UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 20-F
(Mark One)
[ ]           REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

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

For the fiscal year December 31, 2005 ended
                                           -------------------------------------

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

                                      OR

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

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

For the  transition  period from
Commission file number      033-79220-02
                            ----------------------------------------------------

                      CALPETRO TANKERS (BAHAMAS II) LIMITED
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                      CALPETRO TANKERS (BAHAMAS II) LIMITED
--------------------------------------------------------------------------------
                 (Translation of Registrant's name into English)

                                     Bahamas
--------------------------------------------------------------------------------
                 (Jurisdiction of incorporation or organisation)

          Mareva House, 4 George Street, PO Box N-3937, Nassau, Bahamas
--------------------------------------------------------------------------------
                    (Address of principal executive offices)


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

      Title of each class                            Name of each exchange
           None
--------------------------------------------------------------------------------



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

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


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

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

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

              Common Stock: 100 shares, par value of $1 per share
--------------------------------------------------------------------------------


Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act.
                                                                [ ] Yes   [X] No

If this report is an annual or transition report,  indicate by check mark if the
registrant  is not required to file  reports  pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
                                                                [ ] Yes   [X] No

Note - Checking the box above will not relieve any  registrant  required to file
reports  pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934
from their obligations under those Sections.

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.

                                                                [X] Yes   [ ] No

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

Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [X]

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

                                                     [ ] Item 17     [X] Item 18

<PAGE>
                             Index to the Form 20-F


                                                                          PAGE
PART I
Item 1.    Identity of Directors, Senior Management and Advisers          2
           ...........................
Item 2.    Offer Statistics and Expected Timetable .............          2
Item 3.    Key Information......................................          2
Item 4.    Information on the Company...........................          6
Item 4.A   Unresolved Staff Comments............................          19
Item 5.    Operating and Financial Review and Prospects.........          19
Item 6.    Directors, Senior Management and Employees...........          21
Item 7.    Major Shareholders and Related Party
           Transactions.........................................          22
Item 8.    Financial Information................................          23
Item 9.    The Offer and Listing................................          23
Item 10.   Additional Information...............................          23
Item 11.   Quantitative and Qualitative Disclosures about Market
           Risk.................................................          25
Item 12.   Description of Securities other than Equity
           Securities...........................................          25
PART II

Item 13.   Defaults, Dividend Arrearages and
           Delinquencies........................................          26
Item 14.   Material Modifications to the Rights of Security Holders
           and Use of Proceeds..................................          26
Item 15.   Controls and Procedures..............................          26
Item 16A.  Audit Committee Financial Expert.....................          26
Item 16B.  Code of Ethics.......................................          26
Item 16C.  Principal Accountant Fees............................          26
Item 16D.  Exemptions from the Listing Standards for Audit
           Committees...........................................          27
Item 16E.  Purchase of Equity Securities by the Issuer and
           Affiliated Purchasers................................          27
PART III

Item 17.   Financial Statements.................................          28
Item 18.   Financial Statements.................................          28
Item 19.   Exhibits.............................................          28

<PAGE>
                                     PART I

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

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

Please note: In this section, "we", "us" and "our" all refer to the Company.

<PAGE>

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

Selected Financial Data

The selected  statement of operations and retained  earnings data of the Company
with respect to the fiscal years ended December 31, 2005, 2004 and 2003, and the
selected  balance  sheet data at December  31, 2005 and 2004,  have been derived
from the Company's  audited financial  statements  included herein and should be
read in conjunction  with such  statements  and the notes thereto.  The selected
statement of  operations  and retained  earnings  data with respect to the years
ended December 31, 2002 and 2001 and the selected balance sheet data at December
31, 2003, 2002 and 2001 have been derived from audited  financial  statements of
the Company not  included  herein.  The  following  table should also be read in
conjunction  with Item 5 "Operating and Financial  Review and Prospects" and the
Company's  audited financial  statements and notes thereto included herein.  The
Company's accounts are maintained in US dollars.

                                       Year ended December 31,
                                 2005     2004     2003     2002     2001
(U.S. Dollars in thousands except per share data)

 Statement of operations
 and retained earnings data
 Total operating revenues       2,819    3,115    3,532    3,966    4,396
 Net (loss) /  income            (90)     (54)     (56)       57       98

 Per share data:
 Dividends per share                -        -        -        -        -

 Balance sheet data:
 Total assets                  34,052   37,398   42,770   48,102   53,351
 Current  portion  of Serial        -        -    5,210    5,210    5,210
 Loans
 Current   portion  of  Term    3,187    3,187        -        -        -
 Loans
 Long-term loans               28,678   31,865   35,052   40,262   45,472
 Stockholder's equity           1,478    1,568    1,622    1,678    1,621

<PAGE>

Risk Factors

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

Our vessel the ALTAIR  VOYAGER  (formerly  Condoleeza  Rice) (the  "Vessel")  is
currently operated under a bareboat charter (the "Charter") to Chevron Transport
Corporation (the  "Chevron").  The Charter has a term expiring on April 1, 2015,
subject to the fact that Chevron has an option to terminate the Charter  earlier
on four specified  dates. The first option to terminate was on April 1, 2004 and
subsequent options exist on each of the three subsequent two-year  anniversaries
thereof. Non-binding notice of the intention to exercise the option to terminate
the  Charter  must be given at least  twelve  months  in  advance  for the first
Optional  Termination Date with irrevocable  notice being required at least nine
months before the first  Optional  Termination  Date and seven months in advance
for  subsequent  Optional  Termination  Dates.  No notice has been received with
regard to the second optional  termination  date,  April 1, 2006,  which implies
that the vessel will be on charter to Chevron at least until April 1, 2008.

If the tanker industry, which has been cyclical, is depressed in the future when
our Vessel's  Charter expires or is terminated,  our earnings and available cash
flow may  decrease.  Our ability to recharter  our Vessel on the  expiration  or
termination  of its  current  Charter and the charter  rates  payable  under any
renewal or replacement  charters will depend upon, among other things,  economic
conditions in the tanker market. Fluctuations in charter rates and vessel values
result from changes in the supply and demand for tanker  capacity and changes in
the supply and demand for oil and oil products.

Because our Charter may be terminated  in April 2008,  we may incur  additional
expenses and not be able to recharter our Vessel profitably

Chevron had its first option to  terminate  its Charter on April 1, 2004 and has
subsequent  options  on  each of the  three  subsequent  two-year  anniversaries
thereof.  Chevron has the sole discretion to exercise these options and will not
owe any fiduciary or other duty to the holders of the Notes in deciding  whether
to  exercise  the  termination  options,  and the  charterer's  decision  may be
contrary to our interests or those of the holders of the Notes.  Chevron has not
exercised  its right to exercise  the first and second  termination  option.  We
cannot  predict at this time any of the factors that  Chevron  will  consider in
deciding  whether to exercise any of its termination  options under the Charter.
It is likely,  however, that Chevron would consider a variety of factors,  which
may include  whether a vessel is surplus or suitable to  Chevron's  requirements
and whether  competitive  charterhire  rates are available in the open market at
that time.

In the event Chevron does  terminate  the Charter,  we will attempt to arrange a
replacement  charter, or may sell the Vessel.  Replacement  charters may include
shorter-term  time charters and employing the Vessel on the spot charter  market
(which is subject to greater  fluctuation  than the time  charter  market).  Any
replacement charter may bring us lower charter rates and would likely require us
to incur greater expenses which may reduce the amounts available, if any, to pay
principal and interest on the Notes.

We operate in the highly  competitive  international  tanker market which could
affect  our  position  at the  end  of  our  current  Charter  and  if  Chevron
terminates its Charter earlier

The  operation  of tanker  vessels  and  transportation  of crude and  petroleum
products is an extremely competitive business. Competition arises primarily from
other tanker owners, including major oil companies as well as independent tanker
companies,  some  of  whom  have  substantially  greater  resources  than we do.
Competition  for the  transportation  of oil and oil products can be intense and
depends on price,  location,  size, age,  condition and the acceptability of the
tanker and its  operators  to the  charterers.  During the term of our  existing
Charter  with  Chevron,  we are not  exposed  to the risk  associated  with this
competition.  At the end of our current  Charter  and in the event that  Chevron
terminates the charter on any subsequent optional termination date, we will have
to compete with other tanker  owners,  including  major oil companies as well as
independent tanker companies for charters.  Due in part to the fragmented tanker
market, competitors with greater resources could enter and operate larger fleets
through  acquisitions or  consolidations  and may be able to offer better prices
and fleets,  which could result in our achieving lower revenues from our Suezmax
oil tanker.

Compliance  with  environmental  laws or regulations  may adversely  affect our
earnings and  financial  conditions  at the end of the  existing  Charter or if
Chevron terminates its Charter prior to that time

Regulations  in the various states and other  jurisdictions  in which our Vessel
trades affect our business.  Extensive and changing environmental laws and other
regulations,  compliance with which may entail significant  expenses,  including
expenses for ship modifications and changes in operating procedures,  affect the
operation of our Vessel.  Although  Chevron is responsible  for all  operational
matters and bears all these  expenses  during the term of our  current  Charter,
these expenses  could have an adverse  effect on our business  operations at any
time after the  expiration or termination of the Charter or in the event Chevron
fails to make a necessary payment.

We may not have  adequate  insurance  in the event  existing  charters  are not
renewed

There  are a  number  of risks  associated  with the  operation  of  ocean-going
vessels, including mechanical failure,  collision,  property loss, cargo loss or
damage and  business  interruption  due to  political  circumstances  in foreign
countries,  hostilities  and labour strikes.  In addition,  the operation of any
vessel is subject to the inherent possibility of marine disaster,  including oil
spills and other environmental  mishaps, and the liabilities arising from owning
and operating vessels in international  trade. Under the Charter,  Chevron bears
all risks  associated with the operation of our Vessel  including the total loss
of the  Vessel.  However,  we cannot  assure  holders  of the Notes that we will
adequately  insure  against  all risks at the end of the Charter or in the event
the  Charter  is  terminated.  We may not be able to obtain  adequate  insurance
coverage at  reasonable  rates for our Vessel in the future and the insurers may
not pay particular claims.

We are highly dependent on Chevron and Chevron Corporation

We are highly  dependent on the due  performance  by Chevron of its  obligations
under the Charter and by its guarantor,  Chevron Corporation, of its obligations
under its  guarantee.  A failure by Chevron  or Chevron  Corporation  to perform
their  obligations  could result in our inability to service the Serial and Term
Loans.  If the Notes  holders had to enforce the  mortgages  securing the Notes,
they may not be able to recover the principal and interest owed to them.

We may not be able to pay down our debt in the future,  which  could  result in
the loss of our Vessel

We currently  must dedicate a large portion of our cash flow from  operations to
satisfy our debt service obligations.  Our ability to pay interest on, and other
amounts  due in respect  of, our Term Loan will  depend on our future  operating
performance,  prevailing economic  conditions and financial,  business and other
factors,  many of which are beyond our control.  There can be no assurance  that
our cash flow and  capital  resources  will be  sufficient  for  payment  of our
indebtedness  in the  future.  If we are unable to service our  indebtedness  or
obtain  additional  financing,  as needed,  this  could have a material  adverse
effect on the holders of the Notes.

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

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

The Notes may not be as liquid as other  securities  with  established  trading
markets,  which may  affect  the value of the Notes and your  ability  to trade
them

The Notes are not listed on any  national  securities  exchange or traded on the
NASDAQ National Market and have no established trading market. Consequently, the
Notes  could  trade at prices  that may be higher or lower than their  principal
amount or  purchase  price,  depending  on many  factors,  including  prevailing
interest  rates,  the market for similar notes and  warrants,  and our financial
performance.  The placement agents for the Notes currently make a market for the
Notes,  but are not obligated to do so and may  discontinue  their market making
activity at any time. In addition,  their market  making  activity is subject to
the limits  imposed by the Securities Act and the Exchange Act. We cannot assure
you that an active  trading  market  will exist for the Notes or that any market
for the Notes will be liquid.

