------------------- |  | --------------------- |  | ------ |  | ------ |  | ----- |  | ---------
|                     |  |                       |  |        |  |        |  |       |  |          
|                     |  | (dollars in millions)
|TC Revenue           |  | $207.6                |  | $197.4 |  | $148.2 |  | $73.6 |  | $62.8    
|Number of Vessels(a) |  | 30                    |  | 27     |  | 17     |  | 10(b) |  |         

Contracted Time Charter Revenue

---

|(a) | Number of vessels at the end of each year assuming no additional extensions or new charters.                
|--- | ------------------------------------------------------------------------------------------------------------
|(b) | The remaining 10 charters expire as follows: eight charters will expire in 2010 and two will expire in 2012.
|   

54

---



If certain vessels with time charter contracts are sold, it would reduce our future time charter revenue.

We recognize profit sharing, if any, for each vessel with a profit sharing provision in the time charter contract when the minimum threshold is met, which is the minimum charter hire revenue.
Historically, we have recognized profit sharing on or about the anniversary of each time charter contract. The table below reflects the number of vessels we expect to record profit sharing for by quarter:

|               |  | 2006 |  | 2007 |  | 2008 |  | 2009 |  | 2010
|-------------- |  | ---- |  | ---- |  | ---- |  | ---- |  | ----
|               |  |      |  |      |  |      |  |      |  |     
|First Quarter  |  | 1    |  | 3    |  | 3    |  | 1    |  |    
|Second Quarter |  | 5    |  | 7    |  | 6    |  | 6    |  | 3   
|Third Quarter  |  | 4    |  | 2    |  | 2    |  | 2    |  | 1   
|Fourth Quarter |  | 1    |  | 1    |  |     |  |     |  |    
|               |  |      |  |      |  |      |  |      |  |     
|Total          |  | 11   |  | 13   |  | 11   |  | 9    |  | 4   
|               |  |      |  |      |  |      |  |      |  |     

Capital Expenditures

2006 Drydocks

OMI evaluates certain vessels to determine if a drydock, special survey, both a drydock combined with a special survey or a postponement is appropriate for each vessel. We have vessels
inspected and evaluated regularly in anticipation of a drydock during the year. Currently, we anticipate the drydock of up to 10 vessels (six of which may begin in the first half of 2006), for an estimated aggregate cost of $5.2 million. The
vessels are expected to incur up to an aggregate of approximately 216 off-hire days in the first and second half of the year.

The table below is a breakdown by vessel segment and charter type (spot or TC) for the Crude Oil Fleet and Clean fleet:

|                 |  | Number of Days     |  | Number of Days      |     |          
|---------------- |  | ------------------ |  | ------------------- | --- | ---------
|                 |  | Off-hire in the    |  | Off-hire in the     |     | Projected
|                 |  | First Half of 2006 |  | Second Half of 2006 |     | Costs    
|                 |  |                    |  |                     |     |          
|Crude Oil Fleet: |  |                    |  |                     |     |          
|Suezmaxspot     |  | 20                 |  |                     | 20  |          
|SuezmaxTC       |  | 20                 |  |                     | n/a |          
|                
|Clean Fleet:     |  |                    |  |                     |     |          
|ProductsTC      |  | 88                 |  |                     | 44  |          
|Productsspot    |  | n/a                |  |                     | 24  |          
|                 |  |                    |  |                     |     |          
|Total            |  | 128                |  |                     | 88  |          
|                 |  |                    |  |                     |     |          

At December 31, 2005, we had commitments to take delivery of five product carriers, four handymax and one handysize, with 2006 delivery dates. Three vessels have been delivered in the first
quarter and two are expected to be delivered in the second quarter. The contract costs for the five vessels aggregated $183.3 million. As of December 31, 2005, $78.9 million in payments had been made on these contracts, $23.8 million of
which was paid in during the year ended December 31, 2005.

As of December 31, 2005, future construction installment and delivery payments, before financing, if any, were as follows:

|                         |  | 2006 Payments
|------------------------ |  | -------------
|                         |  |              
|                         |  | (in millions)
|First Quarter(a)         |  | $            
|Second Quarter           |  |              
|                         |  |              
|Total Remaining Payments |  | $            
|                         |  |              

---

55

---



During 2005, the Board of Directors declared quarterly dividends aggregating $0.32 per share to shareholders of record at designated dates aggregating $ 25.6 million (the fourth quarter
dividend of $5.7 million declared in November 2005 and paid on January 11, 2006). On February 16, 2006, the Board of Directors of OMI approved an increase in our quarterly dividend from $0.08 per share to $0.10 per share and declared the
$0.10 per share dividend to shareholders of record on March 22, 2006, which will be paid on April 12, 2006.

The Company has a stock buy back and retirement program in place. The following table illustrates repurchases by Board authorized programs for the year ended December 31, 2005:

|Board                   |  | Amount          |  | Total Shares |  | Costs For    
|----------------------- |  | --------------- |  | ------------ |  | -------------
|Authorization           |  | Authorized      |  | Repurchased  |  | Repurchases  
|                        |  |                 |  |              |  |              
|                        |  |                 |  |              |  | (in millions)
|December 2004           |  | 4,250,000 Shrs. |  | 4,250,000    |  | $            
|August 2005             |  | 3,000,000 Shrs. |  | 3,000,000    |  |              
|September 2005          |  | $70.0 million   |  | 3,997,235    |  |              
|October 2005            |  | $70.0 million   |  | 3,787,765    |  |              
|                        |  |                 |  |              |  |              
|Total                   |  |                 |  | 15,035,000   |  | $            
|                        |  |                 |  |              |  |              
|                       
|Average Price Per Share |  |                 |  |              |  | $            

The Company has substantially completed the previous $70.0 million authority announced October 31, 2005. In February 2006, the Board authorized another $70 million for the repurchase of
its common stock. OMI currently has 71,061,791 shares outstanding.

In 2003, the 2003 Stock Incentive Plan was approved. This plan provides for the granting of options to officers, employees, consultants and directors for restricted shares and stock options.
The total number of shares that may be awarded under the Plan are 4,000,000, of which 1,400,000 shares of stock may be awarded as restricted stock. We have not granted any stock options under this plan in 2003, 2004 or 2005. No additional restricted
shares or options may be granted pursuant to any prior Company plan.

The Company has granted restricted stock to certain of its employees, executive officers and directors under the 2001 Restricted Stock Plan and the 2003 Stock Incentive Plan. At December 31,
2005, there were 1,943,119 shares of restricted stock outstanding at an average fair value at grant date of $11.12 per share.

Please refer to the appropriate sections within the Financial Condition and Capital Resources section for other commitments disclosed (i.e., for capital expenditures relating to vessel
purchases under current construction contracts, see Capital Expenditures section.)

The Company terminated an agreement to acquire one of the Suezmax vessels it was to acquire in August 2004 from Athenian Sea Carriers Ltd., as delivery was not tendered in accordance with the
requirements of the agreement. In September 2005, the dispute relating to the failed delivery of the Suezmax tanker was settled. The Companys deposit of $6.4 million (previously classified as restricted cash and included in the
Consolidated Balance Sheets in Other assets and deferred charges) was returned to OMI, together with interest. No other payments were made by either party. There is no material impact on the Company resulting from the settlement.

In September 2005, the Company reached an agreement with one of its insuring Protection and Indemnity Associations (P & I club) in respect of costs and expenses relating to the
investigation by the U.S. Government of certain insured ships that culminated in a plea agreement and fine paid for a violation by the crew of the vessel GUADALUPE of the Act to Prevent Pollution from Ships. In 2003, the Company expensed a fine it
paid to the U.S.

56

---



Government in the amount of $4.2 million and associated costs. In the fourth quarter of 2005, the Company received $1.0 million from the settling insurer. We have recognized a $0.6 million gain (which reflects
associated expenses of $0.4 million) recorded in Vessel expense in the Consolidated Statements of Income, for the year ended December 31, 2005 from the insurance recovery. A claim against another P & I club relating to the same incident was
rejected by that insurer and the Company has commenced an arbitration seeking recovery on the claim. At December 31, 2005, no amounts have been recorded nor will any be recognized until the arbitration has been decided or settled.

OMI and certain subsidiaries are defendants in various actions arising from shipping operations. Such actions are covered by insurance or, in the opinion of management; the ultimate resolution
of these matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company. Management accrues an estimate of expense for any matters that are considered probable of occurring based on the
facts and circumstances.

The following table lists contractual obligations by required payment periods as of December 31, 2005:

|                                  |  | Payments Due By Period
|--------------------------------- |  | ----------------------
|                                  |  |                       
|                                  |  | Total                 
|                                  |  |                       
|                                  |  | (in millions)         
|Contractual Obligations           |  |                       
|Long-Term Debt                    |  | $895.9                
|Interest on Fixed Rate Debt       |  | 162.4                 
|Interest on Variable Rate Debt(1) |  | 184.1                 
|Purchase Obligations(2)           |  | 104.4                 
|Operating Leases(3)               |  | 204.6                 

---

|(1) | Variable rate interest of 5.08% is based on a projected LIBOR rate plus applicable margins.                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Purchase obligations relate to contracts to construct vessels. Future payments required are related to future services to be performed and are not reflected on the Consolidated Balance Sheets as
  Liabilities.                                                                                                                                                                       
|(3) | Contractual obligations relating to future minimum lease payments required by year, under operating leases subsequent to December 31, 2005, include leases for the chartering-in of vessels and the lease obligation for our
  office space and are not included as liabilities on the Consolidated Balance Sheets, since such payments relate to services to be provided in the future.
|   

In February 2005, OMI agreed to time charter-in for seven years two new Suezmax vessels. One vessel was delivered in June 2005 and the other was delivered in September 2005. OMI has options to
extend the term of the time charters and/or to acquire the vessels.

During April 2005, we signed a new lease for existing and additional office space at our corporate office in Stamford, Connecticut. The lease was extended from December 2006 to February 2017,
which increased our commitment for the period from August 2005 to February 2017 by $14.4 million (see Contractual Obligations above).

Operating leases agreed to in the first quarter of 2006 are not included in the Contractual Obligation table above. For more information see discussion in the 2005 Financial Summary, recent
transaction, Disposition of vessels and 2006 Outlook sections.

As of December 31, 2005, we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a) (4) (ii) of SEC Regulation S-K.

Letters of Credit - In the normal course of business, we arranged for the issuance of a letter of credit by a bank for $1.2 million as collateral, as required by certain of our
operations.

The Company does not consider inflation to be a significant risk to the cost of doing business in the current or foreseeable future. Inflation has a moderate impact on operating expenses,
drydocking expenses and corporate overhead.

57

---



In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, (SFAS 123(R)), as amended.
This Statement requires companies to expense the estimated fair value of stock options and similar equity instruments issued to employees. Currently, companies are required to calculate the estimated fair value of these share-based payments and can
elect to either include the estimated cost in earnings or disclose the pro forma effect in the footnotes to their financial statements. The fair value concepts were not changed significantly in SFAS 123(R); however, in adopting this Standard,
companies must choose among alternative valuation models and amortization assumptions. On April 14, 2005 the U.S. Securities and Exchange Commission (the SEC) announced a deferral of the effective date of SFAS 123(R) for calendar year
companies until the beginning of 2006 and this pronouncement will apply to all awards existing as of the adoption date, as well as those granted and modified after the adoption date. The provisions of SFAS 123(R), as amended, which the Company
adopted on January 1, 2006, did not have a material effect on the Companys consolidated financial statements since we have an immaterial amount of options, which are 100% vested, remaining from prior grants. However, if the Company were to
resume issuing stock options, the impact could be material.

In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107) regarding the SECs interpretations of SFAS 123 (R) and the valuation of share-based payments for
public companies. OMI has evaluated the requirements of SFAS 123 (R) in conjunction with SAB 107 and we do not expect that the adoption of SAB 107 on January 1, 2006 to have a material impact on Companys consolidated financial statements and
earnings per share.

In November 2005, the FASB issued FASB Staff Position No. 123(R)-3 Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards (FSP 123(R)-3). FSP
123(R)-3 provides an alternative transition method of accounting for the tax effects of adopting SFAS 123(R). This FSP grants one year from the later of the date of the FSP or the adoption of SFAS 123(R) to the Company for determination of the
onetime election for purposes of transition. However, substantially all of the Companys operations are tax exempt and will not be impacted by this FSP upon adoption.

In February 2006, the FASB issued FSP 123 (R)-4 Classification of Options and Similar Instruments Issued as Employee Compensation That Allow for Cash Settlement upon the Occurrence of a
Contingent Event. The guidance in this FSP (R)-4 amends SFAS 123(R) to require companies with contingent cash-settleable provisions in their employee share option awards to assess the probability of the contingent events occurrence when
classifying the instrument as liabilities or equity. The guidance in this FSP will be applied upon initial adoption of Statement 123(R). Since the Company adopted Statement 123(R) prior to the issuance of the FSP, we will apply the guidance in the
FSP in the first reporting period beginning after February 2006. The Company does not anticipate that this new FSP will have a material impact on the Companys financial statements.