Substantial  leverage  and debt  service  could  affect our ability to grow and
service our debt obligations

We are highly leveraged.  As of December 31, 2005, we had $31.9 million in total
indebtedness outstanding and stockholders' equity of $1.5 million. The degree to
which we are leveraged could have important  consequences for the holders of the
Notes, including:

     o    our  ability  to obtain  additional  financing  for  working  capital,
          capital  expenditures,  acquisitions or general corporate purposes may
          be limited;

     o    we  must  dedicate  a  substantial  portion  of  our  cash  flow  from
          operations to the payment of interest on our Serial and Term Loans and
          any future  indebtedness,  which reduces the funds available to us for
          other purposes;

     o    we may have trouble withstanding  competitive pressures and responding
          to changing business conditions;

     o    we may be more  vulnerable  than  others in the event of a downturn in
          general economic conditions or in our business; and

     o    we may be more highly leveraged than other tanker owners with which we
          compete, which may put us at a competitive disadvantage.

We have a limited business purpose which limits our flexibility

Our activity is limited to engaging in the acquisition,  disposition, ownership,
and  chartering  of a Suezmax oil tanker.  During the terms of our Charter  with
Chevron we expect that the only source of  operating  revenue  from which we may
pay  principal and interest on the Serial Loans and Term Loans will be from this
Charter.

Item 4. Information on the Company

The Company

CalPetro Tankers (Bahamas II) Limited was incorporated in the Bahamas on May 13,
1994 together with two other companies: CalPetro Tankers (Bahamas I) Limited and
CalPetro  Tankers  (Bahamas III) Limited and in addition  CalPetro Tankers (IOM)
Limited  is  incorporated  in the  Isle of Man.  Together  these  companies  are
referred to as the Owners. Each of the Owners was organised as a special purpose
company for the purpose of acquiring  one of four oil tankers  (each a "Vessel",
together the "Vessels") from Chevron. California Petroleum Transport Corporation
("California Petroleum"),  a Delaware corporation,  acting as agent on behalf of
the  Owners,  issued as full  recourse  obligations  $167,500,000  Serial  First
Preferred  Mortgage Notes and $117,900,000  8.52% First Preferred Mortgage Notes
due 2015  (together the  "Notes").  The proceeds from the sale of the Notes were
applied by way of long-term  loans,  being Serial Loans in respect of the Serial
First Preferred  Mortgage Notes and Term Loans in respect of the First Preferred
Mortgage  Notes due 2015, to the Owners to fund the  acquisition  of the Vessels
from Chevron Transport Corporation.  We were allocated $46,620,000 of the Serial
Loans and  $35,052,000  of the Term Loans and  acquired  our Vessel,  the ALTAIR
VOYAGER (formerly Condoleeza Rice), as described below. We engage in no business
other than the ownership and chartering of our Vessel and  activities  resulting
from or incidental to such ownership and chartering.

We are  wholly-owned  by  California  Tankers  Investments  Limited,  a  company
organized  under  the  laws of the  Bahamas,  which  is in  turn a  wholly-owned
subsidiary  of  CalPetro  Holdings  Limited,  an Isle of Man  company.  CalPetro
Holdings   Limited  is  a  wholly-owned   subsidiary  of   Independent   Tankers
Corporation, a Cayman Islands company ("ITC") which is a wholly-owned subsidiary
of Frontline Ltd ("Frontline"), a publicly listed Bermuda company.

Overview of the Business

Our Vessel is a 130,000-deadweight  tonne ("dwt") Suezmax oil tanker, called the
ALTAIR  VOYAGER  (formerly  Condoleeza  Rice),  which was acquired from Chevron.
Suezmax tankers are medium-sized  vessels ranging from approximately  120,000 to
200,000 dwt, and of maximum  length,  breadth and draft capable of passing fully
loaded through the Suez Canal.

The Vessel has been chartered  back to Chevron.  The Charter has a term expiring
on April 1, 2015; subject to Chevron's right to terminate the Initial Charter on
certain  specified  dates. The option to terminate has already lapsed for two of
these  dates.  Chevron  can elect to  terminate  the  Charter  on any of the two
remaining termination dates, which occur on April 1, 2008 and April 1, 2010. For
future  optional  termination  dates,  non-binding  notice of the  intention  to
exercise  the option to  terminate  the  Charter  must be given at least  twelve
months in advance with  irrevocable  notice of Chevron's  intention to terminate
must be given seven months prior to the termination date. Chevron is required to
pay us a  termination  payment  (the  "Termination  Payment") on or prior to the
termination date as follows:

      (In millions of $)
     Optional                 Termination
     Termination Date         Payment
     April 1, 2008              10.03
     April 1, 2010               8.94

Chevron is principally  engaged in the marine  transportation of oil and refined
petroleum products.  Chevron's primary transportation routes are from the Middle
East,  Indonesia,  Mexico,  West Africa and the North Sea to ports in the United
States,  Europe,  the United  Kingdom and Asia.  Chevron has advised the Company
that it expects to use the Vessel worldwide as permitted under the Charter.  The
obligations of Chevron under the Charter are guaranteed by Chevron  Corporation,
a major  international  oil  company,  pursuant  to a  guarantee  (the  "Chevron
Guarantee").  Chevron  is  an  indirect,  wholly  owned  subsidiary  of  Chevron
Corporation.

The Vessel is a double-hull  oil carrier and is presently  registered  under the
Bahamian flag. The Vessel was constructed  under the  supervision of Chevron and
designed to Chevron's  specifications to enhance safety and reduce operating and
maintenance costs,  including such features as high performance  rudders,  extra
steel (minimal use of high tensile  steels),  additional fire safety  equipment,
redundant power generation equipment,  extra coating and electrolytic  corrosion
monitoring and protection systems,  additional crew quarters to facilitate added
manning  and a  double-hull  design  patented  by one of  Chevron  Corporation's
subsidiaries.   The  builder  of  ALTAIR  VOYAGER  was  Ishikawajima  do  Brasil
Estaleiros S.A.

The Management

On March 31, 1999, Frontline became our Manager and Technical Advisor,  pursuant
to an  assignment of a Management  Agreement.  Under the  Management  Agreement,
Frontline provides administrative,  management and advisory services to us along
with  technical  advisory  services.  If the Charter is  terminated  by Chevron,
Frontline,  acting on our behalf, will provide all technical management services
and will attempt to find an acceptable replacement charter for the Vessel. If an
acceptable  replacement  charter is commercially  unavailable,  the Manager will
solicit bids for the sale or recharter of the Vessel.  The Manager's  ability to
obtain an acceptable  replacement  charter,  to sell the Vessel or recharter the
Vessel will depend on market rates for new and used vessels,  both of which will
depend on the supply of and demand for tanker  capacity for oil  transportation,
and the advantages or  disadvantages  of the Vessel  compared with other vessels
available at the time.

The International Tanker Market

The market for  international  seaborne  crude oil  transportation  services  is
highly fragmented and competitive.  Seaborne crude oil  transportation  services
generally are provided by two main types of operators: major oil company captive
fleets (both private and  state-owned)  and  independent  shipowner  fleets.  In
addition, several owners and operators pool their vessels together on an ongoing
basis,  and  such  pools  are  available  to  customers  to the same  extent  as
independently  owned and operated fleets. Many major oil companies and other oil
trading  companies  also operate their own vessels and use such vessels not only
to transport their own crude oil but also to transport crude oil for third party
charterers in direct  competition with  independent  owners and operators in the
tanker  charter  market.  Competition  for charters is intense and is based upon
price,  location,  size, age,  condition and acceptability of the vessel and its
manager.  Competition is also affected by the availability of other size vessels
to compete in the trades in which we engage.

The oil  transportation  industry has historically been subject to regulation by
national authorities and through international  conventions.  Over recent years,
however,  an  environmental  protection  regime has  evolved  which could have a
significant impact on the operations of participants in the industry in the form
of increasingly  more stringent  inspection  requirements,  closer monitoring of
pollution-related  events, and generally higher costs and potential  liabilities
for the owners and operators of tankers.  In order to benefit from  economies of
scale,  tanker  charterers will typically charter the largest possible vessel to
transport  oil  or  products,   consistent  with  port  and  canal   dimensional
restrictions  and optimal  cargo lot sizes.  The oil tanker  fleet is  generally
divided into the following five major types of vessels, based on vessel carrying
capacity:

     (i)  ULCC-size range of approximately 320,000 to 450,000 dwt;
     (ii) VLCC-size range of approximately 200,000 to 320,000 dwt;
    (iii) Suezmax-size range of approximately 120,000 to 200,000 dwt;
     (iv) Aframax-size range of approximately 60,000 to 120,000 dwt; and
     (v)  small tankers of less than approximately 60,000 dwt.

ULCCs and VLCCs typically  transport crude oil in long-haul trades, such as from
the Arabian Gulf to Rotterdam  via the Cape of Good Hope.  Suezmax  tankers also
engage in long-haul crude oil trades as well as in medium-haul crude oil trades,
such as from West  Africa to the East Coast of the United  States.  Aframax-size
vessels generally engage in both medium-and short-haul trades of less than 1,500
miles  and  carry  crude  oil or  petroleum  products.  Smaller  tankers  mostly
transport petroleum products in short-haul to medium-haul trades.

The  shipping   industry  is  highly   cyclical,   experiencing   volatility  in
profitability,  vessel  values and charter  rates.  In  particular,  freight and
charterhire rates are strongly  influenced by the supply and demand for shipping
capacity.

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

     o    demand for oil and oil products;

     o    global and regional economic conditions;

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

     o    changes in sea borne and other transportation patterns

The factors that influence the supply of tanker capacity include:

     o    the number of newbuilding deliveries;

     o    the scrapping rate of older vessels; and

     o    the number of vessels that are out of service.

Tanker values have generally experienced high volatility.  The fair market value
of oil tankers,  including the Vessel,  can be expected to fluctuate,  depending
upon general  economic and market  conditions  affecting the tanker industry and
competition from other shipping companies, types and sizes of vessels, and other
modes of  transportation.  In  addition,  as  vessels  grow  older,  they may be
expected to decline in value.  These factors will affect the value of the vessel
at the termination or expiration of the current Charter.

For the third year in a row the tanker market was very profitable,  even if 2005
could not compete with 2004. The extreme volatility witnessed in rates over 2004
was experienced to a smaller extent in 2005.  According to industry reports, the
time charter equivalent  earnings,  or TCEs, for a modern Suezmax ranged between
lows of $23,000 per day and highs of $107,000 in 2005.

The International  Energy Agency ("IEA") reported in their May issue, that world
oil demand in 2005 was 83.59 million  barrels per day (mbd), an increase of 1.05
mbd over 2004. The Middle East, China and North America  contributed with 55% of
this increase which is an indicator of their strong economic growth.

Lack of spare oil  production  capacity  drove crude oil prices to about $70 per
barrel  towards the end of the year and dampened the extremely  strong growth in
oil consumption of close to 4.0% in 2004 to 1.3% in 2005 according to IEA. China
continued  its  rapid  economic  growth  with full  force  also in 2005 with GDP
increasing  9.8% however  their growth in oil demand was down from 15.4% in 2004
to 2.4% in 2005.  Hurricanes  Katrina  and Rita  which hit the US Gulf  Coast in
August and September  were each among the top five most  powerful  storms of all
time and  lead to  damages  to  production  platforms  which  caused  additional
ton-miles for the last quarter of 2005. It is estimated that hurricanes  reduced
U.S.  production  by 0.4 million  barrels per day, as an average  over the year.
Geopolitical  tension in Nigeria,  Venezuela,  Iraq, Iran and other parts of the
Middle East,  seems to have had limited  effect on their  production as the OPEC
members in total  increased  their  production by 3.2% in 2005 compared to total
world supply which increased 1.3%.

The size of the world Suezmax fleet  increased by 7% in 2005 from 315 vessels to
337. Two Suezmaxes were scrapped while 24 were  delivered.  The total  orderbook
for Suezmaxes  was at 63 at the end of the year, of which 7 were ordered  during
the year. The total  orderbook for Suezmaxes  equates to 18.7%,  of the existing
fleet.

Even  though  spot market  rates have  declined  during the first four months of
2006,  we believe the outlook for the  remainder  of 2006 is positive due to the
continued  growth in oil  consumption  combined with  relatively few deliveries,
combined with an increasing  amount of  conversions  for other  purposes,  which
should lead to a positive demand environment for tankers.

There is no guarantee  that Suezmax  rates would be  sufficient to meet the debt
service   required  if  the  bareboat  charter  entered  into  with  Chevron  is
terminated.  Spot  market  rates are  volatile  and  generally  linked to global
economic  development and especially demand for oil but also to political events
affecting oil producing countries.

Inspection by Classification Society
Every  commercial  vessel's hull and machinery is "classed" by a  classification
society  authorised  by its  country of  registry.  The  classification  society
certifies that the vessel has been built and  maintained in accordance  with the
rules of such  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 every year,
every two and a half years and every four to five  years.  Should any defects be
found, the classification surveyor will issue a "recommendation" for appropriate
repairs which have to be made by the shipowner within the time limit prescribed.

The  Vessel  will be  maintained  during  the term of the  Charter by Chevron in
accordance with good commercial  maintenance  practice  commensurate  with other
vessels  in  Chevron's  fleet of  similar  size and trade,  as  required  by the
Charter. The Charter requires Chevron to return the Vessel on termination of the
Charter  "in  class"  under the rules of the  American  Bureau of  Shipping  (or
another classification society previously approved by the Company). In addition,
we have the right to inspect our Vessel and to require surveys upon  redelivery,
and  Chevron  will be  responsible  for making or  compensating  us for  certain
necessary repairs in connection with such redelivery.

Insurance

The operation of any ocean-going vessel carries an inherent risk of catastrophic
marine disasters, environmental mishaps, cargo and property losses or damage and
business   interruptions   caused  by  adverse  weather  and  ocean  conditions,
mechanical failures,  human error,  political action in various countries,  war,
terrorism, piracy, labour strikes and other circumstances or events. Pursuant to
the  Charter,  the Vessel may be operated  through the world in any lawful trade
for which the Vessel is suitable,  including  carrying oil and its products.  In
the past, political conflicts in many regions, particularly in the Arabian Gulf,
have  included  attacks on tankers,  mining of  waterways  and other  efforts to
disrupt  shipping in the area.  Vessels  trading in such  regions have also been
subject to acts of terrorism and piracy. In addition,  the carriage of petroleum
products  is subject to the risk of  spillage  and  leakage.  Any such event may
result in increased costs or the loss of revenues or assets, including a Vessel.

Under the Charter,  Chevron is entitled to  self-insure  against  marine and war
risks  relating  to the Vessel  and  against  protections  and  indemnity  risks
relating  to the  Vessel  during  the  term  of the  Charter  and,  accordingly,
purchasers of the Notes cannot rely on the existence of  third-party  insurance.
There can be no assurance  that all risks will be  adequately  insured  against,
that any  particular  loss will be  covered  or that we will be able to  procure
adequate insurance  coverage at commercially  reasonable rates in the future. In
particular,  stricter  environmental  regulations  may result in increased costs
for,  or  the  lack  of  availability  or,   insurance   against  the  risks  of
environmental damage or pollution.

Chevron will, pursuant to the Charter,  indemnify us from damages arising from a
failure to maintain any financial  responsibility  requirements whether relating
to oil or other pollution  damage.  Chevron will also indemnify us to the extent
losses,  damages  or  expenses  are  incurred  by us  relating  to oil or  other
pollution damage as a result of the operation of the Vessel by Chevron.

Environmental and Other Regulations

Government  regulation  significantly affects the ownership and operation of our
Vessel.  The various types of  governmental  regulation  that affect our vessels
include  international  conventions  and  national,  state  and  local  laws and
regulations  of the  jurisdictions  where our Vessel  operates or is  registered
significantly affect the ownership and operation. We believe we are currently in
substantial  compliance  with  applicable   environmental  and  regulatory  laws
regarding the ownership and operation of our tanker.  However,  because existing
laws may change or new laws may be  implemented,  we cannot predict the ultimate
cost of complying with all applicable  requirements or the impact they will have
on the resale value or useful life of our tanker.  Future,  non-compliance could
require us to incur substantial costs or to temporarily suspend operation of our
tanker.

We believe that the heightened  environmental  and quality concerns of insurance
underwriters,  regulators and  charterers are leading to greater  inspection and
safety  requirements on all vessels and creating an increasing demand for modern
vessels that are able to conform to the  stricter  environmental  standards.  We
maintain  high  operating  standards for our Vessel that  emphasize  operational
safety,  quality maintenance,  continuous training of our crews and officers and
compliance with United States and international and other national regulations.

Our Vessel is 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,  and charterers,  particularly  terminal
operators and major oil companies  which conduct  frequent  vessel  inspections.
Each of these entities may have unique requirements that we must comply with.

International Maritime Organization

The International Maritime  Organization,  or the IMO (the United Nations agency
for  maritime  safety and the  prevention  of marine  pollution  by ships),  has
adopted the International Convention for the Prevention of Marine Pollution from
Ships,  1973,  as modified by the Protocol of 1978 relating  thereto,  which has
been updated through various amendments,  or the "MARPOL Convention.  The MARPOL
Convention relates to environmental standards including oil leakage or spilling,
garbage  management,  as well as the handling  and disposal of noxious  liquids,
harmful substances in packaged forms,  sewage and air emissions.  In March 1992,
the IMO adopted  regulations  that set forth pollution  prevention  requirements
applicable to tankers,  which became effective in July 1993. These  regulations,
which  have  been  adopted  by more  than  150  nations,  including  many of the
jurisdiction in which our Vessel operates, provide, in part, that:

     o    tankers   between  25  and  30  years  old  must  be  of   double-hull
          construction or of a mid-deck design with  double-sided  construction,
          unless:

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

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

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

     o    all tankers are subject to enhanced inspections.

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

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

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

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


These  regulations  were amended in 2001 and provided a timetable  for the phase
out of single hull tankers. This timetable was amended again in December 2003 in
response to European Union, or EU,  proposals,  further  accelerating  the final
phase-out dates for single hull tankers.

The  baseline  phase-out  dates apply to tankers  according  to their  certified
arrangement  (protectively  located  segregated ballast tanks or PL/SBT) and the
type of oil carried as cargo. These regulations  identify 3 categories of single
hull tankers, including double side and double bottom tankers:

a)   Category 1 (Pre-  PL/SBT)  oil  tankers--any  tanker of 20,000 dwt or above
     carrying crude oil, fuel oil, heavy diesel oil or lubricating  oil as cargo
     or of 30,000 dwt or above carrying other types of oil.
b)   Category 2 (PL/SBT) oil tankers--any tanker of 20,000 dwt or above carrying
     crude oil,  fuel oil,  heavy diesel oil or  lubricating  oil as cargo or of
     30,000 dwt or above carrying other types of oil.
c)   Category  3 oil  tankers--any  tanker of  between  5,000 dwt and 20,000 dwt
     carrying crude oil, fuel oil, heavy diesel oil or lubricating  oil as cargo
     or less than 30,000 dwt carrying other types of oil.

The table below provides the specific phase out dates according to each category
of oil  tanker.  Oil  tankers  that meet  MARPOL  Regulation  13F or have double
bottoms and double sides with  dimensions in compliance  with MARPOL  Regulation
13G1(c) continue to be exempt from the accelerated phase out.


Baseline Phase Out Scheme

  Phase Out Date                        Year of Delivery
                        Category 1          Category 2         Category 3
   April 5, 2005   before April 5, 1982          before April 5, 1977
      + 2005       after April 5, 1982      After April 5, 1977 but before
                                                   January 1, 1978
      + 2006                                       1978* and 1979*
      + 2007                                       1980* and 1981*
      + 2008                                            1982*
      + 2009                                            1983*
      + 2010                                        1984* or later
                    + by Anniversary of Delivery Date In Year
                                * subject to CAS

For  Category  2 and  3  tankers,  a  successful  completion  of  the  Condition
Assessment  Scheme  (CAS)  is  required  by 15  years  of age  or by  the  first
intermediate or renewal survey due after April 5, 2005, which ever occurs later.

The new  phase-out  regime  became  effective  on April 5, 2005.  For Category 1
tankers  (pre-MARPOL  tankers without segregated ballast tanks,  generally built
before 1982),  the final  phase-out date was brought  forward to 2005 from 2007.
For Category 2 tankers  (MARPOL  tankers,  generally built after 1982) the final
phase out date has brought forward to 2010 from 2015.

To soften the  significant  impact  that would  occur if the  approximately  700
tankers  (approximately 67.0 million tons dwt) were to be phased out globally in
2010 as per above,  two  exceptions to the baseline phase out dates were adopted
which  allow  Category 2 and 3 oil  tankers  that have passed the CAS to operate
beyond the 2010 cut-off date as summarized below:

Exception  One - a flag state may  permit oil  tankers to operate to 25 years of
age provided  that, not later than July 1, 2001, the entire cargo tank length is
protected  with one of the following  arrangements  which cannot be used for the
carriage of oil:

o    Double  bottoms  having a height  at  centerline  which  does not meet that
     required by the MARPOL Regulation 13E; or

o    Wing  tanks  having  a width  which  does  not meet  that  required  by the
     International Bulk Chemical Code for type 2 cargo tank location.

Exception  Two - a flag state may permit oil  tankers,  that do not have  double
bottoms nor double sides, to operate to the age of 25 or the anniversary date of
the tanker's delivery in 2015, whichever occurs earlier.

Although the flag States are permitted to grant  extensions in both of the above
cases provided CAS is  satisfactorily  completed and IMO has been so informed of
the  extension,  coast  States have the right to deny oil tankers that have been
granted such extensions into their ports and offshore terminals.

Oil tankers granted life extension under Exception One may be denied entry after
2015 if they are 25 years of age and older.  Oil  tankers  with  neither  double
bottoms nor double sides which have been granted an  extension  under  Exception
Two may be denied entry after the relevant phase out date.

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

Under MARPOL Regulation 13H, HGO means any of the following:

o    crude oils having a density at 15(0)C higher than 900 kg/m3;

o    fuel oils  having  either a density at 15(0)C  higher  than 900 kg/ m3 or a
     kinematic viscosity at 50(0)C higher than 180 mm2/s;

o    bitumen, tar and their emulsions.

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

The IMO has also negotiated international  conventions that impose liability for
oil pollution in international  waters and a signatory's  territorial waters. In
September 1997, the IMO adopted Annex VI to the International Convention for the
Prevention of Pollution from Ships to address air pollution from ships. Annex VI
was ratified in May 2004, and became effective in May 2005. Annex VI sets limits
on sulfur oxide and nitrogen  oxide  emissions  from ship exhausts and prohibits
deliberate   emissions   of  ozone   depleting   substances,   such  as  halons,
chlorofluorocarbons,  emissions  of  volatile  compounds  from  cargo  tanks and
prohibition  of shipboard  incineration  of specific  substances.  Annex VI also
includes a global cap on the sulfur  content of fuel oil and allows for  special
areas to be  established  with more  stringent  controls  on  sulfur  emissions.
Compliance with these  regulations  could require the  installation of expensive
emission  control  systems  and could  have an adverse  financial  impact on the
operation of our Vessel. Additional or new conventions, laws and regulations may
be adopted that could adversely affect our ability to manage our Vessel.

The  operation of our Vessel is also affected by the  requirements  set forth in
the  IMO's  Management  Code  for the Safe  Operation  of  Ships  and  Pollution
Prevention,  or the ISM Code.  The ISM Code  requires  ship owners and  bareboat
charterers to maintain an extensive "Safety Management System" that includes the
adoption  of  a  safety  and  environmental   protection  policy  setting  forth
instructions  and procedures  for safe  operation and describing  procedures for
emergencies.  The failure of a ship owner or a bareboat charterer to comply with
the ISM  Code may  subject  such  party to  increased  liability,  may  decrease
available insurance coverage for the affected vessels and may result in a denial
of access to, or detention in certain  ports.  We rely on the safety  management
system that has been developed by Chevron.