In May 2005, the FASB issued SFAS No. 154 Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20, and FASB Statement No. 3. (SFAS 154) SFAS 154
replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. This
statement applies to all voluntary changes in accounting principles. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a
pronouncement includes specific transition provisions, those provisions should be followed. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 31, 2005.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws, and are intended to be covered by
the safe harbor provided for under these sections. These statements may include words such as believe, estimate, project, intend, expect, plan, anticipate, and
similar expressions in connection with any discussion of the timing or nature of future operating or financial performance or other events. Our forward-looking statements include, without limitation:

- estimates of future earnings and cash flows and
    the sensitivity of earnings and cash flows to charter rates;

58

---



- estimates of when new vessels will be delivered by shipyards to the Company and when they may be chartered by customers;
- estimates of when vessels may be contracted for sale and delivered to buyers;
- estimates of when laws, regulations or commercial decisions may remove older vessels from markets or enhance the value or earnings of double hulled vessels;
- statements as to the projected
      development of the Companys strategy and how it may act to implement its strategy;
- estimates of future costs and other liabilities for certain environmental matters and investigations and the expectations concerning insurance coverage therefore;
- estimates relating to expectations in world economic activity, growth in the demand for crude oil and petroleum products and their affect upon tanker markets;
- estimates of the number of drydockings of vessels, their costs and the number of related off-hire days;
- estimates of capital requirements and the sources of the funding; and
- statements regarding hedges and their affects.

Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our
forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by those forward-looking statements. Such risks include,
but are not limited to, supply of tankers, demand for their use, world economic activity, breakdown of vessels and resultant time out of service as well as repair cost, availability and cost of insurance, governmental regulation, customer
preferences and availability and cost of financing.

All subsequent written and oral forward-looking statements attributable to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements. We disclaim any
intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Item 7A.      Quantitative and Qualitative Disclosures about Market Risks

The Company is exposed to market risk from changes in interest rates, which could impact its results of operations, financial condition and cash flow. The Company manages its ratio of fixed to
floating rate debt with the objective of achieving a mix that reflects managements interest rate outlook at various times by entering into interest rate swap agreements, in which it agrees to pay a fixed interest rate and receive market
interest rate based on contracted notional amounts and for specific period of time. The interest rate swaps are entered into with financial institutions that have investment grade credit ratings, thereby minimizing the risk of credit loss. The
Company uses such derivative financial instruments as risk management tools and not for speculative or trading purposes. At December 31, 2005, the floating rate debt, taking into account the interest rate swaps referred to herein, was $497.1
million of the $895.9 million total debt, and we had interest rate swaps relating to the floating rate debt of $206.8 million (including $112.4 million on interest rate swaps that commences in 2006). At December 31, 2004, the floating
rate debt was $490.4 million, and we had interest rate swaps relating to the floating rate debt of $192.2 million (including $62.4 million on interest rate swaps that commences in 2006). Based on the floating rate debt at December 31,
2005, a one-percentage point increase in the floating interest rate would increase interest expense by $2.9 million per year.

The fair market value of the fixed rate debt on our balance sheet was $386.6 million as of December 31, 2005, and $454.6 million as of December 31, 2004.

The table below provides information about interest rates, including our debt obligations and interest rate swaps at December 31, 2005. For debt obligations, the table presents principal cash
flows and related weighted average interest

59

---



rates by expected maturity dates. For interest rate swaps, the table presents notional amounts and weighted average interest rates by expected contractual maturity dates.

|                        |  |                                   |  | Expected Maturities(1) | 
|----------------------- |  | --------------------------------- |  | ---------------------- | 
|                        |  | Balance as of                     |  |                        | 
|                        |  | Dec. 31, 2005                     |  | 2006                   | 
|                        |  |                                   |  |                        | 
|                        |  | (In millions, except percentages) | 
|Long-Term Debt:         |  |                                   |  |                        | 
|Fixed-Rate Debt         |  | $398.8                            |  | $6.2                   | 
|Average Interest Rate   |  |                                   |  | 5.60%                  | 
|                        |  |                                   |  |                        | 
|Variable Rate Debt(2)   |  | 497.1                             |  | 28.3                   | 
|                        |  |                                   |  |                        | 
|Interest Rate Swaps:(3) |  |                                   |  |                        | 
|Contract Amount         |  | 94.4                              |  | 10.5                   | 
|Average Fixed Pay Rate  |  |                                   |  | 3.34%                  | 
|                        |  |                                   |  |                        | 

---

|(1) | These are the expected maturities based on the balances as of December 31, 2005.                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The interest rates for
            the variable rate debt is based on LIBOR contracts, which range from
            30 days to one year. In 2010, $24.6 million of fixed rate debt
    reverts to variable rate debt.
|(3) | Excludes $112.4 million
    for two swaps beginning in 2006.                                                                                                                                                         
|   

Spot Market Rate Risk

We use written forward freight agreements (FFAs) as a hedge to protect against the change in spot market rates earned by some of our vessels. FFAs involve contracts to provide
theoretical voyages at fixed rates thus hedging a portion of the Companys exposure to the spot charter market. The fair value of FFAs is the estimated amount that the Company would receive or pay to terminate the agreements at the reporting
date. At December 31, 2005, the FFAs had an aggregate notional value of $3.1 million, which is an aggregate of both long and short positions that extend to March 2006. The fair value of $0.2 million at December 31, 2005 of our forward
freight agreements is the estimated net amount that the Company would receive to terminate the agreements at the reporting date.

60

---



[This Page Intentionally Left Blank]

---



Item 8:FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|                                                          |  | Page
|--------------------------------------------------------- |  | ----
|                                                          |  |     
|OMI Corporation and Subsidiaries:                         |  |     
|                                                          |  |     
|Consolidated Statements of Income                         |  | 63  
|                                                          |  |     
|Consolidated Balance Sheets                               |  | 64  
|                                                          |  |     
|Consolidated Statements of Cash Flows                     |  | 66  
|                                                          |  |     
|Consolidated Statement of Changes in Stockholders Equity |  | 67  
|                                                          |  |     
|Notes to Consolidated Financial Statements                |  | 68  
|                                                          |  |     
|Report of Independent Registered Public Accounting Firm   |  | 87  
|                                                          |  |     
|Quarterly Results of Operations (unaudited)               |  | 88  

62

---



OMI CORPORATION AND SUBSIDIARIES

|                                              |  | For the Years Ended December 31, |        
|--------------------------------------------- |  | -------------------------------- | -------
|                                              |  |                                  |        
|                                              |  | 2005                             |        
|                                              |  |                                  |        
|REVENUE                                       |  | $                                | 652,367
|                                              |  |                                  |        
|                                             
|OPERATINGEXPENSES:                            |  |                                  |        
|Voyage expense                                |  |                                  | 136,743
|Vessel expense                                |  |                                  | 89,116 
|Charter hire expense                          |  |                                  | 72,781 
|Depreciation and amortization                 |  |                                  | 68,399 
|General and administrative                    |  |                                  | 31,683 
|Provision for settlement and related expenses |  |                                  |       
|Provision for impairment loss on vessels      |  |                                  |       
|(Gain) loss on disposal of vesselsnet        |  |                                  | (57,965
|                                              |  |                                  |        
|Total operating expenses                      |  |                                  | 340,757
|                                              |  |                                  |        
|OPERATINGINCOME                               |  |                                  | 311,610
|                                              |  |                                  |        
|                                             
|OTHERINCOME(EXPENSE):                         |  |                                  |        
|(Loss) gain on investments                    |  |                                  |       
|Interest expense                              |  |                                  | (43,739
|Interest income                               |  |                                  | 1,225  
|Othernet                                     |  |                                  | 6,073  
|                                              |  |                                  |        
|Net other expense                             |  |                                  | (36,441
|                                              |  |                                  |        
|NETINCOME                                     |  | $                                | 275,169
|                                              |  |                                  |        
|                                             
|BASICEARNINGSPERCOMMONSHARE                   |  | $                                | 3.39   
|                                              |  |                                  |        
|                                             
|DILUTEDEARNINGSPERCOMMONSHARE                 |  | $                                | 3.39   
|                                              |  |                                  |        
|WEIGHTEDAVERAGESHARESOUTSTANDING:             |  |                                  |        
|Basic                                         |  |                                  | 81,112 
|Diluted                                       |  |                                  | 81,177 
|CASHDIVIDENDSDECLAREDPERSHARE                 |  | $                                | 0.32   

See notes to consolidated financial statements.

63

---



OMI CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS(In thousands)

ASSETS

|                                                                                |  | December 31,
|------------------------------------------------------------------------------- |  | ------------
|                                                                                |  |             
|                                                                                |  | 2005        
|                                                                                |  |             
|CURRENTASSETS                                                                   |  |             
|Cash, including cash equivalents of $29,401 in 2005 and $10,120 in 2004         |  | $           
|Receivables:                                                                    |  |             
|Traffic receivables, net of
          allowance for doubtful accounts of $5,600 |  |             
|in 2005 and $4,183 in 2004                                                      |  |             
|Other                                                                           |  |             
|Current restricted cash                                                         |  |             
|Prepaid expenses and other current assets                                       |  |             
|                                                                                |  |             
|Total current assets                                                            |  |             
|                                                                                |  |             
|VESSELS, CONSTRUCTION INPROGRESS ANDOTHERPROPERTY                               |  |             
|Vessels                                                                         |  |             
|Construction in progress                                                        |  |             
|Other property                                                                  |  |             
|                                                                                |  |             
|Total vessels, construction in progress and other property                      |  |             
|Less accumulated depreciation                                                   |  |             
|                                                                                |  |             
|Vessels, construction in progress and other property-net                        |  |             
|                                                                                |  |             
|DRYDOCKNET OFAMORTIZATION                                                      |  |             
|NON-CURRENTRESTRICTEDCASH                                                       |  |             
|OTHERASSETS ANDDEFERREDCHARGES                                                  |  |             
|                                                                                |  |             
|                                                                               
|TOTAL                                                                           |  | $           
|                                                                                |  |             

See notes to consolidated financial statements.

64

---



OMI CORPORATION AND SUBSIDIARIES

LIABILITIES AND STOCKHOLDERS EQUITY

|                                                                    |  | December 31, |          
|------------------------------------------------------------------- |  | ------------ | ---------
|                                                                    |  |              |          
|                                                                    |  | 2005         |          
|                                                                    |  |              |          
|CURRENTLIABILITIES:                                                 |  |              |          
|Current portion of long-term debt                                   |  | $            | 34,491   
|Accounts payable                                                    |  |              | 19,195   
|Accrued liabilities:                                                |  |              |          
|Voyage and vessel                                                   |  |              | 4,688    
|Interest                                                            |  |              | 4,634    
|Compensation                                                        |  |              | 8,126    
|Other                                                               |  |              | 10,313   
|Deferred charter hire revenue                                       |  |              | 10,799   
|Charter hire payable                                                |  |              | 10,210   
|Dividend payable                                                    |  |              | 5,704    
|Deferred gain on sale of vessels                                    |  |              |         
|                                                                    |  |              |          
|Total current liabilities                                           |  |              | 108,160  
|                                                                   
|OTHERLIABILITIES                                                    |  |              | 3,571    
|                                                                   
|LONG-TERMDEBT                                                       |  |              | 861,376  
|                                                                   
|COMMITMENTS ANDCONTINGENCIES(NOTE17)                                |  |              |          
|                                                                   
|STOCKHOLDERS EQUITY:                                               |  |              |          
|Common stock, $0.50 per share par value; 150,000 shares authorized, |  |              |          
|shares issued and outstanding: 2005-71,304, 2004-85,630             |  |              | 35,652   
|Capital surplus                                                     |  |              | 89,370   
|Retained earnings                                                   |  |              | 641,073  
|Unearned compensationrestricted stock                              |  |              | (14,204  
|Accumulated other comprehensive income (loss)                       |  |              | 3,045    
|                                                                    |  |              |          
|Total stockholders equity                                          |  |              | 754,936  
|                                                                    |  |              |          
|TOTAL                                                               |  | $            | 1,728,043
|                                                                    |  |              |          

65

---



OMI CORPORATION AND SUBSIDIARIES

|                                                            |  | For the Years Ended December 31, |         
|----------------------------------------------------------- |  | -------------------------------- | --------
|                                                            |  |                                  |         
|                                                            |  | 2005                             |         
|                                                            |  |                                  |         
|CASHFLOWSPROVIDED(USED)BYOPERATINGACTIVITIES                |  |                                  |         
|Net income                                                  |  | $                                | 275,169 
|Adjustments to reconcile net income to net cash provided by |  |                                  |         
|operating activities:                                       |  |                                  |         
|Depreciation and amortization                               |  |                                  | 68,399  
|(Gain) loss on disposal of vesselsnet                      |  |                                  | (57,965 
|Loss (gain) on investments                                  |  |                                  |        
|Provision for impairment loss on vessels                    |  |                                  |        
|Amortization of deferred gain on sale of vessels            |  |                                  | (1,557  
|Amortization of debt issue costs                            |  |                                  | 3,150   
|Amortization of restricted stock awards                     |  |                                  | 4,092   
|Other                                                       |  |                                  | (4,899  
|Changes in assets and liabilities:                          |  |                                  |         
|Decrease (increase) in receivables and other current assets |  |                                  | 1,207   
|Increase in accounts payable and accrued liabilities        |  |                                  | 17,135  
|Increase in other assets and deferred charges               |  |                                  | (295    
|Increase (decrease) increase in other liabilities           |  |                                  | 23      
|Othernet                                                   |  |                                  | (995    
|                                                            |  |                                  |         
|Net cash provided by operating activities                   |  |                                  | 303,464 
|                                                            |  |                                  |         
|                                                           
|CASHFLOWSPROVIDED(USED)BYINVESTINGACTIVITIES:               |  |                                  |         
|Proceeds from disposition of vessels                        |  |                                  | 176,351 
|Additions to vessels and other property                     |  |                                  | (148,597
|Payments for drydocking                                     |  |                                  | (4,387  
|Proceeds (payments) for a deposit in escrow                 |  |                                  | 6,435   
|Escrow of funds                                             |  |                                  | 1,000   
|Other                                                       |  |                                  |        
|                                                            |  |                                  |         
|Net cash provided (used) by investing activities            |  |                                  | 30,802  
|                                                            |  |                                  |         
|                                                           
|CASHFLOWS(USED)
PROVIDED BYFINANCINGACTIVITIES:             |  |                                  |         
|Proceeds from issuance of debt                              |  |                                  | 279,958 
|Payments on debt                                            |  |                                  | (316,613
|Proceeds from issuance of common stock                      |  |                                  | 548     
|Payments for debt issue costs                               |  |                                  | (1,872  
|Payments for the purchase of common stock                   |  |                                  | (269,933
|Payments of dividends to shareholders                       |  |                                  | (25,862 
|                                                            |  |                                  |         
|Net cash (used) provided by financing activities            |  |                                  | (333,774
|                                                            |  |                                  |         
|NETINCREASE(DECREASE)INCASH ANDCASHEQUIVALENTS              |  |                                  | 492     
|CASH ANDCASHEQUIVALENTS ATBEGINNING OFYEAR                  |  |                                  | 41,805  
|                                                            |  |                                  |         
|CASH ANDCASHEQUIVALENTS ATEND OFYEAR                        |  | $                                | 42,297  
|                                                            |  |                                  |         