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 ISM 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 each flag state,  under the ISM Code. All of
our vessels and their  operators  have  received ISM  certification.  Chevron is
required  to  renew  these   documents  of  compliance  and  safety   management
certificates annually.

Non-compliance  with the ISM Code and  other IMO  regulations  may  subject  the
vessel  owner  or a  bareboat  charterer  to  increased  liability,  may lead to
decreases in available insurance coverage for affected vessels and may result in
a tanker's  denial of access to, or  detention  in, some ports.  Both the United
States  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.

The IMO continues to review and introduce new  regulations.  It is impossible to
predict what additional  regulations,  if any, may be passed by the IMO and what
effect, if any, such regulations might have on the operation of oil tankers.

United  States  Oil  Pollution  Act of  1990  and  Comprehensive  Environmental
Response, Compensation and Liability Act of 1980

The United States regulates the tanker industry with an extensive regulatory and
liability  regime  for  environmental  protection  and  cleanup  of oil  spills,
consisting primarily of the United States Oil Pollution Act of 1990, or OPA, and
the  Comprehensive  Environmental  Response,  Compensation  and Liability Act of
1980, or CERCLA.  OPA affects all owners and operators  whose vessels trade with
the United States or its territories or possessions, or whose vessels operate in
the waters of the United  States.,  which include the United States  territorial
sea and the 200 nautical mile exclusive  economic zone around the United States.
CERCLA applies to the discharge of hazardous substances (other than oil) whether
on land or at sea. Both OPA and CERCLA impact our operations.

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

o    natural resources damages and related assessment costs;
o    real and personal property damages;
o    net loss of taxes, rents, royalties, fees and other lost revenues;
o    net  cost of  public  services  necessitated  by a spill  response  such as
     protection from fire, safety or health hazards; and
o    loss of subsistence use of natural resources.

OPA limits the  liability  of  responsible  parties to the greater of $1,200 per
gross ton or $10.0  million per tanker that is over 3,000 gross tons (subject to
possible adjustment for inflation).  Under a recently proposed legislation,  OPA
liability  limits will be increased,  when such  legislation is enacted,  to the
greater of $1,900 per gross ton or $16.0  million  per tanker that is over 3,000
gross tons per discharge (subject to possible adjustment for inflation). The act
specifically  permits  individual  states to impose their own liability  regimes
with regard to oil pollution  incidents  occurring within their boundaries,  and
some states have enacted  legislation  providing  for  unlimited  liability  for
discharge of  pollutants  within their waters.  In some cases,  states that have
enacted this type of legislation  have not yet issued  implementing  regulations
defining tanker owners' responsibilities under these laws.

CERCLA,  which  applies to owners and  operators of tankers,  contains a similar
liability  regime and provides  for cleanup and removal of hazardous  substances
and for  natural  resource  damages.  Liability  under  CERCLA is limited to the
greater of $300 per gross ton or $5.0 million.  These limits of liability do not
apply,  however,  where the incident is caused by violation of applicable United
States  federal  safety,  construction  or  operating  regulations,  or  by  the
responsible party's gross negligence or willful misconduct.  These limits do not
apply if the  responsible  party  fails or refuses to report the  incident or to
co-operate and assist in connection with the substance removal  activities.  OPA
and CERCLA  each  preserve  the right to recover  damages  under  existing  law,
including maritime tort law.

OPA also requires owners and operators of vessels to establish and maintain with
the United States Coast Guard evidence of financial responsibility sufficient to
meet the limit of their  potential  strict  liability  under the act. The United
States  Coast  Guard has enacted  regulations  requiring  evidence of  financial
responsibility  in the amount of $1,500 per gross ton for tankers,  coupling the
OPA  limitation  on liability of $1,200 per gross ton with the CERCLA  liability
limit of $300 per gross ton. We expect that if the recently proposed legislation
increasing  liability  limitations under OPA is enacted, the United States Coast
Guard will  accordingly  increase the amounts of the  financial  responsibility.
Under  these  regulations,  an owner or  operator  of more  than one  tanker  is
required to obtain a  certificate  of  financial  responsibility  for the entire
fleet in an amount equal only to the financial responsibility requirement of the
tanker having the greatest maximum strict liability under OPA and CERCLA.

Operators,  such as Chevron in the case of our  Vessel,  are  required to insure
their vessels with  pollution  liability  insurance in the maximum  commercially
available amount of $1.0 billion any one incident or occurrence.  A catastrophic
spill could exceed the insurance coverage available,  in which event there could
be a material adverse effect on our business.

Under OPA,  oil tankers  without  double  hulls will not be permitted to come to
United States ports or trade in the United States waters by 2015.

OPA also amended the Federal Water  Pollution  Control Act to require  owners or
operators of tankers operating in the waters of the United States to file vessel
response  plans  with the United  States  Coast  Guard,  and their  tankers  are
required to operate in compliance  with their United States Coast Guard approved
plans. These response plans must, among other things:

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

o    describe crew training and drills; and

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

In addition,  the United  States Coast Guard has announced it intends to propose
similar regulations  requiring certain vessels to prepare response plans for the
release of hazardous substances.

OPA does not prevent individual states from imposing their own liability regimes
with respect to oil pollution  incidents  occurring within their boundaries.  In
fact,  most  U.S.   states  that  border  a  navigable   waterway  have  enacted
environmental  pollution  laws that  impose  strict  liability  on a person  for
removal  costs and damages  resulting  from a discharge of oil or a release of a
hazardous substance. These laws may be more stringent than United States federal
law.

Other U.S. Environmental Requirements

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

The Clean Water Act (the "CWA")  prohibits  the  discharge  of oil or  hazardous
substances  into navigable  waters and imposes  strict  liability in the form of
penalties  for any  unauthorized  discharges.  The CWA also imposes  substantial
liability for the costs of removal,  remediation and damages. State laws for the
control  of  water   pollution  also  provide   varying   civil,   criminal  and
administrative  penalties  in the case of a discharge  of petroleum or hazardous
materials into state waters.  The CWA complements  the remedies  available under
the more recent OPA and CERCLA,  discussed above.  Under current  regulations of
the EPA,  vessels are not  required to obtain CWA permits for the  discharge  of
ballast water in U.S. ports. However, as a result of a recent U.S. federal court
decision,  vessel owners and operators may be required to obtain CWA permits for
the discharge of ballast  water,  or they will face  penalties for failing to do
so. Although the EPA is likely to appeal this decision,  we do not know how this
matter  is  likely  to be  resolved  and we  cannot  assure  you that any  costs
associated with compliance with the CWA's  permitting  requirements  will not be
material to our results of operations.

The National  Invasive  Species Act, or NISA, was enacted in 1996 in response to
growing  reports of harmful  organisms  being  released into U.S.  ports through
ballast  water taken on by ships in foreign  ports.  NISA  established a ballast
water management program for ships entering U.S. waters.  Under NISA,  mid-ocean
ballast  water  exchange  is  voluntary,  except for ships  heading to the Great
Lakes,  Hudson Bay, or vessels  engaged in the foreign  export of Alaskan  North
Slope crude oil. However,  NISA's exporting and record-keeping  requirements are
mandatory for vessels bound for any port in the United States.  Although ballast
water  exchange is the primary  means of compliance  with the act's  guidelines,
compliance  can also be achieved  through the retention of ballast water onboard
the  ship,  or the  use  of  environmentally  sound  alternative  ballast  water
management  methods  approved by the U.S. Coast Guard. If the mid-ocean  ballast
exchange is made mandatory  throughout the United States,  or if water treatment
requirements or options are instituted,  the costs of compliance  could increase
for ocean carriers.

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

Our Vessel  currently carry cargoes to U.S. waters regularly and we believe that
it is suitable to meet OPA and other U.S. environmental requirements and that it
would also qualify for trade if chartered to serve U.S. ports.

European Union Tanker Restrictions

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

International Conventions on Civil Liability for Oil Pollution Damage

Although the United States is not a party to these  Conventions,  many countries
ratified and followed the liability system adopted by the IMO and originally set
out in the International  Convention on Civil Liability for Oil Pollution Damage
of 1969 and the Convention for the  Establishment of an  International  Fund for
Oil Pollution of 1971. This  international  oil pollution regime was modified in
1992 by two  Protocols.  The  amended  Conventions  are known as the 1992  Civil
Liability Convention and the 1992 Fund Convention.  The 1992 Conventions entered
into  force  on May 30,  1996.  Due to a  number  of  denunciations  of the 1971
Convention this Convention ceased to be in force on May 24, 2004. A large number
of States have also  denounced the 1969 Civil  Liability  Convention and as more
States do so its importance is  increasingly  diminishing.  Under the 1992 Civil
Liability  Convention,  a vessel's  registered  owner is strictly liable for oil
pollution damage caused in the territory, territorial seas or exclusive economic
zone of a  contracting  state by  discharge  of  persistent  oil from a  tanker,
subject to certain complete defences. The 1992 Fund established by the 1992 Fund
Convention pays  compensation to those suffering oil pollution damage in a State
party to the 1992 Fund Convention who did not obtain full compensation under the
1992 Civil Liability  Convention.  This would normally apply where the shipowner
has a defence under the 1992 Civil  Liability  Convention or the damage  exceeds
the shipowner's liability under that Convention.  Under an amendment that became
effective on November 1, 2003,  liability  limits under the 1992 Civil Liability
Convention  were  increased by over 50%.  For vessels of 5,000 to 140,000  gross
tons (a unit of  measurement  for the  total  enclosed  spaces  within a vessel)
liability will be limited to SDR 4,510,000 (approximately $6.7 million) plus SDR
631  (approximately  $932) for each additional gross ton over 5,000. For vessels
of over  140,000  gross  tons,  liability  will  be  limited  to SDR  89,770,000
(approximately $132.7 million).  Also with effect from the same date the maximum
amount payable by the 1992 Fund  increased  from SDR 135 million  (approximately
$199.5 million) to SDR 203million  (approximately $300.0 million).  The right to
limit liability is forfeited under the 1992 Civil Liability  Convention if it is
proved that the pollution  damage resulted from the shipowner's  personal act or
omission, committed with the intent to cause such damage, or recklessly and with
knowledge that such damage would probably result. Vessels trading to States that
are parties to the 1992 Civil  Liability  Convention  must  provide  evidence of
insurance  covering the  liability  of the owner.  On March 2005 a third tier of
compensation  was  established  by  means of a  Supplementary  Fund.  This  Fund
provides  additional   compensation  to  that  available  under  the  1992  Fund
Convention for pollution damage in States that are members of the  Supplementary
Fund.  The amount  available  is SDR 750 million  (approximately  $1.1  billion)
including the costs payable under the 1992 Civil  Liability  Convention  and the
1992  Fund  Convention,  SDR 203  million  (approximately  $300.0  million).  In
jurisdictions  where the 1992 Civil  Liability  Convention has not been adopted,
various  legislative  schemes  govern or common law  applies,  and  liability is
imposed  either  on the  basis  of  fault  or in a  manner  similar  to the 1992
Convention.  We believe that our P&I insurance covers  liabilities  either under
the  international  oil pollution schemes or under local regimes for example the
US Oil Pollution Act 1990.

The unit of account in the 1992  Conventions is the Special  Drawing Right (SDR)
as defined by the International Monetary Fund. In this document the SDR has been
converted  into US dollars at the rate of exchange  applicable on May 2, 2006 of
SDR 1 = USD 1.477760.

Vessel Security Regulations

Since the terrorist  attacks of September 11, 2001, there have been a variety of
initiatives  intended to enhance  vessel  security.  On November 25,  2002,  the
Maritime  Transportation  Security  Act of 2002,  or MTSA came into  effect.  To
implement  certain  portions of the MTSA, in July 2003,  the United States Coast
Guard  issued  regulations  requiring  the  implementation  of certain  security
requirements  aboard vessels  operating in waters subject to the jurisdiction of
the United States.  Similarly, in December 2002, amendments to the International
Convention for the Safety of Life at Sea, or SOLAS, created a new chapter of the
convention  dealing  specifically with maritime  security.  The new chapter came
into effect in July 2004 and imposes various  detailed  security  obligations on
vessels and port  authorities,  most of which are contained in the newly created
International  Ship and Port Facilities  Security Code, or ISPS Code.  Among the
various requirements are:

     o    on-board  installation of automatic  information  systems,  or AIS, to
          enhance vessel-to-vessel and vessel-to-shore communications;
     o    on-board installation of ship security alert systems;
     o    the development of vessel security plans; and
     o    compliance with flag state security certification requirements.