66

---



OMI CORPORATION AND SUBSIDIARIES

|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|------------------------------------ |  | ------------ | - |  | ------- | ------ | - | -------- | - | -------- | ---------- |  | ------------ | -------- | - |  | -------- | ------- | ------------- | -------- | ------- | ------ | ------- | ----------- | ------- | ------ |  | - | -------- | - |  | - | -------
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         | Accumulated |         |        |  |   |          |   |  |  
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  | Unearned |         |               |          |         |        | Other   |             |         | Total  |  |   |          |  
|                                     |  | Common Stock |   |  |         |        |   |          |   |          |            |  | Compensation |          |   |  |          |         | Comprehensive |          |         | Stock- |         |             | Compre-
|                                     |  |              |   |  | Capital |        |   | Retained |   |          | Restricted |  |              | Treasury |   |  | (Loss)   |         |               | holders |         |        | hensive
|                                     |  | Shares       |   |  | Amount  |        |   | Surplus  |   |          | Earnings   |  |              | Stock    |   |  | Stock    |         |               | Income   |         |        | Equity  |             |         | Income
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Balance at January 1, 2003           |  | 76,779       |   |  | $       | 38,390 |   |          | $ | 321,447  |            |  | $            | 87,932   |   |  | $        | (3,658  | )             |          |        |        |         | $           | (6,289  | )      |  | $ | 437,822  |   |  |   |        
|Comprehensive income:                |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Net income                           |  |              |   |  |         |        |   |          |   |          |            |  |              | 76,471   |   |  |          |         |               |          |         |        |         |             |         |        |  |   | 76,471   |   |  | $ | 76,471 
|Other comprehensive income:          |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Net unrealized gains on              |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|derivatives                          |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             | 4,230   |        |  |   | 4,230    |   |  |   | 4,230  
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Total comprehensive income           |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  | $ | 80,701 
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Issuance of common stock             |  | 2,000        |   |  |         | 1,000  |   |          |   | 10,989   |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   | 11,989   |   |  |   |        
|Exercise of stock options            |  | 1,381        |   |  |         | 691    |   |          |   | 5,271    |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   | 5,962    |   |  |   |        
|Issuance of restricted stock         |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|awards                               |  | 498          |   |  |         | 249    |   |          |   | 3,159    |            |  |              |          |   |  |          | (3,408  | )             |          |         |        |         |             |         |        |  |   |         |   |  |   |        
|Amortization of restricted stock     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|awards                               |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          | 1,290   |               |          |         |        |         |             |         |        |  |   | 1,290    |   |  |   |        
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Balance at December 31, 2003         |  | 80,658       |   |  |         | 40,330 |   |          |   | 340,866  |            |  |              | 164,403  |   |  |          | (5,776  | )             |          |        |        |         |             | (2,059  | )      |  |   | 537,764  |   |  |   |        
|Comprehensive income:                |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Net Income                           |  |              |   |  |         |        |   |          |   |          |            |  |              | 245,695  |   |  |          |         |               |          |         |        |         |             |         |        |  |   | 245,695  |   |  | $ | 245,695
|Other comprehensive income:          |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Net unrealized gain on               |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|derivatives                          |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             | 1,874   |        |  |   | 1,874    |   |  |   | 1,874  
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Total comprehensive income           |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  | $ | 247,569
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Dividends on common stock            |  |              |   |  |         |        |   |          |   |          |            |  |              | (18,622  | ) |  |          |         |               |          |         |        |         |             |         |        |  |   | (18,622  | ) |  |   |        
|Issuance of common stock             |  | 12,204       |   |  |         | 6,102  |   |          |   | 131,593  |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   | 137,695  |   |  |   |        
|Exercise of stock options            |  | 481          |   |  |         | 240    |   |          |   | 2,194    |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   | 2,434    |   |  |   |        
|Purchase of treasury stock           |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          | 431     |               |          | (16,497 | )      |         |             |         |        |  |   | (16,066  | ) |  |   |        
|Purchase and retirement of           |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|common stock                         |  | (8,000       | ) |  |         | (4,000 | ) |          |   | (138,081 | )          |  |              |          |   |  |          |         |               |          | 16,497  |        |         |             |         |        |  |   | (125,584 | ) |  |   |        
|Issuance of restricted stock awards, |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|net of forfeitures                   |  | 287          |   |  |         | 143    |   |          |   | 3,575    |            |  |              |          |   |  |          | (3,718  | )             |          |         |        |         |             |         |        |  |   |         |   |  |   |        
|Amortization of restricted stock     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|awards                               |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          | 2,212   |               |          |         |        |         |             |         |        |  |   | 2,212    |   |  |   |        
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Balance as of December 31, 2004      |  | 85,630       |   |  |         | 42,815 |   |          |   | 340,147  |            |  |              | 391,476  |   |  |          | (6,851  | )             |          |        |        |         |             | (185    | )      |  |   | 767,402  |   |  |   |        
|Comprehensive income:                |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Net Income                           |  |              |   |  |         |        |   |          |   |          |            |  |              | 275,169  |   |  |          |         |               |          |         |        |         |             |         |        |  |   | 275,169  |   |  | $ | 275,169
|Other comprehensive income:          |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Net unrealized gain on               |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|derivatives                          |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             | 3,230   |        |  |   | 3,230    |   |  |   | 3,230  
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Total comprehensive income           |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  | $ | 278,399
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Dividends on common stock            |  |              |   |  |         |        |   |          |   |          |            |  |              | (25,572  | ) |  |          |         |               |          |         |        |         |             |         |        |  |   | (25,572  | ) |  |   |        
|Exercise of stock options            |  | 106          |   |  |         | 53     |   |          |   | 495      |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   | 548      |   |  |   |        
|Purchase and retirement of           |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|common stock                         |  | (15,035      | ) |  |         | (7,518 | ) |          |   | (262,415 | )          |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   | (269,933 | ) |  |   |        
|Issuance of restricted stock awards, |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|net of forfeitures                   |  | 603          |   |  |         | 302    |   |          |   | 11,143   |            |  |              |          |   |  |          | (11,445 | )             |          |         |        |         |             |         |        |  |   |         |   |  |   |        
|Amortization of restricted stock     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|awards                               |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          | 4,092   |               |          |         |        |         |             |         |        |  |   | 4,092    |   |  |   |        
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        
|Balance as of December 31, 2005      |  | 71,304       |   |  | $       | 35,652 |   |          | $ | 89,370   |            |  | $            | 641,073  |   |  | $        | (14,204 | )             |          |        |        |         | $           | 3,045   |        |  | $ | 754,936  |   |  |   |        
|                                     |  |              |   |  |         |        |   |          |   |          |            |  |              |          |   |  |          |         |               |          |         |        |         |             |         |        |  |   |          |   |  |   |        

67

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(All tabular amounts are in thousands, except per share data)

Note 1Business and Summary of Significant Accounting Policies

BusinessOMI Corporation (OMI or the Company) was incorporated January 9, 1998 in the Republic of the Marshall Islands. OMI
is a leading seaborne transporter of crude oil and refined petroleum products operating in the international shipping markets. We separated from our former parent entity in 1998 in a transaction designed to create a shipping company with only
internationally flagged vessels. Our predecessor entities, however, date back to 1960. The Company trades under the symbol OMM on the New York Stock Exchange.

ReclassificationsCertain reclassifications have been made to the 2004 and 2003 financial statements to conform to the 2005 presentation. These
reclassifications have no impact on previously reported net income or cash flows, except as indicated below.

To conform to the presentation in 2005, the Company corrected the 2004 classification of the deposit of $6,435,000 held in escrow (see Note 9) from Operating Activities to Escrow of Funds
in Investing Activities in the Consolidated Statements of Cash Flows.

Principles of ConsolidationThe consolidated financial statements include all subsidiaries that are more than 50% owned by OMI. All significant
intercompany accounts and transactions have been eliminated in consolidation.

Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of 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.

Revenue Recognition Revenues are generated primarily from voyage charters and time charters.

Consistent
    with industry practice, we use time charter equivalent, or TCE revenue, which
    comprises revenue from vessels operating on time charters and voyage revenue
    less voyage expenses from vessels operating on voyage charters in the spot
    market. TCE revenue serves as a measure for analyzing fluctuations between
    financial periods and as a method of equating revenue generated from a voyage
    charter to time charter revenue. TCE revenue also serves as an industry standard
for measuring revenue and comparing results among competitors.

Voyage charters: Under a voyage charter and voyage servicing contracts of affreightment (COAs) the revenues and associated voyage costs, such
as fuel, canal tolls and port charges are recognized ratably over the estimated duration of the voyage (the percentage of completion method of accounting). Estimated losses under a voyage charter are provided for in full at the time such losses
become evident. OMIs accounting policy for recognition of voyage freight for vessels operating on voyage charters and COAs is on the discharge-to-discharge basis. Under this method, voyage revenue is recognized evenly over the period from the
discharge of cargo for the prior voyage to the discharge of cargo for the current voyage. Demurrage income, included in voyage revenue, is the revenue earned when loading and discharging time exceeds the stipulated time in the voyage charter.
Demurrage income is measured in accordance with the provisions of the respective charter agreements and the circumstances under which demurrage claims arise and is also recognized ratably over the estimated duration of the voyage. The Consolidated
Balance Sheets reflect the accrual of revenues and expenses from voyages in progress.

Time charter: Under a time charter, revenues are recorded over the term of the charter as service is provided. When the time charter contains a profit
sharing agreement, we recognize the profit sharing or contingent revenue only after meeting a threshold, which is the minimum yearly charter hire. The Company receives a preliminary cash payment for profit sharing after six months. This distribution
is recorded in deferred revenue (a liability) until the threshold is reached. Amounts receivable arising from profit sharing arrangements are accrued based on the actual results of the voyages recorded as of the reporting date.

Pool revenue: Revenues include the gross revenue generated by vessels in the Gemini Suezmax Pool that began in December 2003. The Gemini Pool, a pool for
double hull Suezmax vessels, is operated by Gemini Tankers LLC (Gemini), a wholly owned subsidiary of OMI. As of December 31, 2005, there were 17 Suezmaxes (12 of OMIs and 5 from 2 other shipowners) operating in the pool. The
earnings of the pool are allocated to the pool members using an agreed upon formula. The gross revenues of Gemini are reflected in OMIs consolidated revenues, and the charter hire expense equal to the revenue earned for the five non-OMI
vessels is included in OMIs consolidated charter hire expense.

68

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note 1Business and Summary of Significant Accounting Policies (continued)

Cash EquivalentsCash equivalents represent liquid investments, with initial maturities of 90 days or less. The carrying amount of these investments
is at cost, which approximates fair value.

Restricted CashRestricted cash includes cash held in an escrow account pursuant to a sale/leaseback agreement. The escrow account for the
sale/leaseback agreement is collateral for the Companys obligations under an operating lease arrangement (see Note 6). In 2004, restricted cash also included cash held in an escrow account for a vessel acquisition that was in arbitration. The
arbitration was settled in September 2005 and the cash, together with interest, was returned to OMI (see Note 9).

Vessels, Construction in Progress and Other PropertyVessels and other property are recorded at cost. Depreciation for financial reporting purposes
is provided on the straight-line method based on the estimated useful life of the asset up to the assets estimated salvage value. The estimated useful life of a vessel is 25 years. Salvage value is based upon a vessels lightweight
tonnage multiplied by a scrap rate. Upon sale of a vessel, the asset cost and related accumulated depreciation are removed from the accounts, and any related gain or loss is reflected in income. Other property and leasehold improvements are
amortized on the straight-line method over the shorter of the terms of the lease or estimated useful life of the asset, which ranges from three to 12 years.

Expenditures for maintenance, repairs and minor renewals are expensed as incurred. Capital expenditures for significant improvements and new equipment are capitalized and are depreciated over
the shorter of the capitalized assets life or the remaining life of the vessel.