The United States Coast Guard regulations,  intended to align with international
maritime security standards,  exempt non-U.S.  vessels from MTSA vessel security
measures provided such vessels have on board a valid International Ship Security
Certificate  that  attests  to  the  vessel's  compliance  with  SOLAS  security
requirements and the ISPS Code.

Our Vessel complies with the various  security  measures  addressed by the MTSA,
SOLAS and the ISPS Code.

Organisational Structure

As described  above, and also in Item 7. Major  Shareholders,  and Related Party
Transactions, we are a wholly owned subsidiary of California Tankers Investments
Limited,  a  company  organized  under  the  laws  of the  Bahamas,  which  is a
wholly-owned subsidiary of ITC. Frontline ultimately controls us as described in
more detail in Item 4.

Property, Plants and Equipment

Other than the Vessel described above, we do not have any property.

Item 4A.    Unresolved Staff Comments
None

Item 5.  Operating and Financial Review and Prospects

Operating Results

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

Total Revenues
Finance lease  interest  income for the year ended December 31, 2005 amounted to
$2,819,000,  compared  with  $3,115,000  for the year ended  December  31, 2004.
Interest  income  has  fallen  in line  with  expectations.  As the value of the
finance  lease  falls on annual  basis,  so does the  interest  received  on the
finance leases.

Expenses
Interest expense on the Term and the Serial Loans amounted to $2,783,000 for the
year ended  December 31,  2005.  The  amortisation  of discount on loans for the
period amounted to $75,000.  The Company amortises the discount over the life of
the Term and Serial Loans. The corresponding  figures for the period to December
31, 2004 were $3,076,000 and $75,000, respectively.  Interest expense has fallen
in line with  expectations,  with interest expense falling in line with the loan
outstanding in the year.

Year ended December 31, 2004 compared with the year ended December 31, 2003

Total Revenues
Finance lease  interest  income for the year ended December 31, 2004 amounted to
$3,115,000,  compared with  $3,532,000 for the year ended December 31, 2003 with
the  decrease  being  primarily  due to the decrease in the value of the finance
lease.

Expenses
Interest expense on the Term and the Serial Loans amounted to $3,076,000 for the
year ended  December 31,  2004.  The  amortisation  of discount on loans for the
period amounted to $75,000.  The Company amortises the discount over the life of
the Term and Serial Loans. The corresponding  figures for the period to December
31, 2003 were $3,489,000 and $75,000, respectively.  Interest expense has fallen
in line with  expectations,  with interest expense falling in line with the loan
outstanding in the year.

Liquidity and Capital Resources

As set forth above,  revenues from the Initial Charter are sufficient to pay our
obligations under the Term and Serial Loans.  Chevron may elect to terminate the
Charter on  specified  termination  dates which had  commenced  in 2004.  If the
Charter is  terminated  by Chevron,  the  Manager,  acting on our  behalf,  will
attempt  to  find an  acceptable  replacement  charter  for  the  Vessel.  If an
acceptable  replacement  charter is commercially  unavailable,  the Manager will
solicit bids for the sale or recharter of the Vessel.  The Manager's  ability to
obtain an acceptable  replacement  charter,  to sell the Vessel or recharter the
Vessel will depend on market rates for new and used vessels,  both of which will
depend on the supply of and demand for tanker  capacity for oil  transportation,
and the advantages or  disadvantages  of the Vessel  compared with other vessels
available at the time.

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements that have, or are reasonably likely to
have, a material current effect or that are reasonably likely to have a material
future  effect on our  financial  condition,  revenues or  expenses,  liquidity,
capital expenditures or capital reserves.

Tabular disclosure of contractual obligations

As at December  31,  2005,  we had the  following  contractual  obligations  and
commitments:

                                      Payments due by period
                      Less than                           More than
(in $'000)               1 year   1-3 years   3-5 years     5 years       Total
Term Loans  (8.52%)       3,187       6,374       6,374      15,930      31,865
--------------------------------------------------------------------------------
Total contractual         3,187       6,374       6,374      15,930      31,865
obligations
--------------------------------------------------------------------------------

Critical Accounting Policies

The  Company's  principal  accounting  policies  are  described in Note 2 to the
financial  statements,  which is included in Item 18 of this Annual Report.  The
most critical accounting policies include:

     o    Accounting for finance leases as lessor

As the lease has been classified as a finance lease,  the minimum lease payments
(net of amounts representing estimated executory costs including profit thereon)
plus the unguaranteed residual value are recorded as the gross investment in the
lease.  The difference  between the gross investment in the lease and the sum of
the present values of the two components of the gross  investment is recorded as
unearned  income  which is  amortised  to income  over the lease term as finance
lease interest  income to produce a constant  periodic rate of return on the net
investment in the lease.

Trend Information

It is expected that as the Vessel ages, the charter  income will be reduced.  In
line with this  effect,  the  interest  payable  on the  Serial  and Term  Loans
financing the ship will also be reduced as the principal is repaid.  Thus, there
is a  consistent  reduction in income,  expenses and net assets  employed by the
Company.  However,  cash flows  should be  adequate  to  service  the debt load.
Clearly there will always be some uncertainty within the business because of the
nature of the tanker  business.  However  over the past few years,  the  charter
rates have been at a level such that the  Company  has been able to service  its
debt. The structure of debt and charterhire agreements,  including provision for
early termination, should provide the Company with a clear future.

Recently  Issued  Accounting  Standards and Securities and Exchange  Commission
Rules

There were no recently issued accounting  standards that would have an impact on
the Company's results.

Item 6.  Directors, Senior Management and Employees

Directors and Executive Officers of CalPetro Tankers (Bahamas II) Limited

                            Age    Position

Tor Olav Troim               43    Director and President
Kate Blankenship             41    Director and Secretary

Tor Olav Troim has been a Director  of  CalPetro  Tankers  (Bahamas II)  Limited
since October 31, 2001. He has been  Vice-President  and a director of Frontline
since  November 3, 1997.  He previously served  as Deputy  Chairman of Frontline
from July 4, 1997.  Mr. Troim has also served as a director and Chairman of Ship
Finance International  Limited,  a  Bermuda  company  listed  on  the  New  York
Stock  Exchange,  since  May  2000, has been  a director  and  Vice-Chairman  of
Knightsbridge Tankers  Limited  ("Knightsbridge").  He is  a director  of  Aktiv
Inkasso  ASA a  Norwegian Oslo  Stock Exchange  listed company and Golden  Ocean
Group Limited, a Bermuda company  listed on the Oslo Stock  Exchange.  Mr. Troim
has served as a director  of Golar  LNG  Limited  since  May  2001. Prior to his
service with Frontline, from January 1992, Mr. Troim served as Managing Director
and a member of the Board of Directors of DNO AS, a Norwegian oil company.

Kate Blankenship  has been a Director of CalPetro  Tankers  (Bahamas II) Limited
since  October 31, 2001.  She has  been Chief  Accounting  Officer  and  Company
Secretary of Frontline and  resigned from these  positions in October  2005, and
since 2003 she has been a  director of Frontline.  Mrs. Blankenship  also serves
as a director of Ship Finance International  Limited.  Mrs. Blankenship has been
Chief  Financial  Officer of  Knightsbridge  since April  2000 and  Secretary of
Knightsbridge  since December  2000.  Mrs.  Blankenship  has been a  director of
Golar  LNG Limited  since 2003. She is a member of  the  Institute of  Chartered
Accountants in England and Wales.

Compensation

During the year ended December 31, 2005, the Company paid no compensation to its
directors and officers.

Board Practices

The directors have no fixed date of expiry of their term of office.  The details
of their  service are shown above.  The  directors  have no  entitlement  to any
benefits on termination of their office.

The Company has neither an audit nor a remuneration committee.

Employees

The  Company does not have  any  employees  involved in  the  management  of the
Vessel.  Frontline  manages  the  company as described  below in Item 7- Related
Party Transactions.

Share Ownership

The directors have no interest in the share capital of the Company,  nor do they
have any arrangements for involvement in the Company's capital.

Item 7. Major Shareholders and Related Party Transactions

Major Shareholders
The Company is a wholly  owned  subsidiary  of  California  Tankers  Investments
Limited,  a  company  organized  under  the  laws  of the  Bahamas,  which  is a
wholly-owned  subsidiary of ITC.  Frontline  ultimately  controls the Company as
described  in more  detail in Item 4. All the issued and  outstanding  shares of
capital stock of the Company are beneficially owned by ITC and have been pledged
to JPMorgan,  formerly the Chase  Manhattan  Trust  Company of  California  (the
"Collateral  Trustee")  as part of the  collateral  for the Notes.  ITC has full
voting control over the Company subject to the rights of the Collateral Trustee.

Significant  changes in  ownership  have been  disclosed in Item 4, there are no
known arrangements, which may lead to a change in control of the Company.

Related Party Transactions

As discussed in Item 4,  Frontline,  the ultimate  parent,  manages the Company.
Pursuant to a management  agreement,  Frontline is the Manager and the Technical
Advisor.  Under the management agreement,  Frontline is entitled to a Management
Fee and a Technical Advisor's Fee.

Under the terms of the  management  agreement,  the Management Fee consists of a
fee of $13,625  initially per annum for each Vessel,  along with a fee of $3,000
covering all four Vessels, payable semi-annually in arrears for the period until
the third anniversary of the closing of the Notes issue then increasing by 4% on
each subsequent anniversary of the closing of the issue of the Notes.

The Technical  Advisor's  Fee was  initially  $10,000 per annum for each Vessel,
payable semi-annually in arrears,  during the initial first three year period as
described  above. On each subsequent  anniversary of the closing of the issue of
the Notes,  the fee will increase by 4%. In addition,  the Technical  Advisor is
entitled  to be  reimbursed  for the fees,  costs  and  expenses  of  conducting
periodic inspections of the Vessels.

Pursuant to a Designated  Representative  Agreement,  CalPetro  Holdings Limited
(the  "Designated   Representative")   was  appointed  to  represent  California
Petroleum as its Designated  Representative to act on its behalf with respect to
certain  administrative  matters  such as the  filing of  periodic  reports  and
financial  statements  with the  Securities  and  Exchange  Commission.  The fee
payable to the Designated  Representative (the "Designated  Representative Fee")
during the initial three year period  described above was $15,000 per annum with
a 4% increase on each subsequent  anniversary of the closing of the issue of the
Notes.

In 2005,  a total of  $38,120  was paid  under  the  Management  and  Designated
Representative Agreements.

Item 8. Financial Information

Consolidated Statements and Other Financial Information

See Item 18 below.

Legal Proceedings

We are not a party to any material pending legal proceedings.  In the future, we
may be  subject  to legal  proceedings  and  claims  in the  ordinary  course of
business.  Those claims,  even if lacking merit, could result in the expenditure
by us of significant financial and managerial resources.

Item 9. The Offer and Listing

Not applicable.

Item 10. Additional Information

Memorandum and Articles of Association

The Company is No. 23064B in the Bahamian register.

Directors may be interested in Company  transactions but such interest should be
disclosed to the other  directors or Company  members  prior to agreement by the
board or Company meeting as appropriate.  The director concerned may not vote on
the transaction. The directors may borrow on behalf of the Company as they think
fit.  There are no stated age limits for  directors  and  directors  need not be
stockholders. They do not retire by rotation.

All shares issued are unclassified,  there is no authorisation in force to issue
other classes of share. Consequently all shares have equal entitlement to voting
rights,  dividends,  profit  shares  and other  rights  and  duties.  Should any
dividend be declared and not claimed the directors  may, after a period of three
years,  resolve that such  dividends are forfeit for the benefit of the Company.
There are no provisions for changes to the rights of  stockholders  contained in
the articles,  except that by resolution of the directors the authorised capital
may be increased  and that the Company may divide or combine  shares  within the
same class.