Interest costs incurred during the construction of vessels (until the vessel is substantially complete and ready for its intended use) are capitalized. The amount of interest capitalized was
$3,758,000 in 2005, $3,717,000 in 2004 and $1,230,000 in 2003.

Impairment of Long-Lived AssetsThe Company follows Statement of Financial Accounting Standards (SFAS) 144, Accounting for the
Impairment or Disposal of Long-lived Assets, which requires that long-lived assets and certain identifiable intangibles by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of
the assets may not be recoverable. The Company evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine if events have occurred that would require modification to the carrying values or the useful lives.
In evaluating useful lives and carrying values of long-lived assets, the Company reviews certain indicators of potential impairment, such as undiscounted projected cash flows, appraisals, business plans and overall market conditions. In the event
that a vessel impairment occurs, the Company would record a charge to net income calculated by comparing the vessels carrying value to the discounted projected cash flows and/or estimated fair value. The Company estimates fair value primarily
through the use of third party valuations performed on an individual vessel basis.

DrydockDrydock costs and special surveys are deferred and amortized over the estimated period between drydocks and special surveys, which is
generally a two to three year period. The drydock amortization expense was $2,956,000 in 2005, $1,777,000 in 2004 and $4,223,000 in 2003 and is included in depreciation and amortization expense.

Deferred Finance ChargesDeferred finance charges, included in Other assets and deferred charges, were $18,467,000 at December 31, 2005 and
$24,194,000 at December 31, 2004. The charges are amortized over the life

69

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note 1Business and Summary of Significant Accounting Policies (continued)

of the related debt and are included in Interest expense. The amount included in Interest expense was $3,150,000 in 2005, $3,101,000 in 2004 and $1,959,000 in 2003. During the years ended December 31, 2005 and
December 31, 2004, OMI recorded a charge to (gain) loss on disposal of vessels-net (see Note 10) of $1,207,000 and $700,000, respectively, relating to the writedown of deferred finance fees attributed to particular vessels disposed of during
each of the years. Additionally, OMI recorded a charge to Other-net of $3,242,000 in 2005 related to the writedown of finance fees for the repurchase of our 2.875% Convertible Notes (see Note 3).

Earnings Per Common ShareIn accordance with SFAS 128 Earnings Per Share the Companys basic EPS excludes the dilutive effect of
stock options. It is based upon the weighted average number of common shares outstanding during the period.

Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.

Comprehensive IncomeThe Company follows SFAS 130, Reporting Comprehensive Income, which establishes standards for reporting and
displaying comprehensive income and its components in the consolidated financial statements. Comprehensive income consists of net income and unrealized gains and loss on derivatives. Accumulated other comprehensive income (loss) consists of net
unrealized gains and losses on interest rate swaps for each of the three years in the period ended December 31, 2005.

Federal Income TaxesThe Company is a Marshall Islands Corporation. Pursuant to various tax treaties and the current United States Internal Revenue
Code, the Company believes that substantially all its operations are exempt from income taxes in the United States of America.

Stock-Based CompensationThe Company currently sponsors stock option plans and restricted stock award plans (see Notes 14 and 16).

During 2003, OMI adopted the fair value recognition provisions of SFAS 123, Accounting for Stock Based Compensation, as amended by SFAS 148, Accounting for Stock Based
Compensation-Transition and Disclosure, to account prospectively for stock options issued after December 31, 2002. In accordance with the modified prospective method of adoption, results of prior years have not been restated. There were no
options granted in the three years ended December 31, 2005. Currently, all of the stock options previously issued have vested. No stock-based employee compensation expense for stock options was reflected in net income for the three years ended
December 31, 2005.

Derivatives and Hedging ActivitiesThe Company accounts for derivatives in accordance with the provisions of SFAS 133, as amended, Accounting
for Derivative Instruments and Hedging Activities. The Company uses derivatives to reduce market risks associated with its operations. The Company is exposed to market risk, such as changes in interest rates and rates derived from vessels
operating in the spot market. Derivative instruments are recorded as assets or liabilities and are measured at fair value. Derivatives that are not hedges are adjusted to fair value through income. If the derivative is a hedge, depending upon the
nature of the hedge, changes in the fair value of the derivatives are either offset against the fair value of assets, liabilities or firm commitments through income, or recognized in other comprehensive income until the hedged item is recognized in
income. The ineffective portion of a derivatives change in fair value is immediately recognized into income (see Note 4).

Recently Issued Accounting PrinciplesRecently issued pronouncements, statements and positions are summarized as follows:

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, (SFAS 123(R)), as amended.
This Statement requires companies to expense the estimated fair value of stock options and similar equity instruments issued to employees.

70

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note 1Business and Summary of Significant Accounting Policies (continued)

Currently, companies are required to calculate the estimated fair value of these share-based payments and can elect to either include the estimated cost in earnings or disclose the pro forma effect in the footnotes to their
financial statements. The fair value concepts were not changed significantly in SFAS 123(R); however, in adopting this Standard, companies must choose among alternative valuation models and amortization assumptions. On April 14, 2005 the U.S.
Securities and Exchange Commission (the SEC) announced a deferral of the effective date of SFAS 123(R) for calendar year companies until the beginning of 2006 and this pronouncement will apply to all awards existing as of the adoption
date, as well as those granted and modified after the adoption date. The provisions of SFAS 123(R), as amended, which the Company adopted on January 1, 2006, did not have a material effect on the Companys consolidated financial statements
since we have an immaterial amount of options, which are 100% vested, remaining from prior grants. However, if the Company were to resume issuing stock options, the impact could be material.

In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107) regarding the SECs interpretations of SFAS 123 (R) and the valuation of share-based payments for
public companies. OMI has evaluated the requirements of SFAS 123 (R) in conjunction with SAB 107, and we do not expect that the adoption of SAB 107 on January 1, 2006 to have a material impact on Companys consolidated financial statements and
earnings per share.

In November 2005, the FASB issued FASB Staff Position No. 123(R)-3 Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards (FSP 123(R)-3). FSP
123(R)-3 provides an alternative transition method of accounting for the tax effects of adopting SFAS 123(R). This FSP grants one year from the later of the date of the FSP or the adoption of SFAS 123(R) to the company for determination of the
onetime election for purposes of transition. However, substantially all of the Companys operations are tax exempt and will not be impacted by this FSP upon adoption.

In February 2006, the FASB issued FSP 123 (R)-4 Classification of Options and Similar Instruments Issued as Employee Compensation That Allow for Cash Settlement upon the Occurrence of a
Contingent Event. The guidance in this FSP (R)-4 amends SFAS 123(R) to require companies with contingent cash-settleable provisions in their employee share option awards to assess the probability of the contingent events occurrence when
classifying the instrument as liabilities or equity. The guidance in this FSP will be applied upon initial adoption of Statement 123(R). Since the Company adopted Statement 123(R) prior to the issuance of the FSP, we will apply the guidance in the
FSP in the first reporting period beginning after February 2006. The Company does not anticipate that this new FSP will have a material impact on the Companys financial statements.

In May 2005, the FASB issued SFAS No. 154 Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20, and FASB Statement No. 3. (SFAS 154) SFAS 154
replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. This
statement applies to all voluntary changes in accounting principles. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a
pronouncement includes specific transition provisions, those provisions should be followed. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 31, 2005.

Segment ReportingThe Company accounts for its segments in accordance with SFAS 131, Disclosure About Segments of an Enterprise and Related
Information. SFAS 131 requires that a public company report annual and interim financial and descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on the Companys methods of internal reporting and management
structure, the Company has two reportable segments, the Crude Oil Fleet and the Clean Fleet.

71

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note
2Earnings Per Common Share

The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share assumes the
foregoing and the exercise of stock options using the treasury stock method and the conversion of the 2.875% Unsecured Convertible Senior Notes due 2024 (2.875% Convertible Notes) to the extent dilutive.

The components of the calculation of basic earnings per share and diluted earnings per share are as follows:

|                                                 |  | For the Years Ended December 31,
|------------------------------------------------ |  | --------------------------------
|                                                 |  |                                 
|                                                 |  | 2005                            
|                                                 |  |                                 
|Numerator:                                       |  |                                 
|Net income                                       |  | $                               
|                                                 |  |                                 
|Denominator:                                     |  |                                 
|Basic weighted average common shares outstanding |  |                                 
|Effect of dilutive securities:                   |  |                                 
|Options                                          |  |                                 
|                                                 |  |                                 
|Diluted weighted average common shares           |  |                                 
|                                                 |  |                                 
|Basic earnings per common share                  |  | $                               
|                                                 |  |                                 
|Diluted earnings per common share                |  | $                               
|                                                 |  |                                 

For the years ended December 31, 2005 and December 31, 2004, the 2.875% Convertible Notes were not dilutive, as the average price of OMIs stock was less than the conversion price of the
notes (see Note 3).

72

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note 3Long-Term Debt and Credit Arrangements

Long-term debt consists of the following:

|                                                                                |  | December 31,
|------------------------------------------------------------------------------- |  | ------------
|                                                                                |  |             
|                                                                                |  | 2005        
|                                                                                |  |             
|Secured debt:                                                                   |  |             
|Term loans under mortgage agreements:                                           |  |             
|Variable rates:                                                                 |  |             
|Based on the London Interbank
          Offering Rate (LIBOR) plus            |  |             
|a margin with an average interest rate of 5.184% in 2005 and 3.439% in          |  |             
|2004 due in varying installments and maturities to 2015:(1),(2),(4)             |  | $           
|Fixed rate:                                                                     |  |             
|5.30% Due October 2013(3)                                                       |  |             
|5.32% Due August 2015(3)                                                        |  |             
|Reducing revolving facilities under bank mortgage agreements at LIBOR plus      |  |             
|a
          margin with an average interest rate of 5.04% in 2005 and 3.238% in |  |             
|2004(1),(4)                                                                     |  |             
|Unsecured debt:                                                                 |  |             
|7.625% Unsecured Senior Notes due December 2013                                 |  |             
|2.875% Unsecured Convertible Senior Notes due December 2024                     |  |             
|                                                                                |  |             
|Total                                                                           |  |             
|Less: Current portion of long-term debt:                                        |  |             
|Scheduled amortization payments of debt                                         |  |             
|                                                                                |  |             
|Long-term debt                                                                  |  | $           
|                                                                                |  |             

|(1) | The margins on the variable rate debt outstanding at December 31, 2005 ranged from 0.675% to 0.80%. Under our loan agreements, LIBOR can range from 30 days to one year.                                                                                                                                                                                     
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The margins on the variable rate debt outstanding at December 31, 2004 ranged from 0.80% to 1.375%. Under our loan agreements, LIBOR can range from 30 days to one year.                                                                                                                                                                                     
|(3) | During the fourth quarter of 2005, the interest rates (including margins) for two variable rate loans were fixed at 5.30% and 5.32% for five years.                                                                                                                                                                                                          
|(4) | As of December 31, 2005,
            OMI had various interest rate swaps that fix notional amounts aggregating $94,432,000 (not including $112,400,000
            scheduled to begin in 2006) of variable rate debt ranging from 2.90%
            to 4.32% (excluding margins) with maturity dates of the swaps ranging
    from October 2008 to July 2009.
|   
|    | As of December 31, 2004,
        OMI had various interest rate swaps that fix notional amounts aggregating $129,808,000 (not including $62,400,000
        that began in February 2006) of variable rate debt ranging from 2.90%
        to 4.86% (excluding margins) with maturity dates of the swaps ranging
        from October 2005 to July 2009.       

As of December 31, 2005, 97.5% of the net book value or $1,448,930,000 of the Companys vessels (representing 40 vessels) was pledged as collateral under certain debt
agreements.

Reducing Revolving Credit Facilities

OMI has two reducing revolving credit facilities collateralized by vessels. On May 11, 2005, we amended and restated our $348,000,000 facility that had an original due date of July 27, 2006
and an available balance at that time of $154,394,000 with a 10 year $320,000,000 reducing revolving credit facility (the $320 Facility). The $320 Facility is collateralized by 12 vessels. Borrowings under the $320
Facility bear interest at LIBOR plus a margin of 0.675% . The scheduled semiannual reductions in May and November of $10,000,000 and the remaining balloon payment of $130,000,000 at maturity in May 2015 may be further reduced upon the
disposal of a vessel pledged as collateral. As of December 31, 2005, the undrawn amount under the $320 Facility was $160,000,000 and outstanding borrowings were $150,000,000.

73

---



Note 3Long-Term Debt and Credit Arrangements (continued)

OMI has another 10 year
reducing revolving facility dated November 2004, in the original amount of $375,000,000
($375 Facility). Borrowings under the $375 Facility bear
 interest at LIBOR plus a margin of 0.80%. During the fourth quarter of 2005,
as a result of the sale of the PECOS and SABINE (see Note 10) the available amount
under this facility was reduced by an aggregate amount of $65,320,000. At
December  31, 2005, the $375 Facility was collateralized by 11 vessels. The
scheduled semiannual reductions in May and November are $9,230,000 and the
remaining balloon payment at maturity in November 2014 will be $132,290,000.
As of December 31,  2005, the available and undrawn amount under the $375
Facility was $289,200,000.

Commitment fees on undrawn amounts under the $320 Facility and $375 Facility are based on 27 and 40 basis points, respectively. Commitment fee expense was $2,347,000 in 2005,
$2,291,000 in 2004 and $765,000 in 2003.