Company  meetings may be convened by the directors or held on request of members
holding 50% of the voting shares. Annual meetings are held according to Bahamian
law.   Members,   their  properly   appointed   proxies  and  corporate  members
representatives are entitled to attend.

There are no limits to  ownership  of Company  securities  or to the exercise of
voting rights.  Disclosure of ownership is governed by Bahamian law and any laws
operative in the jurisdictions  pertaining to the owners of the securities.  The
directors of the Company  may,  without  giving a reason,  decline to register a
transfer of shares.

Material Contracts

The Company has no material  contracts apart from those pertaining to its normal
business.

Exchange Controls

The Company was registered under the International  Business Companies Act, 1989
of the  Commonwealth  of the Bahamas (the "IBC Act") in May 1994. As a result of
such  registration  the Company is exempt from the  provisions  of the  Exchange
Control Regulations Act of the Bahamas.  Interests in the Registered  Securities
may be freely transferred among non-residents of The Bahamas under Bahamian Law.

There are no restrictions  upon the payment of foreign  (non-Bahamian)  currency
dividends, interest or other payments in respect of the Registered Securities.

The Company is not permitted to deal in the currency of the Bahamas except in an
external  Bahamian dollar account which can be funded only with foreign currency
funds or funds the Company has permission to convert.

None of the Company's Articles of Association,  Memorandum of Association or any
other document,  nor any Bahamian law nor, to the knowledge of the Company,  any
foreign law, imposes limitations on the right of non-residents or foreign owners
to hold the Company's shares of common stock.

Taxation

No  Bahamian  income or  withholding  taxes are  imposed  on the  payment by the
Company of any  principal  or  interest  to any holder of Notes who is either an
individual  citizen or resident of the United  States or an entity  formed under
the laws of the United States. There is no income tax treaty currently in effect
between the United States and Bahamas.

Documents on Display

The  Company is  subject to the  informational  requirements  of the  Securities
Exchange Act of 1934, as amended.  In accordance with these requirements we file
reports and other information with the Securities and Exchange Commission. These
materials,  including  this annual report and the  accompanying  exhibits may be
inspected  and  copied at the  public  reference  facilities  maintained  by the
Commission  at 100 F Street,  NE, Room 1580,  Washington,  D.C.  20549.  You may
obtain  information  on the operation of the public  reference room by calling 1
(800)  SEC-0330,  and you may obtain copies at prescribed  rates from the Public
Reference Section of the Commission at its principal office in Washington,  D.C.
20549. The SEC maintains a website  (http://www.sec.gov.) that contains reports,
proxy and information  statements and other  information  regarding  registrants
that file  electronically  with the SEC. In addition,  documents  referred to in
this annual report may be inspected at the office of the Manager at Par-la-Ville
Place 4th Floor, 14 Par-la-Ville Road, Hamilton.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

Quantitative information about market risk

Quantitative  information  about market risk instruments at December 31, 2005 is
as follows:

i)   Term Loans:

The Term Loans bear  interest at a rate of 8.52% per annum.  Interest is payable
semi-annually on April 1 and October 1. Principal is repayable on the Term Loans
in accordance with a remaining  ten-year sinking fund schedule.  The table below
provides  the  revised  scheduled  sinking  fund  redemption  amounts  and final
principal payment of the Allocated  Principal Amount of the Term Loans following
termination of the related Initial  Charter on each of the optional  termination
dates.


      Scheduled  Charter not     Charter      Charter      Charter
   payment date   terminated  terminated   terminated   terminated
                                    2006         2008         2010
                       $'000       $'000        $'000        $'000
 April 1, 2006         3,187       3,187        3,187        3,187
 April 1, 2007         3,187       1,700        3,187        3,187
 April 1, 2008         3,187       1,840        3,187        3,187
 April 1, 2009         3,187       2,000        1,690        3,187
 April 1, 2010         3,187       2,170        1,830        3,187
 April 1, 2011         3,187       2,360        1,990        1,510
 April 1, 2012         3,187       2,560        2,160        1,630
 April 1, 2013         3,187       2,770        2,340        1,770
 April 1, 2014         3,187       3,010        2,540        1,930
 April 1, 2015         3,182      10,268        9,754        9,090
 ------------------------------------------------------------------
                      31,865      31,865       31,865       31,865
 ==================================================================

Qualitative information about market risk

The  Company was  organised  solely for the  purpose of the  acquisition  of one
Vessel and subsequently  entered into a long-term  agreement between the Company
and Chevron.

Item 12. Description of Securities Other than Equity Securities

Not applicable.

<PAGE>

                                     PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material  Modifications  to the Rights of Security  Holders and Use of
Proceeds

None.

Item 15. Controls and Procedures

(a)  Evaluation of disclosure controls and procedures.

     Within the 90 days prior to the date of this  report,  the Company  carried
     out an evaluation,  under the supervision and with the participation of the
     Company's  manager  Frontline Ltd.,  including the Company's  President and
     Principal  Financial  Officer,  of  the  effectiveness  of the  design  and
     operation of the Company's  disclosure  controls and procedures pursuant to
     Exchange Act Rule 13a-14.  Based upon that  evaluation,  the  President and
     Principal  Financial  Officer  concluded  that  the  Company's   disclosure
     controls and  procedures  are effective in alerting them timely to material
     information  relating  to  the  Company  required  to be  included  in  the
     Company's periodic SEC filings.

(b)  Changes in internal controls

     There have been no significant changes in our internal controls or in other
     factors that could have significantly affected those controls subsequent to
     the date of our most recent evaluation of internal controls,  including any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.

Item 16A. Audit Committee Financial Expert

The Company's equity is neither listed nor publicly  traded.  The equity is held
by one beneficial holder,  California Tankers Investments Limited. The Company's
obligations toward its bondholders are set out in detail in covenants  contained
in the Indenture for their Notes.  Accordingly  the Company's Board of Directors
has  determined  that  the  role  played  by an audit  committee  would  have no
applicability to the Company.

Item 16B. Code of Ethics

The Company's equity is neither listed nor publicly  traded.  The equity is held
by one beneficial holder,  California Tankers Investments Limited. The Company's
obligations toward its bondholders are set out in detail in covenants  contained
in the Indenture for their Notes.  Accordingly  the Company's Board of Directors
has  determined  that  the  role  played  by a code  of  ethics  would  have  no
applicability to the Company.

Item 16C. Principal Accountant Fees and Services

(a)   Audit Fees
The  following  table sets forth,  for the two most  recent  fiscal  years,  the
aggregate  fees  billed for  professional  services  rendered  by the  principal
accountant,  Grant Thornton LLP, for the audit of the Company's annual financial
statements and services provided by the principal  accountant in connection with
statutory and regulatory  filings or engagements  for the two most recent fiscal
years.

 Fiscal year ended December 31, 2005           $19,425
 Fiscal year ended December 31, 2004           $18,000

(b)  Audit -Related Fees
For the  fiscal  years  ended  December  31,  2005 and 2004,  there have been no
assurance and related services rendered by the principal  accountant  related to
the  performance  of the audit or review of the Company's  financial  statements
which have not been reported under Audit Fees above.

(c)  Tax Fees
For the  fiscal  years  ended  December  31,  2005 and 2004,  there have been no
aggregate  fees  billed for  professional  services  rendered  by the  principal
accountant for tax compliance, tax advice and tax planning.

(d)   All Other Fees
For the  fiscal  years  ended  December  31,  2005 and 2004,  there have been no
aggregate  fees  billed for  professional  services  rendered  by the  principal
accountant for services other than Audit Fees,  Audit-Related  Fees and Tax Fees
set forth above.

The Company's Board of Directors has assigned  responsibility for the engagement
of the auditors to the Company's manager.

Item 16D. Exemptions from the Listing Rules for Audit Committees

Not Applicable

Item  16E.  Purchases  of  Equity  Securities  by  the  Issuer  and  Affiliated
Purchasers

Not Applicable

<PAGE>

                                    PART III

Item 17. Financial Statements

Not applicable.

Item 18. Financial Statements

The following financial  statements and notes,  together with the reports of the
Grant Thornton Independent  Registered Public Accounting Firm and Ernst & Young,
Independent  Registered Public Accounting Firm, are filed as part of this annual
report

Page

   Report of Independent Registered Accounting Firm                       F-1

   Report of Independent Registered Accounting Firm                       F-2

   Statements of Operations and Retained Earnings for the Years Ended     F-3
   December 31, 2005, 2004 and 2003

   Balance Sheets as of December 31, 2005 and 2004                        F-4

   Statements of Cash Flows for the Years Ended                           F-5
   December 31, 2005, 2004 and 2003

   Notes to the Financial Statements                                      F-6

Item 19.  Exhibits

1.1*  Certificate  of  Incorporation  and  Memorandum of Association of CalPetro
Tankers  (Bahamas II) Limited,  incorporated  by reference to Exhibit 3.3 in the
Registration Statement of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas II) Limited,  CalPetro  Tankers  (Bahamas  III)  Limited,  and CalPetro
Tankers  (IOM)  Limited  filed  November  9,  1994 on  Forms  S-3,  S-1 and F-1,
Registration No. 33-79220.

1.2*  Articles  of  Association  of  CalPetro   Tankers  (Bahamas  II)  Limited,
incorporated  by  reference  to Exhibit  3.4 in the  Registration  Statement  of
CalPetro  Tankers  (Bahamas I) Limited,  CalPetro  Tankers (Bahamas II) Limited,
CalPetro Tankers (Bahamas III) Limited, and CalPetro Tankers (IOM) Limited filed
November 9, 1994 on Forms S-3, S-1 and F-1, Registration No. 33-79220.

2.1* Form of Term Indenture between California  Petroleum Transport  Corporation
and Chemical Trust Company of California, as Indenture Trustee,  incorporated by
reference  to Exhibit 4.1 in the  Registration  Statement  of  CalPetro  Tankers
(Bahamas I) Limited,  CalPetro  Tankers  (Bahamas II) Limited,  CalPetro Tankers
(Bahamas III) Limited, and CalPetro Tankers (IOM) Limited filed November 9, 1994
on Forms S-3, S-1 and F-1, Registration No. 33-79220.

2.2* Form of Term Mortgage  Notes,  incorporated  by reference to Exhibit 4.2 in
the Registration  Statement of CalPetro  Tankers  (Bahamas I) Limited,  CalPetro
Tankers  (Bahamas II) Limited,  CalPetro  Tankers  (Bahamas  III)  Limited,  and
CalPetro Tankers (IOM) Limited filed November 9, 1994 on Forms S-3, S-1 and F-1,
Registration No. 33-79220.

2.3* Form of Bahamian Statutory Ship Mortgage and Deed of Covenants by [CalPetro
Tankers  (Bahamas  I)  Limited],  [CalPetro  Tankers  (Bahamas  II)  Limited] to
California Petroleum Transport Corporation  (including the form of assignment of
such Mortgage to Chemical Trust Company of California, as Collateral Trustee, by
California  Petroleum  Transport  Corporation),  incorporated  by  reference  to
Exhibit  4.4 in the  Registration  Statement  of  CalPetro  Tankers  (Bahamas I)
Limited,  CalPetro Tankers (Bahamas II) Limited,  CalPetro Tankers (Bahamas III)
Limited, and CalPetro Tankers (IOM) Limited filed November 9, 1994 on Forms S-3,
S-1 and F-1, Registration No. 33-79220.

2.4* Form of  Assignment  of Initial  Charter  Guarantee  by  [CalPetro  Tankers
(Bahamas I) Limited]  [CalPetro Tankers (Bahamas II) Limited]  [CalPetro Tankers
(IOM) Limited] [CalPetro Tankers (Bahamas III) Limited] to California  Petroleum
Transport  Corporation  (including  the form of  Collateral  Assignment  of such
Initial Charter Guarantee to Chemical Trust Company of California, as Collateral
Trustee,  by  California  Petroleum  Transport  Corporation),   incorporated  by
reference  to Exhibit 4.7 in the  Registration  Statement  of  CalPetro  Tankers
(Bahamas I) Limited,  CalPetro  Tankers  (Bahamas II) Limited,  CalPetro Tankers
(Bahamas III) Limited, and CalPetro Tankers (IOM) Limited filed November 9, 1994
on Forms S-3, S-1 and F-1, Registration No. 33-79220.

2.5* Form of  Assignment  of Earnings  and  Insurances  from  [CalPetro  Tankers
(Bahamas I) Limited]  [CalPetro Tankers (Bahamas II) Limited]  [CalPetro Tankers
(IOM) Limited] [CalPetro Tankers (Bahamas III) Limited] to California  Petroleum
Transport  Corporation,   incorporated  by  reference  to  Exhibit  4.8  in  the
Registration Statement of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas II) Limited,  CalPetro  Tankers  (Bahamas  III)  Limited,  and CalPetro
Tankers  (IOM)  Limited  filed  November  9,  1994 on  Forms  S-3,  S-1 and F-1,
Registration No. 33-79220.

2.6* Form of Assignment of Initial  Charter from [CalPetro  Tankers  (Bahamas I)
Limited]  [CalPetro  Tankers  (Bahamas  II)  Limited]  [CalPetro  Tankers  (IOM)
Limited[  [CalPetro  Tankers  (Bahamas  III)  Limited] to  California  Petroleum
Transport  Corporation  (including  the form of  Collateral  Assignment  of such
Initial Charter to Chemical Trust Company of California,  as Collateral Trustee,
by California  Petroleum  Transport  Corporation),  incorporated by reference to
Exhibit  4.9 in the  Registration  Statement  of  CalPetro  Tankers  (Bahamas I)
Limited,  CalPetro Tankers (Bahamas II) Limited,  CalPetro Tankers (Bahamas III)
Limited, and CalPetro Tankers (IOM) Limited filed November 9, 1994 on Forms S-3,
S-1 and F-1, Registration No. 33-79220.

2.7* Form of Management  Agreement  between P.D. Gram & Co., A.S., and [CalPetro
Tankers (Bahamas I) Limited]  [CalPetro Tankers (Bahamas II) Limited]  [CalPetro
Tankers (IOM) Limited] [CalPetro Tankers (Bahamas III) Limited], incorporated by
reference to Exhibit  4.10 in the  Registration  Statement  of CalPetro  Tankers
(Bahamas I) Limited,  CalPetro  Tankers  (Bahamas II) Limited,  CalPetro Tankers
(Bahamas III) Limited, and CalPetro Tankers (IOM) Limited filed November 9, 1994
on Forms S-3, S-1 and F-1, Registration No. 33-79220.

2.8* Form of Assignment of Management  Agreement from [CalPetro Tankers (Bahamas
I) Limited]  [CalPetro  Tankers  (Bahamas II) Limited]  [CalPetro  Tankers (IOM)
Limited] [CalPetro Tankers (Bahamas III) Limited],  incorporated by reference to
Exhibit  4.11 in the  Registration  Statement  of CalPetro  Tankers  (Bahamas I)
Limited,  CalPetro Tankers (Bahamas II) Limited,  CalPetro Tankers (Bahamas III)
Limited, and CalPetro Tankers (IOM) Limited filed November 9, 1994 on Forms S-3,
S-1 and F-1, Registration No. 33-79220.

2.9*  Form of Serial  Loan  Agreement  between  California  Petroleum  Transport
Corporation  and  [CalPetro  Tankers  (Bahamas  I)  Limited]  [CalPetro  Tankers
(Bahamas  II)  Limited]  [CalPetro  Tankers  (IOM)  Limited]  [CalPetro  Tankers
(Bahamas  III)  Limited],  incorporated  by  reference  to  Exhibit  4.12 in the
Registration Statement of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas II) Limited,  CalPetro  Tankers  (Bahamas  III)  Limited,  and CalPetro
Tankers  (IOM)  Limited  filed  November  9,  1994 on  Forms  S-3,  S-1 and F-1,
Registration No. 33-79220.

2.10*  Form  of Term  Loan  Agreement  between  California  Petroleum  Transport
Corporation  and  [CalPetro  Tankers  (Bahamas  I)  Limited]  [CalPetro  Tankers
(Bahamas  II)  Limited]  [CalPetro  Tankers  (IOM)  Limited]  [CalPetro  Tankers
(Bahamas  III)  Limited],  incorporated  by  reference  to  Exhibit  4.13 in the
Registration Statement of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas II) Limited,  CalPetro  Tankers  (Bahamas  III)  Limited,  and CalPetro
Tankers  (IOM)  Limited  filed  November  9,  1994 on  Forms  S-3,  S-1 and F-1,
Registration No. 33-79220.

2.11*  Form of  Collateral  Agreement  between  California  Petroleum  Transport
Corporation  [CalPetro  Tankers (Bahamas I) Limited]  [CalPetro Tankers (Bahamas
II) Limited]  [CalPetro  Tankers (IOM) Limited]  [CalPetro Tankers (Bahamas III)
Limited],  the  Indenture  Trustee  under the Serial  Indenture,  the  Indenture
Trustee under the Term Indenture and Chemical  Trust Company of  California,  as
Collateral   Trustee,   incorporated   by  reference  to  Exhibit  4.14  in  the
Registration Statement of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas II) Limited,  CalPetro  Tankers  (Bahamas  III)  Limited,  and CalPetro
Tankers  (IOM)  Limited  filed  November  9,  1994 on  Forms  S-3,  S-1 and F-1,
Registration No. 33-79220.

2.12* Form of Issue of One Debenture from [CalPetro Tankers (Bahamas I) Limited]
[CalPetro  Tankers  (Bahamas  II)  Limited]  [CalPetro  Tankers  (IOM)  Limited]
[CalPetro  Tankers  (Bahamas  III) Limited] to  California  Petroleum  Transport
Corporation,  incorporated  by  reference  to Exhibit  4.15 in the  Registration
Statement of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas II)
Limited,  CalPetro  Tankers  (Bahamas III) Limited,  and CalPetro  Tankers (IOM)
Limited  filed  November  9, 1994 on Forms S-3,  S-1 and F-1,  Registration  No.
33-79220.

4.1* Form of Initial Charter Guarantee by Chevron  Corporation,  incorporated by
reference to Exhibit  10.1 in the  Registration  Statement  of CalPetro  Tankers
(Bahamas I) Limited,  CalPetro  Tankers  (Bahamas II) Limited,  CalPetro Tankers
(Bahamas III) Limited, and CalPetro Tankers (IOM) Limited filed November 9, 1994
on Forms S-3, S-1 and F-1, Registration No. 33-79220.

4.2* Form of Bareboat  Initial Charter  between  [CalPetro  Tankers  (Bahamas I)
Limited]  [CalPetro  Tankers  (Bahamas  II)  Limited]  [CalPetro  Tankers  (IOM)
Limited]   [CalPetro  Tankers  (Bahamas  III)  Limited]  and  Chevron  Transport
Corporation,  incorporated  by  reference  to Exhibit  10.2 in the  Registration
Statement of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas II)
Limited,  CalPetro  Tankers  (Bahamas III) Limited,  and CalPetro  Tankers (IOM)
Limited  filed  November  9, 1994 on Forms S-3,  S-1 and F-1,  Registration  No.
33-79220.

4.3* Form of Vessel Purchase  Agreement  between  [CalPetro  Tankers (Bahamas I)
Limited]  [CalPetro  Tankers  (Bahamas  II)  Limited]  [CalPetro  Tankers  (IOM)
Limited]   [CalPetro  Tankers  (Bahamas  III)  Limited]  and  Chevron  Transport
Corporation  (including the form of Assignment of such Vessel Purchase Agreement
to California Petroleum Transport), incorporated by reference to Exhibit 10.3 in
the Registration  Statement of CalPetro  Tankers  (Bahamas I) Limited,  CalPetro
Tankers  (Bahamas II) Limited,  CalPetro  Tankers  (Bahamas  III)  Limited,  and
CalPetro Tankers (IOM) Limited filed November 9, 1994 on Forms S-3, S-1 and F-1,
Registration No. 33-79220.

10.1* Powers of Attorney for directors and certain  officers of CalPetro Tankers
(Bahamas  II)  Limited,  incorporated  by  reference  to  Exhibit  24.1  in  the
Registration Statement of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas II) Limited,  CalPetro  Tankers  (Bahamas  III)  Limited,  and CalPetro
Tankers  (IOM)  Limited  filed  November  9,  1994 on  Forms  S-3,  S-1 and F-1,
Registration No. 33-79220.

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

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

13   Certification  pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant to
     Section 906 of the Sarbanes-Oxley Act of 2002

* Incorporated by reference to the filing indicated.

<PAGE>
Report of Independent Registered Public Accounting Firm

To the Board of Directors
Calpetro Tankers (Bahamas II) Limited

We have audited the accompanying balance sheets of Calpetro Tankers (Bahamas II)
Limited  (the  "Company")  as of  December  31,  2005 and  2004 and the  related
statements of  operations  and retained  earnings,  and cash flows for the years
then ended.  These financial  statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Calpetro Tankers (Bahamas II)
Limited at December 31, 2005 and 2004 and the results of its operations and cash
flows  for the  years  then  ended  in  conformity  with  accounting  principles
generally accepted in the United States of America.



Grant Thornton LLP



New York, New York
June 22, 2006


<PAGE>



Report of Independent Registered Public Accounting Firm

To the Board of Directors
Calpetro Tankers (Bahamas II) Limited

We have audited the accompanying statement of operations, cashflows and retained
earnings of CalPetro  Tankers  (Bahamas II) Limited for the year ended  December
31, 2003.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We  conducted  our audit in  accordance  with  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.  We were not engaged to perform an
audit of the Company's  internal  control over  financial  reporting.  Our audit
included  consideration of internal control over financial  reporting as a basis
for designing audit  procedures that are appropriate in the  circumstances,  but
not for the  purpose  of  expressing  an  opinion  on the  effectiveness  of the
Company's internal control over financial reporting.  Accordingly, we express no
such  opinion.  An audit also  includes  examining,  on a test  basis,  evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the results of  operations  and  cashflows of CalPetro
Tankers (Bahamas II) Limited for the year ended December 31, 2003, in conformity
with United States generally accepted accounting principles.




Ernst & Young LLC
Chartered Accountants



Douglas, Isle of Man
June 8, 2004



<PAGE>




CalPetro Tankers (Bahamas II) Limited
Statements of  Operations  and Retained  Earnings For the Years Ended  December
31, 2005, 2004 and 2003
(in thousands of US$)


                                                       2005      2004     2003
Operating revenues
    Finance lease interest income                     2,819     3,115    3,532
-------------------------------------------------------------------------------
    Total operating revenues                          2,819     3,115    3,532
-------------------------------------------------------------------------------

Operating expenses
    Administrative expenses                            (97)      (72)     (78)
-------------------------------------------------------------------------------
    Total operating expenses                           (97)      (72)     (78)
-------------------------------------------------------------------------------
Net operating income                                  2,722     3,043    3,454
-------------------------------------------------------------------------------
Other operating income (expenses)
    Interest income                                      46        54       54
    Interest expense                                (2,783)   (3,076)  (3,489)
    Other financial items                              (75)      (75)     (75)
-------------------------------------------------------------------------------
    Net other expenses                              (2,812)   (3,097)  (3,510)
-------------------------------------------------------------------------------
Net income                                             (90)      (54)     (56)

Retained earnings at the start of year                1,568     1,622    1,678
-------------------------------------------------------------------------------
Retained earnings at the end of year                  1,478     1,568    1,622
===============================================================================

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

<PAGE>

CalPetro Tankers (Bahamas II) Limited
Balance Sheets as of December 31, 2005 and 2004
(in thousands of US$)