7.625% Unsecured Senior Notes Due 2013

On November 26, 2003, we issued $200,000,000 of 7.625% Senior Notes (the Notes) due December 2013, with allowances for optional redemptions on or after December 1, 2008. The
Notes accrue interest at the rate of 7.625% per year, payable semiannually in arrears on June 1 and December 1. The Notes are general unsecured, senior obligations of the Company. The Notes are guaranteed fully and unconditionally as well as jointly
and severally by substantially all of the Companys current and future subsidiaries. Any subsidiaries of the Company, other than the subsidiary guarantors, are minor within the meaning of Rule 3-10 of Regulation S-X under the Securities Act.
The Company has no independent assets or operations within the meaning of Rule 3-10 of Regulation S-X under the Securities Act. The Senior Notes are subject to certain covenants that among other things, limit the type and amount of additional
indebtedness that may be incurred by the Company and the restricted subsidiaries and impose certain limitations on sales or transfers of assets and certain payments, the ability of the Company to enter into sale and leaseback transactions and
certain mergers, consolidations and purchases of assets.

2.875% Convertible Notes Due 2024

On December 7, 2004, we issued $250,000,000 of convertible notes due December 2024. The notes are senior unsecured obligations of OMI and bear interest at the rate of 2.875% per annum.
Interest on the notes is payable semiannually on June 1 and December 1.

During the year ended December 31, 2005, the Company repurchased an aggregate of $105,244,000 of its Convertible Notes at a discount and recorded a gain of $4,672,000 for the year ended
December 31, 2005, which is included in Other Income (Expense) on the Consolidated Statements of Income.

The conversion ratio and conversion price on the 2.875% Convertible Notes are adjusted upon the payment of cash dividends in excess of $0.28 per share per annum. As of October 2005, the
Company had paid dividends aggregating $0.31 per share for the year. As a result the conversion ratio increased to 32.5895 shares for each $1,000 bond, and the conversion price decreased to $30.68 per share, which is 69.0% above our
stock price of $18.15 on December 31, 2005.

The 2.875% convertible notes may be converted prior to maturity under the following circumstances:

- during any fiscal quarter commencing after December 31, 2004, if the closing sale price of our common stock for at least 20 trading days in the 30 trading-day period ending on the last
  trading day of the proceeding fiscal quarter exceeds 130% of the conversion price on that 30th trading day; or
- subject to certain exceptions, during the five business-day period after any five consecutive trading-day period in which the trading price per note for each day of that period was less than
  98% of the product of the closing sale price of our common stock and the conversion rate then in effect; or
- if we have called the note for redemption; or
- upon the occurrence of certain specified corporate transactions.

74

---



Note 3Long-Term Debt and Credit Arrangements (continued)

Upon conversion, we will deliver cash equal to the lesser of the aggregate principal amount of notes to be converted and our conversion obligation, and at our option, cash or common shares in
respect to the remainder, if any (Excess Value). Upon certain corporate transactions (e.g. change of control), the Company may issue additional shares based on the date the corporate transaction becomes effective and the stock
price.

On or after December 1, 2011, OMI may redeem the notes, in whole or in part, for cash at a redemption price equal to the principal amount of the notes plus accrued, unpaid interest and
liquidated damages, if any.

On December 1, 2011, December 1, 2014 and December 1, 2019, the holders may require OMI to repurchase all or a portion of the notes for cash at a repurchase price equal to 100% of the principal
amount of the notes, puttable upon a designated event, plus accrued, unpaid interest and liquidated damages, if any.

Restrictive Covenants

All of our loan agreements contain restrictive covenants as to cash, maintenance of specified financial ratios, collateral values and other non-financial restrictions. As of December 31, 2005
we were in compliance with all covenants.

Maturities

Aggregate maturities of debt during the next five years from December 31, 2005 are as follows:

|2006       |  | $ | 34,491 
|---------- |  | - | -------
|2007       |  |   | 33,770 
|2008       |  |   | 40,953 
|2009       |  |   | 36,461 
|2010       |  |   | 27,550 
|Thereafter |  |   | 722,642
|           |  |   |        
|Total      |  | $ | 895,867
|           |  |   |        

Interest Paid

During the years ended December 31, 2005, 2004 and 2003, cash paid for interest, net of amounts capitalized (see Note 1), totaled approximately $37,112,000, $27,993,000 and
$22,396,000, respectively.

Note 4Derivatives and Hedging Activities

All derivatives are recognized on the Companys Consolidated Balance Sheets at their fair values. For accounting hedges, on the date the derivative contract is entered into the Company
designates the derivative as (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge) or (2) a hedge of a forecasted transaction (cash flow hedge). The Company
has entered into interest rate swaps agreements, which have been designated as accounting hedges. The Company has also entered into forward freight agreements (FFAs). We use FFAs as economic hedges, but we have not designated FFAs as
hedges for accounting purposes, and, as such, changes in the fair value of FFAs are recorded to the Companys Consolidated Statements of Income each reporting period. FFAs involve contracts to provide theoretical voyages at fixed rates. The FFA
contracts settle based on the monthly Baltic Tanker Index (BITR). The BITR average rates received in the spot market are by cargo type and trade route for crude oil and refined petroleum products. The duration of a contract can be one
month, quarterly or up to two years with open positions settling on a monthly basis. We have taken short positions in FFA contracts as a hedge to reduce a portion of the Companys exposure to the spot charter market by creating synthetic time
charters. We have also from time to time taken long positions, which have increased our exposure to the spot market.

75

---



OMI CORPORATION AND SUBSIDIARIESNOTES
TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(All tabular amounts are in thousands, except per share data)

Note 4Derivatives and Hedging Activities (continued)

OMI has interest rate swaps to manage interest costs and the risk associated with increasing LIBOR interest rates. As of December 31, 2005, we had various interest rate swaps aggregating
notional amounts of $206,832,000 (which includes notional amounts aggregating $112,400,000 for two interest rate swaps that commence in 2006) with related loans they are designated to hedge on various debt tranches within a range of 2.9% to
4.84% expiring from October 2008 to November 2014. The Company pays fixed-rate interest amounts and receives floating-rate interest amounts based on three month LIBOR settings (for a term equal to the swaps reset periods). As of December 31,
2005, the Company has recorded an asset of $3,045,000 related to the fair market value of these hedges and a corresponding unrealized gain of $3,045,000 to Other comprehensive income (loss).

|The changes in the notional amounts were as follows: |  |              |         |   |      |   |          |  
|---------------------------------------------------- |  | ------------ | ------- | - | ---- | - | -------- | -
|                                                     |  | December 31, |        
|                                                     |  |              |         |  
|                                                     |  | 2005         |         |   | 2004 |  
|                                                     |  |              |         |   |      |   |          |  
|Notional principal amount, beginning of the year     |  | $            | 192,208 |   |      | $ | 275,390  |  
|Increase of notional amounts                         |  |              | 50,000  |   |      |   | 112,377  |  
|Reductions of notional amounts                       |  |              | (35,376 | ) |      |   | (195,559 | )
|                                                     |  |              |         |   |      |   |          |  
|Notional principal amount, end of year               |  | $            | 206,832 |   |      | $ | 192,208  |  
|                                                     |  |              |         |   |      |   |          |  

Interest expense pertaining to interest-rate swaps for the years ended December 31, 2005, 2004, and 2003 was $252,597, $3,363,000 and $4,816,000, respectively. The amount that is
expected to be reclassified from Other comprehensive income to the Consolidated Statement of Income, as a reduction to interest expense, within the next twelve months has been estimated to be approximately $1,745,000.

OMI entered into an additional interest rate swap in January 2006, with a notional amount of $50,000,000. The swap commences November 2006 and expires November 2014, and has an interest
rate of 4.84%. The Company will pay fixed-rate interest amounts and receives floating-rate interest amounts based on three month LIBOR settings.

At December 31, 2005, the FFAs had an aggregate notional value of $3,051,000, which is an aggregate of both long and short positions that extend to March 2006. The fair value of
$227,000 at December 31, 2005 of our forward freight agreements is the estimated net amount that the Company would receive to terminate the agreements at the reporting date.

The Company is exposed to credit loss in the event of non-performance by the counter parties to the interest rate swap agreements and forward freight agreements; however, the Company does not
anticipate non-performance by any of the counter parties.

76

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note 5Fair Value of Financial Instruments

The estimated fair values of the Companys financial instruments are as follows:

|                                     |  | December 31,
|------------------------------------ |  | ------------
|                                     |  |             
|                                     |  | 2005        
|                                     |  |             
|                                     |  | Carrying    
|                                     |  | Value       
|                                     |  |             
|Cash and cash equivalents(1)         |  | $           
|                                    
|Derivatives:                         |  |             
|Liability for interest rate swaps(2) |  |             
|Asset for interest rate swaps(2)     |  |             
|Asset for FFAs(3)                    |  |             
|Liability for FFAs(3)                |  |             
|                                    
|Total debt(4)                        |  |             

---

|(1) | Cash and cash equivalentsThe
    carrying amount approximates fair value.                                                                                                                                                                                                                                                                          
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Interest rate swapsThe
            fair value of interest-rate swaps (used for hedging purposes) is
            the estimated amount the Company would pay or receive to terminate
            swap agreements at the reporting date, taking into account current
    interest rates and the current credit-worthiness of the swap counter-parties.
|(3) | FFAsThe fair value
            of FFAs is the estimated amount the Company would receive or pay
    to terminate FFA contracts based on broker values.                                                                                                                                                                                             
|(4) | Debt obligationsThe
            fair value of long-term debt is estimated based on current rates
            offered to the Company for similar debt of the same remaining maturities.
            The carrying value approximates the fair market value for the variable
    rate loans.                                                          
|   

Note 6Operating Lease Expense

Total operating lease expense was $73,788,000, $60,914,000 and $19,809,000 for the years ended December 31, 2005, 2004 and 2003, respectively. Leases are for vessels (charter hire expense) and office
space.

The future minimum lease payments required by year, under operating leases (not including options) subsequent to December 31, 2005 are as follows:

|2006       | $ | 40,078 
|---------- | - | -------
|2007       |   | 31,751 
|2008       |   | 31,965 
|2009       |   | 31,911 
|2010       |   | 26,657 
|Thereafter |   | 42,270 
|           |   |        
|Total      | $ | 204,632
|           |   |        

In April 2005, we signed a new lease for existing and additional office space at our corporate office in Stamford, Connecticut. The lease was extended from December 2006 to February
2017.

In June and September 2005, OMI chartered-in two new Suezmax vessels, the CAPE BASTIA and the CAPE BONNY, each for a seven year period. OMI has options to extend the term of the time charters
and/or to acquire the vessels.

OMI time charters-in two vessels, the OLIVER JACOB and the MAX JACOB, resulting from two sale leaseback transactions in June 2002 and December 2001, respectively. The OLIVER JACOB has been time
chartered back for a period of eight years and is being accounted for as an operating lease. The gain on the sale of approximately $4,700,000 is being amortized over the charter period, which expires in June 2010.

77

---



Note 6Operating Lease Expense (continued)

The MAX JACOB has been time chartered back for a period of five years, not including options, and is being accounted for as an operating lease. The gain on the sale of approximately
$4,900,000 is being amortized over the five year lease term, which expires in December 2006. As part of the charter hire agreement, the Company was required to deposit $5,000,000 in escrow, which is being repaid ratably over the charter
period. As of December 31, 2005, the balance in escrow was $1,000,000 and was included in Current restricted cash.

Time charters to third parties of the Companys owned vessels are accounted for as operating leases. Minimum future revenues (not including profit sharing or charterers options and
excluding broker commissions) to be received subsequent to December 31, 2005 on time charters are as follows:

|2006       | $ | 180,388
|---------- | - | -------
|2007       |   | 161,623
|2008       |   | 112,300
|2009       |   | 61,291 
|2010       |   | 32,872 
|Thereafter |   | 29,905 
|           |   |        
|Total      | $ | 578,379
|           |   |        

If certain vessels with time charter contracts are sold, it could reduce our future time charter revenue and any gain on the disposal of the vessels because of contracted obligations.

In January 2006, OMI entered into a three year time charter for a handymax product carrier, the PLATTE, currently under construction and scheduled to be delivered in the second quarter of 2006.
The vessel will be chartered at a fixed rate, and will add approximately $23,620,000 to the Companys contracted time charter revenue over the three year period following delivery of the vessel.

In February 2006, OMI entered into three year time charters for two handysize product carriers, the KANSAS and the REPUBLICAN, scheduled to be delivered in 2006. The time charters are expected
to begin in the second quarter. The vessels are both chartered at a fixed rate plus a 50% profit sharing arrangement above the fixed rate, and will add approximately $43,260,000 (not including profit sharing) to the Companys contracted
time charter revenue over the three years.

In March 2006, OMI entered into a three year time charter for a Suezmax vessel, the CAPE BASTIA, to begin April 2006. The vessel will be chartered at a fixed rate, and will add approximately
$40,519,000 to the Companys contracted time charter revenue over the three years.

Note 8Impairment Loss on Vessels and Reduction of Depreciable Lives

The Company evaluates the carrying value of its vessels against the projected undiscounted cash flows as required under the provisions of SFAS 144. Based on the results of our evaluation, the
Company recorded an impairment loss of $2,770,000 to the Consolidated Statements
of Income for the year ended December 31, 2003 relating to two single hull Panamax
vessels. These vessels were considered to be impaired as of December 31, 2003,
as their net book values were greater than the undiscounted projected cash flow.
During 2004, both vessels were sold (see Note 10).

In December 2003, during the Companys periodic evaluation for vessel impairment, it was determined that two single hull handysize product carriers were impacted by the recent
International Maritime Organization regulation issued that included new phase-out dates for single hull vessels. There was no adjustment to the 2003 financial statements since the vessels were not impaired; however, the new regulation resulted in
reducing the depreciable lives of the two vessels. The phase-out dates would have increased the annual depreciation expense beginning in 2004 by $686,000 until June 2007 and $95,000 from June 2007 to August 2015. The single hull vessels were
sold in 2004 (see Note 10).

78

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note
  9Acquisitions of Vessels

The following table summarizes the acquisitions of vessels delivered during the years ended December 31, 2005 and December 31, 2004:

|2005:    |  |               |  |       |  |           |  |             |         | 
|-------- |  | ------------- |  | ----- |  | --------- |  | ----------- | ------- | 
|         |  | Date          |  | Year  |  | Type of   |  | Capitalized |        
|Vessel   |  | Delivered     |  | Built |  | Vessel    |  | Cost(1)     |        
|         |  |               |  |       |  |           |  |             |         | 
|LAUREN   |  | January 2005  |  | 2005  |  | Handymax  |  | $           | 40,223  | 
|BRAZOS   |  | March 2005    |  | 2005  |  | Handymax  |  |             | 40,390  | 
|FOX      |  | May 2005      |  | 2005  |  | Handysize |  |             | 30,066  | 
|TEVERE   |  | July 2005     |  | 2005  |  | Handysize |  |             | 29,965  | 
|THAMES   |  | July 2005     |  | 2005  |  | Handymax  |  |             | 37,698  | 
|         |  |               |  |       |  |           |  |             |         | 
|Total    |  |               |  |       |  |           |  | $           | 178,342 | 
|         |  |               |  |       |  |           |  |             |         | 
|        
|2004:    |  |               |  |       |  |           |  |             |         | 
|         |  | Date          |  | Year  |  | Type of   |  | Capitalized |        
|Vessel   |  | Delivered     |  | Built |  | Vessel    |  | Cost(1)     |        
|         |  |               |  |       |  |           |  |             |         | 
|LOIRE    |  | February 2004 |  | 2004  |  | Handysize |  | $           | 29,256  | 
|GARONNE  |  | April 2004    |  | 2004  |  | Handysize |  |             | 29,226  | 
|SAONE    |  | July 2004     |  | 2004  |  | Handysize |  |             | 29,484  | 
|HORIZON  |  | July 2004     |  | 2004  |  | Handymax  |  |             | 39,469  | 
|ADAIR    |  | July 2004     |  | 2003  |  | Suezmax   |  |             | 70,632  | 
|ANGELICA |  | July 2004     |  | 2004  |  | Suezmax   |  |             | 70,681  | 
|JANET    |  | July 2004     |  | 2004  |  | Suezmax   |  |             | 70,926  | 
|ARLENE   |  | August 2004   |  | 2003  |  | Suezmax   |  |             | 70,980  | 
|INGBORG  |  | August 2004   |  | 2003  |  | Suezmax   |  |             | 71,529  | 
|JEANETTE |  | October 2004  |  | 2004  |  | Handymax  |  |             | 39,999  | 
|GANGES   |  | October 2004  |  | 2004  |  | Handysize |  |             | 29,501  | 
|RUBY     |  | December 2004 |  | 2004  |  | Handysize |  |             | 37,066  | 
|         |  |               |  |       |  |           |  |             |         | 
|Total    |  |               |  |       |  |           |  | $           | 588,749 | 
|         |  |               |  |       |  |           |  |             |         | 

---

In 2005, we funded all of our capital expenditures with operating cash flow and bank financing (see Note 3).

In June 2004, OMI entered into an agreement for the acquisition of four double hull Suezmax vessels (two built in 2003 and two in 2004), one product carrier built in July 2004 and seven product
carriers under construction (of which one was delivered in October 2004, one in January 2005 and one in March 2005) at the same shipyard from Athenian Sea Carriers, Ltd. (Athenian). The total contract cost was $585,000,000
($520,650,000, excluding the vessel not delivered, explained in the next paragraph). As of December 31, 2005, there were four product carriers that were under construction that were scheduled to be delivered in 2006.

The Company terminated an agreement to acquire one of the Suezmax vessels it was to acquire in August 2004 from Athenian Sea Carriers Ltd., as delivery was not tendered in accordance with the
requirements of the agreement. In September 2005, the dispute relating to the failed delivery of the Suezmax tanker was settled. The Companys deposit of $6,435,000
(previously classified as restricted cash and included in the Consolidated Balance
Sheets in Other assets and deferred charges) was returned to OMI, together with
interest. No other payments were made by either party. There was no material
impact on the Company resulting from the settlement.

79

---



Note 10Dispositions Of Vessels

2005 Dispositions

In November 2005, we sold two 1998-built Suezmax vessels, the PECOS and the SABINE, for a combined sales price of approximately $139,599,000, net of commissions. The sale of the vessels
resulted in a gain of approximately $55,021,000, which was recorded to the Consolidated Statements of Income in the fourth quarter of 2005.

In January 2005, we sold our last two non-double hull handysize crude oil carriers, the TANDJUNG AYU and the BANDAR AYU, for an aggregate sales price of approximately $36,752,000, net of
commissions. The sale of the vessels resulted in a gain of approximately $2,913,000, which was recorded to the Consolidated Statements of Income in the first quarter of 2005.

In May, June, August and December 2004, we disposed of three single hull Panamax vessels and two single hull product carriers built between 1981 and 1991 for sales prices aggregating
approximately $39,124,000, net of commissions. The disposal of the vessels resulted in a net loss on sale of approximately $1,726,000, which was recorded to the Consolidated Statements of Income for the year ended December 31,
2004.

In November 2004, our 1986 built single hull Ultra Large Crude Carrier (ULCC) with a net book value of $16,514,000 was disposed of. OMI agreed to sell the ULCC vessel for
conversion of the vessel for an offshore project for approximately $20,047,000. The disposal of the vessel resulted in a gain on sale of approximately $3,452,000, which was recorded to the Consolidated Statements of Income for the year ended
December 31, 2004.

During March, September and November 2003, we disposed of five single hull product carriers built between 1984 and 1990 for sales prices aggregating approximately $33,048,000, net of
commissions. The disposal of the vessels resulted in a net loss on sale of approximately $14,358,000, which was recorded to the Consolidated Statements of Income for the year ended December 31, 2003.

The loss on investment of $3,098,000 for the year ended December 31, 2004 resulted from expenses related to the termination of an attempt to acquire Stelmar Shipping in June 2004. During
the second quarter of 2004, OMI had withdrawn its previously announced offer to merge with Stelmar following Stelmars rejection of its merger proposal and its decision to refrain from entering into discussions with OMI.

The Company organizes its business principally into two operating segments. These segments and their respective operations are as follows:

Crude Oil Tanker Fleetincludes vessels that normally carry crude oil or low grade oil products. The fleet in all years presented include four sizes
of vessels; Suezmax, ULCC, Panamax and handysize.

Clean Fleetincludes vessels that normally carry refined petroleum products such as gasoline, naphtha and kerosene. The fleet in all years presented
include three sizes of vessels, Panamax, handymax and handysize vessels.

80

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note 12Financial Information Relating to Segments (continued)

The following is a summary of the operations by major operating segments for each of the three years in the period ended December 31, 2005:

|                                                            |  | For the Years Ended December 31, |          
|----------------------------------------------------------- |  | -------------------------------- | ---------
|                                                            |  |                                  |          
|                                                            |  | 2005                             |          
|                                                            |  |                                  |          
|Revenues:                                                   |  |                                  |          
|Crude Oil Fleet                                             |  | $                                | 410,589  
|Clean Fleet                                                 |  |                                  | 240,259  
|                                                            |  |                                  |          
|Subtotal                                                    |  |                                  | 650,848  
|Other                                                       |  |                                  | 1,519    
|                                                            |  |                                  |          
|Total                                                       |  | $                                | 652,367  
|                                                            |  |                                  |          
|Time Charter Equivalent Revenues:(1)                        |  |                                  |          
|Crude Oil Fleet                                             |  | $                                | 306,456  
|Clean Fleet                                                 |  |                                  | 207,649  
|                                                            |  |                                  |          
|Total                                                       |  | $                                | 514,105  
|                                                            |  |                                  |          
|Operating Income:(2)                                        |  |                                  |          
|Crude Oil Fleet                                             |  | $                                | 218,934  
|Clean Fleet                                                 |  |                                  | 108,994  
|                                                            |  |                                  |          
|Subtotal                                                    |  |                                  | 327,928  
|General and administrative expense not allocated to vessels |  |                                  | (23,036  
|Other                                                       |  |                                  | 6,718    
|                                                            |  |                                  |          
|Total                                                       |  | $                                | 311,610  
|                                                            |  |                                  |          
|Identifiable Assets-At End of Year:                         |  |                                  |          
|Crude Oil Fleet                                             |  | $                                | 676,186  
|Clean Fleet                                                 |  |                                  | 981,068  
|                                                            |  |                                  |          
|Subtotal                                                    |  |                                  | 1,657,254
|Cash and cash equivalents                                   |  |                                  | 42,297   
|Other                                                       |  |                                  | 28,492   
|                                                            |  |                                  |          
|Total                                                       |  | $                                | 1,728,043
|                                                            |  |                                  |          
|Capital Expenditures:                                       |  |                                  |          
|Crude Oil Fleet                                             |  | $                                | 205      
|Clean Fleet                                                 |  |                                  | 146,592  
|Other                                                       |  |                                  | 1,800    
|                                                            |  |                                  |          
|Total                                                       |  | $                                | 148,597  
|                                                            |  |                                  |          
|Depreciation and Amortization:                              |  |                                  |          
|Crude Oil Fleet                                             |  | $                                | 30,841   
|Clean Fleet                                                 |  |                                  | 37,024   
|Other                                                       |  |                                  | 534      
|                                                            |  |                                  |          
|Total                                                       |  | $                                | 68,399   
|                                                            |  |                                  |          
|Interest Expense:                                           |  |                                  |          
|Crude Oil Fleet                                             |  | $                                | 7,476    
|Clean Fleet                                                 |  |                                  | 10,057   
|                                                            |  |                                  |          
|Subtotal                                                    |  |                                  | 17,533   
|Other(3)                                                    |  |                                  | 26,206   
|                                                            |  |                                  |          
|Total                                                       |  | $                                | 43,739   
|                                                            |  |                                  |          

81

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note 12Financial Information Relating to Segments (continued)

|(1) | The Company uses time charter equivalent revenue, which is voyage revenue less voyage expenses, as a measure of analyzing fluctuations in voyage revenue between financial periods and as a method of equating revenue
  generated from a voyage charter to time charter (see Note 1).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following is a reconciliation of TCE revenue for the year ended December 31, 2005:

|                                                                                       | Crude Oil                        |         | Clean |   |         |              |  |  
|-------------------------------------------------------------------------------------- | -------------------------------- | ------- | ----- | - | ------- | ------------ |  | -
|                                                                                       | Fleet                            |         | Fleet |   |         | Consolidated | 
|                                                                                       |                                  |         |       |   |         |              |  |  
|Voyage and TC Revenues                                                                 | $                                | 410,589 |       | $ | 240,259 |              |  | $
|Voyage Expenses                                                                        |                                  | 104,133 |       |   | 32,610  |              |  |  
|                                                                                       |                                  |         |       |   |         |              |  |  
|TCE Revenue                                                                            | $                                | 306,456 |       | $ | 207,649 |              |  | $
|                                                                                       |                                  |         |       |   |         |              |  |  
|                                                                                      
|The following is a reconciliation of TCE revenue for the year ended December 31, 2004: |                                  |         |       |   |         |              |  |  
|                                                                                       | Crude Oil                        |         | Clean |   |         |              |  |  
|                                                                                       | Fleet                            |         | Fleet |   |         | Consolidated | 
|                                                                                       |                                  |         |       |   |         |              |  |  
|Voyage and TC Revenues                                                                 | $                                | 427,336 |       | $ | 136,413 |              |  | $
|Voyage Expenses                                                                        |                                  | 74,978  |       |   | 5,205   |              |  |  
|                                                                                       |                                  |         |       |   |         |              |  |  
|TCE Revenue                                                                            | $                                | 352,358 |       | $ | 131,208 |              |  | $
|                                                                                       |                                  |         |       |   |         |              |  |  
|                                                                                      
|The following is a reconciliation of TCE revenue for the year ended December 31, 2003: |                                  |         |       |   |         |              |  |  
|                                                                                       | Crude Oil                        |         | Clean |   |         |              |  |  
|                                                                                       | Fleet                            |         | Fleet |   |         | Consolidated | 
|                                                                                       |                                  |         |       |   |         |              |  |  
|Voyage and TC Revenues                                                                 | $                                | 189,254 |       | $ | 133,674 |              |  | $
|Voyage Expenses                                                                        |                                  | 43,789  |       |   | 9,967   |              |  |  
|                                                                                       |                                  |         |       |   |         |              |  |  
|TCE Revenue                                                                            | $                                | 145,465 |       | $ | 123,707 |              |  | $
|                                                                                       |                                  |         |       |   |         |              |  |  
|                                                                                      
|(2)      Operating income includes gain (loss) on disposal of vesselsnet (see below). |                                  |         |       |   |         |              |  |  
|                                                                                      
|                                                                                       | For the Years Ended December 31, |        
|                                                                                       |                                  |         |      
|                                                                                       | 2005                             |         | 2004  |   |         | 2003         | 
|                                                                                       |                                  |         |       |   |         |              |  |  
|Gain (loss) on disposal of vesselsnet:                                                |                                  |         |       |   |         |              |  |  
|Crude Oil Fleet                                                                        | $                                | 57,965  |       | $ | 4,950   |              |  | $
|Clean Fleet                                                                            |                                  |        |       |   | (3,224  | )            |  |  
|                                                                                       |                                  |         |       |   |         |              |  |  
|Total                                                                                  | $                                | 57,965  |       | $ | 1,726   |              |  | $
|                                                                                       |                                  |         |       |   |         |              |  |  

(3)      Other interest expense represents interest on unsecured debt that is not allocated to vessels.

Revenue from major customers is defined as 10% or more of consolidated revenue. No customer provided 10% or more of consolidated revenue in 2005. In 2004, the major customers were
Chartering and Shipping S.A.(CSSA), an affiliate of Total, with revenue of $67,327,000 and Chevron Transport Corp. with revenue of $53,966,000. In 2003, the major customers were CSSA with revenue of $34,305,000 and El Paso
Corporation with revenue of $43,254,000.

Note 13Savings Plan

The Company has a 401(k) Plan (the Plan) which is available to full-time employees who meet the Plans eligibility requirements. This Plan is a defined contribution plan,
which permits employees to make contributions up to 15% of their annual salaries (up to statutory limits) with the Company matching 100% of the first 6% in 2005, 2004 and 2003. The Company may elect to make additional contributions to the Plan at
the discretion of the Companys Board of Directors. The Company also has an Executive Savings Plan for certain key employees.

The following is a summary of Company contributions to these Plans primarily recorded to General and administrative expense on the Consolidated Statements of Income for each of the three years
in the period ended December 31, 2005:

|                       |  | 2005 |       | 2004 |   | 2003
|---------------------- |  | ---- | ----- | ---- | - | ----
|                       |  |      |       |      |   |     
|401 (k) Plan           |  | $    | 598   |      | $ | 313 
|Executive Savings Plan |  |      | 838   |      |   | 305 
|                       |  |      |       |      |   |     
|Total                  |  | $    | 1,436 |      | $ | 618 
|                       |  |      |       |      |   |     

82

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note
  14Stock Option Plan

In 2003, the stockholders approved the 2003 Stock Incentive Plan, which replaced the 1998 Stock Incentive Plan. This plan provides for the granting of options and restricted stock to officers,
employees, consultants and directors for purchase of the Companys common shares. The total number of shares that may be awarded under the Plan are 4,000,000 of which 1,400,000 shares of stock may be awarded as restricted stock (see Note
16).

The stockholders approved the 1998 Stock Option Plan (The 1998 Plan) on May 19, 1998. The Plan provided for the granting of options to officers, employees, consultants and directors
for purchase of the Companys common shares. The total number of shares that may be awarded under the 1998 Plan were 2,500,000 not including the replacement options granted in June 1998 to replace those that were previously granted by the
Companys former parent.

The following table summarizes activity under the stock option plan and the weighted average exercise prices for the three years ended December 31, 2005 (in whole numbers, except for Exercise
Prices):

|                              |  | Number of  |   |  | Weighted Average
|----------------------------- |  | ---------- | - |  | ----------------
|                              |  | Options    |   |  | Exercise Price  
|                              |  |            |   |  |                 
|Outstanding, January 1, 2003  |  | 2,046,235  |   |  | $4.59           
|Granted                       |  |           |   |  |                
|Exercised                     |  | (1,381,168 | ) |  | 4.34            
|Forfeited                     |  |           |   |  |                
|Expired                       |  |           |   |  |                
|                              |  |            |   |  |                 
|Outstanding December 31, 2003 |  | 665,067    |   |  | 5.11            
|Granted                       |  |           |   |  |                
|Exercised                     |  | (480,067   | ) |  | 5.09            
|Forfeited                     |  |           |   |  |                
|Expired                       |  |           |   |  |                
|                              |  |            |   |  |                 
|Outstanding December 31, 2004 |  | 185,000    |   |  | 5.16            
|Granted                       |  |           |   |  |                
|Exercised                     |  | (106,000   | ) |  | 5.17            
|Forfeited                     |  |           |   |  |                
|Expired                       |  |           |   |  |                
|                              |  |            |   |  |                 
|Outstanding December 31, 2005 |  | 79,000     |   |  | $5.21           
|                              |  |            |   |  |                 

As of December 31, 2004, there were 184,167 options exercisable at a weighted average price of $5.16. As of December 31, 2003, there were 659,650 options exercisable at a weighted average
price of $5.05. Proceeds received from the exercise of the options are credited to the capital accounts.

OMI has employment agreements with all of its senior executive officers and certain other employees, which provide for an annual base salary and a performance incentive bonus. The base salary
is the prior years base salary plus any raise granted by the OMI Board of Directors (Board). Under the contracts, bonuses are paid at the discretion of the OMI Board. Each of these agreements also provides that if the
executives employment (i) is terminated without cause (as defined in his or her employment agreement), (ii) the executive voluntarily terminates his or her employment within 90 days of a relocation (following a Change in Control) or reduction
in compensation or responsibilities, or (iii) the executive is disabled (as defined in his or her employment agreement), such executive will continue to receive base salary and other benefits for a period of two years. For five senior executives,
following a Change in Control (as defined in his or her employment agreement), the executives future bonuses will be equal to 150% of the executives annual salary. If an executives employment is terminated by the Company (other
than for cause or becoming

83

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note
  15Employment Agreements (continued)

disabled) within two years after a Change in Control, OMI is required to pay the executive a bonus equal to his or her bonuses paid during the previous twelve months preceding the Change in Control (for
executives other than the five senior executives) and 150% of the then effective annual salary of the executive for the five senior executives (the termination bonus). In addition, in the event of a Change in Control (as defined in the
employment agreement) and if any such executives employment is terminated by OMI without cause (other than for reasons of disability) or by the employee as described in clause (ii) above, within two years before or after such a Change in
Control, OMI will pay such executive an amount equal to three times the sum of his or her then current base salary and his or her termination bonus, reduced, in the case of a termination occurring prior to such a change in control by any severance
theretofore paid to the executive under his or her employment agreement.

Note 16Stockholders Equity

Common Stock

On June 29, 2004, OMI issued 12,204,000 shares of common stock pursuant to underwriting agreements for the offer and sale of common stock of the Company under the Companys shelf
Registration Statement on Form S-3, filed on May 13, 2003.

The net proceeds of the 12,204,000 shares sold by OMI after the related underwriting discount and offering expenses were approximately $137,695,000. All of the net proceeds were used to
fund acquisitions (see Note 9).

The Company has granted an aggregate of 2,329,084 shares of restricted stock to certain of its employees, executive officers and directors under the 2001 Restricted Stock Plan and the 2003
Stock Incentive Plan, and 130,391 shares have been forfeited (20,000 in 2005 and 110,391 in 2004). The market value at issuance of the 1,943,119 remaining restricted shares was approximately $21,613,000. Restricted stock awards granted in July
2001, April 2002, September 2003, May 2004, June 2004, December 2004, February 2005 and May 2005 were recorded as unearned compensation as a separate component of stockholders equity. The Company is amortizing unearned compensation over the
applicable vesting periods. During the years ended December 31, 2005, 2004 and 2003, the Company recognized $4,092,000, $2,212,000 and $1,290,000, respectively, of compensation expense related to restricted stock.

In February and May 2005, OMI awarded and issued 622,847 shares of restricted stock to employees, executive officers and directors for a total value at the respective dates of grant of
approximately $11,830,000. Restrictions lapse for one third of the shares at the end of year three, the next third at the end of year four, and the remaining third of the shares at the end of year five. Upon the issuance of the restricted stock,
unearned compensation equivalent to the market value at the date of grant was charged to Stockholders Equity and subsequently is being amortized to expense over the appropriate restriction period.

During 2005, the Company repurchased 15,035,000 common shares for an aggregate of $269,933,000 under share repurchase programs approved by the Board of Directors. The Company also received
20,000 restricted shares, which were forfeited in 2005. The Company retires all treasury shares and all common stock repurchases and forfeitures immediately.

On November 19, 1998, the Board of Directors approved the adoption of a stockholder rights plan in which it declared a dividend distribution of one Right for each outstanding share of common
stock, $0.50 par value (the Common Stock) of the Company, to stockholders of record at the close of business on December 1, 1998. Subsequent issuances of common stock have been made with Rights attached. Each Right entitles the
record holder to purchase from the

84

---



OMI CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)(All tabular amounts are in thousands, except per share data)

Note
        16Stockholders Equity
  (continued)

Company one hundred-thousandth of a share of the Companys Series A Participating Preferred Stock, $1.00 par value at a price of $25.00 (the Purchase Price), subject to adjustment in certain
circumstances.

Initially, the Rights attach to the certificates representing outstanding shares of Common Stock, and no Rights Certificates will be distributed. In general the Rights will separate from the
Common Stock and a Distribution Date will occur only if a public announcement has been made that a person or group of affiliated or associated persons (an Acquiring Person) has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of Common Stock, or after the commencement of a tender offer or exchange offer if, upon consummation thereof, the person or group making such offer would be the beneficial owner of 15% or
more of the outstanding shares of Common Stock. Thereafter, under certain circumstances, each Right (other than any Rights that are or were beneficially owned by an Acquiring Person, which Rights will be void) could become exercisable to purchase at
the Purchase Price a number of shares of Common Stock (or, in certain circumstances, the common stock of a company into which the Company is merged or consolidated or to which the Company sells all or substantially all of its assets) having a market
value equal to two times the Purchase Price.

The determination to pay dividends is at the discretion of the Board of Directors. Payment of dividends is limited by the terms of certain agreements to which OMI and its subsidiaries are
party.

During 2005, the Board of Directors declared quarterly dividends aggregating $0.32 per share to shareholders of record at designated dates aggregating $25,572,000 (the fourth quarter
dividend of $5,704,000 was declared in November 2005, accrued in Dividends payable in the Consolidated Balance Sheets at December 31, 2005, and paid on January 11, 2006). On February 16, 2006, the Board of Directors of OMI approved an increase
in our quarterly dividend from $0.08 per share to $0.10 per share and declared the $0.10 per share dividend to shareholders of record on March 22, 2006 that will be paid on April 12, 2006.

During 2004, the Board of Directors declared quarterly dividends aggregating $0.22 per share to shareholders of record at designated dates aggregating $18,622,000 (the fourth quarter
dividend of $5,994,000 was declared in November 2004 and paid on January 11, 2005).

There were no dividends declared in 2003.

Note 17Commitments and Contingencies

Contracts Relating to the Purchase of Vessels

At December 31, 2005, we had commitments to take delivery of five product carriers, four handymax and one handysize. Three vessels have been delivered in the first quarter and two are expected
to be delivered in the second quarter of 2006 (see Note 9). The contract costs for the five vessels aggregated $183,320,000. As of December 31, 2005, $78,904,000 in payments had been made on these contracts, $23,807,000 of which was paid
during the year ended December 31, 2005.

As of December 31, 2005, future construction installment and delivery payments, before financing, if any, were as follows:

|2006 Payments            |  |   |        
|------------------------ |  | - | -------
|                         |  |   |        
|First Quarter(a)         |  | $ | 67,064 
|Second Quarter           |  |   | 37,352 
|                         |  |   |        
|Total Remaining Payments |  | $ | 104,416
|                         |  |   |        

Note (a): In January, February and March 2006, the WABASH, RHINE and KANSAS were delivered. OMI paid an aggregate of $62,875,000 upon delivery of the three vessels.

85

---



Note 17Commitments and Contingencies (continued)

In March 2006, we agreed to sell two Suezmax vessels, the HUDSON and the POTOMAC, for an aggregate net sales price of approximately $142,000,000. The POTOMAC will be time chartered back to
the Company. The vessels are expected to be delivered in the second quarter of 2006. The gain on the disposal of approximately $26,000,000 on the HUDSON will be recognized in the Consolidated Statements of Income upon delivery and the gain on
the sale of the POTOMAC of approximately $27,000,000 will be deferred and amortized over the lease term.

In February 2006, we agreed to sell our two 2003-built Panamax vessels, the OTTAWA and the TAMAR, for an aggregate net sales price of approximately $89,000,000. The vessels are being leased
back under a bareboat charter (we pay the vessel expenses) for approximately four years each. The average daily bareboat charter hire expense for each vessel is approximately $12,150 per day. The anticipated gain on the disposals aggregating
approximately $20,000,000 will be deferred and amortized over the four year lease term (which will be reduced the expense by the amortization of the gain on the sale of the vessels by approximately $6,613 per day). The vessels continue their
current time charters (out) that expire in April and July 2008, respectively.

Additionally, in February 2006, we agreed to sell our 1998-built Suezmax vessel, the SACRAMENTO, for an aggregate net sales price of approximately $68,000,000. The vessel is expected to be
delivered to the new owners in the second quarter of 2006. The anticipated gain on the disposal of approximately $27,000,000 will be recognized in the Consolidated Statements of Income upon delivery in the second quarter of 2006.

In September 2005, the Company reached an agreement with one of its insuring Protection and Indemnity Associations (P & I club) in respect of costs and expenses relating to the
investigation by the U.S. Government of certain insured ships that culminated in a plea agreement and fine paid for a violation by the crew of the vessel GUADALUPE of the Act to Prevent Pollution from Ships. In 2003, the Company expensed a fine it
paid to the U.S. Government in the amount of $4,200,000 and associated costs. In the fourth quarter of 2005, the Company received $1,000,000 from the settling insurer. We recognized a $620,000 gain (which reflects associated expenses of
$380,000) recorded in Vessel expense in the Consolidated Statements of Income, for the year ended December 31, 2005 from the insurance recovery.

A claim against another P & I club relating to the same incident was rejected by that insurer and the Company has commenced an arbitration seeking recovery on the claim. At December 31,
2005, no amounts have been recorded nor will any be recognized until the arbitration has been decided or settled.

OMI and certain subsidiaries are defendants in various actions arising from shipping operations. Such actions are covered by insurance or, in the opinion of management, the ultimate resolution
of these matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

Management accrues an estimate of expense for any matters that are considered probable of occurring based on the facts and circumstances.

86

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of OMI Corporation:

We have audited the accompanying consolidated balance sheets of OMI Corporation and subsidiaries (the Company) as of December 31, 2005 and 2004, and the related consolidated
statements of income, changes in stockholders equity and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of OMI Corporation and subsidiaries as of December 31, 2005 and 2004, and
the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Companys internal control over financial
reporting as of December 31, 2005, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 13, 2006 expressed an
unqualified opinion on managements assessment of the effectiveness of the Companys internal control over financial reporting and an unqualified opinion on the effectiveness of the Companys internal control over financial
reporting.

87

---



Item 8.SUPPLEMENTARY DATA

|                                      |  | Quarterly Results
      of Operations (Unaudited)
|------------------------------------- |  | -------------------------------------------------
|                                      |  | (In thousands, except
      per share amounts)   
|                                      |  |                                                  
|                                      |  | 2005 Quarter Ended                               
|                                      |  |                                                  
|                                      |  | March 31                                         
|                                      |  |                                                  
|Revenues                              |  | $                                                
|Operating
      Income(1)             |  |                                                  
|Net  income                           |  | $                                                
|                                      |  |                                                  
|Basic Earnings Per Common Share:(2)   |  |                                                  
|Net income                            |  | $                                                
|                                      |  |                                                  
|Weighted average number of shares of  |  |                                                  
|common stock outstandingbasic        |  |                                                  
|                                      |  |                                                  
|Diluted Earnings Per Common Share:(2) |  |                                                  
|Net income                            |  | $                                                
|                                      |  |                                                  
|Weighted average number of shares of  |  |                                                  
|common stockoutstandingdiluted       |  |                                                  
|                                      |  |                                                  

---

|(1) | Operating income includes
            Gains on disposal of vessels in 2005; aggregating $2,874,000 and $55,091,000 in the first and fourth quarters, respectively. Operating income includes Gains on disposal of vessels in
  2004; aggregating $360,000 and $2,426,000 in the second and fourth quarters, respectively, and Loss on disposal of vessels of $1,060,000
  in the third quarter.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Earnings per share are based on stand-alone quarters.                                                                                                                                                                                                                                                                                                                                          
|   

Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
                  FINANCIAL
DISCLOSURE

None.

Item 9A.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Companys Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 [the Exchange Act]), as of the end of the period covered by this Form 10-K, based on the evaluation of the Companys disclosure controls and procedures required
by paragraph (b) of Exchange Act Rules 13a-15 and 15d-15. Based on their evaluation as of the end of the period covered by this Form 10-K, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and
procedures were effective.

Changes in Internal Controls

There was no change in our internal control over financial reporting that occurred during the period covered by this Form 10-K that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

88

---



Managements Report on Internal Control over Financial Reporting

The management of OMI Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act
of 1934. The Companys internal control system was 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.

We assessed the effectiveness of the Companys internal control over financial reporting as of December 31, 2005. In making this assessment, we used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal ControlIntegrated Framework. Based on our assessment using those criteria, we concluded that our internal control over financial reporting was effective as
of December 31, 2005.

Our managements assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 has been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their report that appears on page 90 of this Form 10-K.

89

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of OMI Corporation:

We have audited managements assessment, included in the accompanying Managements Report on Internal Control over Financial Reporting, that OMI Corporation and subsidiaries (the
Company) maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to
express an opinion on managements assessment and an opinion on the effectiveness of the Companys internal control over financial reporting 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating managements
assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinions.

A companys internal control over financial reporting is a process designed by, or under the supervision of, the companys principal executive and principal financial officers, or
persons performing similar functions, 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. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 (3) 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 the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due
to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, managements assessment that the Company maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects,
based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2005, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended
December 31, 2005, of the Company and our report dated March 13, 2006 expressed an unqualified opinion on those financial statements.

90

---



Item 9B.OTHER INFORMATION

During the first quarter of 2006 (to March 10, 2006) we repurchased 230,000 shares of OMI common stock at an average price of $18.22 per share.

PART III

Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to General Instruction G(3) the information regarding directors and the Audit Committee called for by this item is hereby incorporated by reference from OMIs definitive Proxy
Statement for its 2006 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission; however certain information relating to Executive Officers of the Company appears in Item 4A of Part I of this Form 10K Annual
Report.

Item 11.EXECUTIVE COMPENSATION

Pursuant to General Instruction G(3) the information called for by this item is hereby incorporated by reference from OMIs definitive Proxy Statement for its 2006 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission.

Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND 
                    RELATED STOCKHOLDER MATTERS

Pursuant to General Instruction G(3) the information called for by this item is hereby incorporated by reference from OMIs definitive Proxy Statement for its 2006 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission.

Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to General Instruction G(3) the information called for by this item is hereby incorporated by reference from OMIs definitive Proxy Statement for its 2006 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission.

Item 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated herein by reference from OMIs definitive Proxy Statement for its 2006 Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission.

PART IV

Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

|1. | Financial Statements and Financial Statement Schedules
|-- | ------------------------------------------------------
|   |                                                       
|   | (a)                                                   
|   |                                                       
|   | (b)                                                   
|   |                                                       
|   |                                                       
|   |                                                       
|   | (c)                                                   
|  

91

---



EXHIBITS

|Number |  | Incorporated by Reference to |                                          | Description of Exhibit |                                    
|------ |  | ---------------------------- | ---------------------------------------- | ---------------------- | -----------------------------------
|       |  |                              |                                          |                        |                                    
|3(i)   |  |                              | Registration Statement on Form S1       |                        | Articles of Association of OMI     
|       |  |                              | (No. 33352771) Filed May 15, 1998       |                        |                                    
|       |  |                              |                                          |                        |                                    
|3(ii)  |  |                              | Registration Statement on Form S1       |                        | Bylaws                            
|       |  |                              | (No. 33352771) Filed May 15, 1998       |                        |                                    
|       |  |                              |                                          |                        |                                    
|4.1    |  |                              | Form 8-A Filed December 14, 1998         |                        | Preferred Stock Purchase Rights    
|       |  |                              |                                          |                        |                                    
|4.2    |  |                              | Registration Statement on Form S-8       |                        |                                    
|       |  |                              | (No. 333-72458) Filed October 30, 2001   |                        |                                    
|       |  |                              |                                          |                        |                                    
|4.3    |  |                              | Registration Statement on Form S8       |                        | 2001 Restricted Stock Plan(1)      
|       |  |                              | (No. 333-72456) Filed October 30, 2001   |                        |                                    
|       |  |                              |                                          |                        |                                    
|4.4    |  |                              | Registration Statement on Form S8       |                        | OMI Corporation Executive          
|       |  |                              | (No. 333-72460) Filed October 30, 2001   |                        | Savings Plan(1)                    
|       |  |                              |                                          |                        |                                    
|10.1   |  |                              | Registration Statement on Form S1       |                        | Form of Common Stock Certificate   
|       |  |                              | (No. 33352771) Filed May 15, 1998       |                        |                                    
|       |  |                              |                                          |                        |                                    
|10.2   |  |                              | Registration Statement on Form S1       |                        | OMI Corporation Stock Option       
|       |  |                              | (No. 33352771) Filed May 15, 1998       |                        | Plan(1)                            
|       |  |                              |                                          |                        |                                    
|10.3   |  |                              | Form S8 Filed June 17, 1998             |                        | Employee Benefit Plan(1)           
|       |  |                              |                                          |                        |                                    
|10.4   |  |                              | Form 10Q Filed August 13, 2001          |                        | Amended Form of Employment         
|       |  |                              |                                          |                        | Agreements for Senior Executives(1)
|       |  |                              |                                          |                        |                                    
|10.5   |  |                              | Registration Statement on Form S-8       |                        | OMI Corporation 2003 Stock         
|       |  |                              | Filed February 12, 2004                  |                        | Incentive Plan(1)                  
|       |  |                              |                                          |                        |                                    
|21     |  |                              | Subsidiaries of the Company              |                        |                                    
|       |  |                              |                                          |                        |                                    
|23.1   |  |                              | Consent of Independent Registered Public |                        |                                    
|       |  |                              | Accounting Firm                          |                        |                                    
|       |  |                              |                                          |                        |                                    
|31.1   |  |                              | OMI Corporations certification by the   |                        |                                    
|       |  |                              | Chief Executive Officer on Form 10-K     |                        |                                    
|       |  |                              | for the year ending December 31, 2005    |                        |                                    
|       |  |                              | as adopted pursuant to section 302 of    |                        |                                    
|       |  |                              | THE SARBANES-OXLEY ACT OF 2002.          |                        |                                    
|       |  |                              |                                          |                        |                                    
|31.2   |  |                              | OMI Corporations certification by the   |                        |                                    
|       |  |                              | Chief Financial Officer on Form 10-K     |                        |                                    
|       |  |                              | for the year ending December 31, 2005    |                        |                                    
|       |  |                              | as adopted pursuant to section 302 of    |                        |                                    
|       |  |                              | THE SARBANES-OXLEY ACT OF 202.           |                        |                                    
|       |  |                              |                                          |                        |                                    
|32.1   |  |                              | OMI Corporations certification by the   |                        |                                    
|       |  |                              | Chief Executive Officer on Form 10-K     |                        |                                    
|       |  |                              | for the year ending December 31, 2005    |                        |                                    
|       |  |                              | pursuant to 18 U.S.C. Section 1350, as   |                        |                                    
|       |  |                              | adopted pursuant to section 906 of       |                        |                                    
|       |  |                              | THE SARBANES-OXLEY ACT OF 2002.          |                        |                                    
|       |  |                              |                                          |                        |                                    
|32.2   |  |                              | OMI Corporations certification by the   |                        |                                    
|       |  |                              | Chief Financial Officer on Form 10-K     |                        |                                    
|       |  |                              | for the year ending December 31, 2005    |                        |                                    
|       |  |                              | pursuant to 18 U.S.C. Section 1350, as   |                        |                                    
|       |  |                              | adopted pursuant to section 906 of       |                        |                                    
|       |  |                              | THE SARBANES-OXLEY ACT OF 2002.          |                        |                                    

---

92

---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

| | OMI CORPORATION                       
| | --------------------------------------
| |                                       
| | By: /s/ CRAIG H. STEVENSON            
| |                                       
| | Craig H. Stevenson, Jr.,              
| | Chairman of the Board of Directors and
| | Chief Executive Officer               
| | March 15, 2006                        

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the
dates indicated.

|Signature                  |  | Title                                        |  | Date          
|-------------------------- |  | -------------------------------------------- |  | --------------
|/s/ CRAIGH. STEVENSON, JR. |  | Chief Executive Officer and Director         |  | March 15, 2006
|                           |  | (Principal Executive Officer)                |  |               
|Craig H. Stevenson, Jr.    |  |                                              |  |               
|                          
|/s/ ROBERTBUGBEE           |  | President, Chief Operating Officer           |  | March 15, 2006
|                           |  | and Director                                 |  |               
|Robert Bugbee              |  |                                              |  |               
|                          
|/s/ MICHAELKLEBANOFF       |  | Director                                     |  | March 15, 2006
|                           |  |                                              |  |               
|Michael Klebanoff          |  |                                              |  |               
|                          
|/s/ JAMESN. HOOD           |  | Director                                     |  | March 15, 2006
|                           |  |                                              |  |               
|James N. Hood              |  |                                              |  |               
|                          
|/s/ PHILIPJ. SHAPIRO       |  | Director                                     |  | March 15, 2006
|                           |  |                                              |  |               
|Philip J. Shapiro          |  |                                              |  |               
|                          
|/s/ DONALDC. TRAUSCHT      |  | Director                                     |  | March 15, 2006
|                           |  |                                              |  |               
|Donald C. Trauscht         |  |                                              |  |               
|                          
|/s/ JAMESD. WOODS          |  | Director                                     |  | March 15, 2006
|                           |  |                                              |  |               
|James D. Woods             |  |                                              |  |               
|                          
|/s/ KATHLEENC. HAINES      |  | Senior Vice President, Chief                 |  | March 15, 2006
|                           |  | Financial Officer,
            Treasurer and |  |               
|Kathleen C. Haines         |  | Chief Accounting Officer (Principal          |  |               
|                           |  | Financial and Accounting Officer)            |  |               

93

---