                                                                 2005     2004
ASSETS
Current Assets
    Cash and cash equivalents                                   2,033    2,010
    Current   portion  of  net  investment  in
    finance lease                                               3,287    3,286
    Interest receivable                                           653      722
    Other current assets                                            6       20
-------------------------------------------------------------------------------
Total current assets                                            5,979    6,038
Net investment in finance lease,  less current
portion                                                        27,872   31,084
Deferred charges                                                  201      276
-------------------------------------------------------------------------------
Total assets                                                   34,052   37,398
===============================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Short-term  debt and  current  portion  of
    long-term debt                                              3,187    3,187
    Accrued interest                                              679      747
    Other current liabilities                                    30         31
------------------------------------------------------------------------------
Total current liabilities                                       3,896    3,965
    Long-term debt                                             28,678   31,865
------------------------------------------------------------------------------
Total liabilities                                              32,574   35,830
------------------------------------------------------------------------------

Commitments and Contingencies                                       -        -
Minority Interest                                                   -        -

Stockholder's equity
    Unclassified  stock:  100 shares of $1 par
    value                                                           -        -
    Retained earnings                                           1,478    1,568
------------------------------------------------------------------------------
Total stockholder's equity                                      1,478    1,568
------------------------------------------------------------------------------
Total liabilities and stockholder's equity                     34,052   37,398
==============================================================================

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

<PAGE>

CalPetro Tankers (Bahamas II) Limited
Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003
(in thousands of US$)


                                                         2005     2004    2003

Net income                                               (90)     (54)    (56)
    Adjustments to reconcile net income to
    net cash provided by operating
    activities:
    Amortisation of deferred charges                       75       75      75
Changes in operating assets and liabilities,
  net of effect of acquisitions:
    Interest receivable                                    69       89     109
    Other current assets                                   14       13      36
    Accrued interest payable                             (68)    (108)    (89)
    Other current liabilities                             (1)        -      23
-------------------------------------------------------------------------------
Net cash provided by operating activities                 (1)       15      98
-------------------------------------------------------------------------------

Investing activities
    Finance lease payments received                     3,211    4,215   5,156
-------------------------------------------------------------------------------
Net cash provided by (used in) investing activities     3,211    4,215   5,156
-------------------------------------------------------------------------------

Financing activities
    Repayments of debt                                (3,187)  (5,210) (5,210)
-------------------------------------------------------------------------------
Net cash provided by (used in) financing activities   (3,187)  (5,210) (5,210)
-------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents       23    (980)      44
Cash and cash equivalents at beginning of year          2,010    2,990   2,946
Cash and cash equivalents at end of year                2,033    2,010   2,990
===============================================================================

Supplemental disclosure of cash flow information:
    Interest paid                                       2,851    3,184   3,578
===============================================================================

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

<PAGE>

CalPetro Tankers (Bahamas II) Limited
Notes to the Financial Statements

1.   GENERAL

     CalPetro  Tankers  (Bahamas II) Limited (the "Company") was incorporated in
     the  Bahamas  on May 13,  1994 with two other  entities:  CalPetro  Tankers
     (Bahamas I) Limited and CalPetro Tankers (Bahamas III) Limited. In addition
     CalPetro  Tankers (IOM) Limited was  incorporated in the Isle of Man. These
     entities (the "Owners") were organised as special purpose companies for the
     purpose of acquiring one of four oil tankers (each a "Vessel", together the
     "Vessels")  from  Chevron  Transport  Corporation  ("Chevron")  which  were
     concurrently  chartered on long-term  charter  agreements  back to Chevron.
     California  Petroleum  Transport  Corporation ,acting as agent on behalf of
     the Owners,  issued as full recourse  obligations  Term Mortgage  Notes and
     Serial Mortgage Notes (the "Serial and Term Notes") and subsequently loaned
     the  proceeds to the Owners in the form of Term  Mortgage  Loans and Serial
     Mortgage Loans (the "Serial and Term Loans") to fund the acquisition of the
     Vessels from Chevron.

     The Owners only  source of funds with  respect to the Serial and Term Loans
     are payments from Chevron,  including any termination payments as discussed
     further  in Note 5. The  Owners do not have any  other  source of funds for
     payment of the Serial and Term Loans.

2.   ACCOUNTING POLICIES

     Basis of presentation
     The financial  statements  have been prepared in accordance with accounting
     principles  generally  accepted in the United  States of America (US GAAP).
     Certain  comparative  figures  have been  reclassified  to  conform  to the
     presentation adopted in the current period.

     The  preparation  of financial  statements  in accordance  with  accounting
     principles  generally accepted in the United States of America requires the
     Company to make  estimates  and  assumptions  in  determining  the reported
     amounts of assets and liabilities and disclosures of contingent  assets and
     liabilities  on the  dates of the  financial  statements  and the  reported
     amounts of revenues  and  expenses  during the  reporting  periods.  Actual
     results could differ from these estimates.

     Cash and cash equivalents
     The Company considers all highly liquid investments with a maturity date of
     three months or less when purchased to be cash equivalents.

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

     Deferred charges
     Deferred  charges  comprise   expenses  incurred  in  connection  with  the
     structuring  of the  financing  transactions  and  issuance  of debt.  Such
     expenses are being amortised over the life of the debt.

     Revenue and expense recognition
     Revenues and  expenses  are  recognised  on the accrual  basis.  Revenue is
     substantially  generated  from bareboat  charter hires and is recorded over
     the term of the  charter as service is  provided.  Interest  payable on the
     Serial and Term Loans is accrued on a daily basis.

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

3.   TAXATION

     The Company is not liable to pay income taxes in the  Bahamas.  No Bahamian
     income or  withholding  taxes are  imposed on the payment by the Company of
     any  principal  or  interest  to any  holder  of  Notes  who is  either  an
     individual  citizen or  resident of the United  States or an entity  formed
     under  the  laws of the  United  States.  There  is no  income  tax  treaty
     currently in effect between the United States and Bahamas.

4.   CASH AND CASH EQUIVALENTS

     The cash accounts were  established and are maintained by JPMorgan Chase as
     the Collateral  Trustee who maintains the accounts as collateral  agent for
     the equal and ratable  benefit of the holders of the Serial and Term Notes.
     Charterhire  payments are deposited into a revenue  account and these funds
     can only be used to fund the  principal  and interest due on the Serial and
     Term Notes and any operating costs in relation to operating the Owners.

5.   INVESTMENT IN FINANCE LEASE

     The Company has chartered  its vessel on a long term bareboat  charter (the
     "Charter") to Chevron which has a term expiring on April 1, 2015 subject to
     Chevron's  right to  terminate  the  Initial  Charter on certain  specified
     dates.  Chevron  can  elect  to  terminate  the  Charter  on  any  of  four
     termination  dates  occurring at two-year  intervals  beginning in April 1,
     2004.  The option to terminate  has already  lapsed for two of these dates.
     Chevron  can elect to  terminate  the  Charter on any of the two  remaining
     termination  dates,  which  occur  on  April 1,  2008  and  April 1,  2010.
     Non-binding  notice of Chevron's  intention to exercise the first option to
     terminate  must be given at least 12 months prior to the  termination  date
     and  irrevocable  notice  must be given at least nine  months  prior to the
     first optional termination date. For subsequent optional termination dates,
     notice of Chevron's intention to terminate must be given seven months prior
     to the  termination  date.  Chevron  is  required  to  pay  the  Company  a
     termination  payment  (the  "Termination  Payment")  on  or  prior  to  the
     remaining termination dates as follows:

     (In  millions of $)
     Optional             Termination
     Termination Date         Payment
     April 1, 2008              10.03
     April 1, 2010               8.94

     Chevron  has the  option to  purchase  the  vessel  for $1 on April 1, 2015
     provided the Initial Charter is still in place.

     The  following  schedule  lists the  components  of the net  investment  in
     finance lease:

     (in thousands of $)                                          2005      2004
     Total minimum lease payments to be received                44,428    50,528
     Less: Unearned income                                    (13,269)  (16,158)
     ---------------------------------------------------------------------------
     Net investment in finance lease                            31,159    34,370
     ===========================================================================


     Lease payments under the charter  agreement for each of the five succeeding
     years are as follows: $5,828,000 in 2006, $5,556,000 in 2007, $5,284,000 in
     2008, $5,013,000 in 2009, and $4,742,000 in 2010.

6.   DEFERRED CHARGES

     Deferred charges represent the  capitalisation  of debt issue costs.  These
     costs are  amortised  over the term of the Loans to which they relate.  The
     deferred charges are comprised of the following amounts:

     (in thousands of $)                                          2005      2004
     Debt arrangement fees                                       1,006     1,006
     Accumulated amortisation                                    (805)     (730)
     ---------------------------------------------------------------------------
                                                                 201       276
     ===========================================================================

7.   DEBT

     (in thousands of $)                                         2005      2004
     8.52% Mortgage Term Loans due 2015                         31,865   35,052
     Less: current portion                                     (3,187)   (3,187)
     ---------------------------------------------------------------------------
                                                               28,678    31,865
   ===========================================================================

     The outstanding debt as of December 31, 2005 is repayable as follows:


     (in thousands of $)
     Year ending December 31,
     2006                                                                 3,187
     2007                                                                 3,187
     2008                                                                 3,187
     2009                                                                 3,187
     2010                                                                 3,187
     2011 and later                                                      15,930
     ---------------------------------------------------------------------------
     Total debt                                                          31,865
     ===========================================================================


     The Term Loans bear  interest  at a rate of 8.52% per  annum.  Interest  is
     payable  semi-annually  on April 1 and  October 1 each year.  Principal  is
     repayable on the Term Loans in accordance with a remaining ten-year sinking
     fund schedule.

     If the Initial Charter is terminated,  the scheduled mandatory sinking fund
     payments on the Term Loans will be revised so that the allocated  principal
     amount of the Term Loans for the  related  Vessel  will be  redeemed on the
     remaining  sinking fund  redemption  dates on a schedule that  approximates
     level debt service  with an  additional  principal  payment on the maturity
     date of $7m.

     The table below  provides the revised  scheduled  sinking  fund  redemption
     amounts and final principal  payment of the Allocated  Principal  Amount of
     the Term Loans following termination of the related Initial Charter on each
     of the remaining  optional  termination  dates. The Company did not receive
     any notification from the Initial Charterer of their intention to terminate
     the Charter on April 1, 2004;  therefore the Charter  remains in place with
     the next Optional Termination Date being April 1, 2006.

     Scheduled payment date             Charter   Charter  Charter   Charter
                                        not       terminateterminatedterminated
                                        terminated    2006      2008      2010
                                            $'000    $'000     $'000     $'000

     April 1, 2006                          3,187    3,187     3,187     3,187
     April 1, 2007                          3,187    1,700     3,187     3,187
     April 1, 2008                          3,187    1,840     3,187     3,187
     April 1, 2009                          3,187    2,000     1,690     3,187
     April 1, 2010                          3,187    2,170     1,830     3,187
     April 1, 2011                          3,187    2,360     1,990     1,510
     April 1, 2012                          3,187    2,560     2,160     1,630
     April 1, 2013                          3,187    2,770     2,340     1,770
     April 1, 2014                          3,187    3,010     2,540     1,930
     April 1, 2015                          3,182   10,268     9,754     9,090
     --------------------------------------------------------------------------
                                           31,865   31,865    31,865    31,865
     ==========================================================================

     The Term Loans are  collateralised  by a first  preference  mortgage on the
     Vessel to  California  Petroleum  Transport  Corporation.  The earnings and
     insurance  relating to the Vessel have been collaterally  assigned pursuant
     to  an  Assignment  of  Earnings  and  Insurance  to  California  Petroleum
     Transport  Corporation,  which  in turn has  assigned  such  Assignment  of
     Earnings and Insurance to the Collateral  Trustee.  The Initial Charter and
     Chevron Guarantee  relating to the Vessel have been  collaterally  assigned
     pursuant to the  Assignment  of Initial  Charter and  Assignment of Initial
     Charter Guarantee to California Petroleum Transport  Corporation,  which in
     turn has assigned such  Assignment to the Collateral  Trustee.  The Capital
     Stock of the Company has been  pledged to  California  Petroleum  Transport
     Corporation pursuant to the Stock Pledge Agreement.

8.   SHARE CAPITAL

     Authorised share capital:

                                                                2005      2004
     1,000 shares of $1 par value                              1,000     1,000
     ==========================================================================

     Issued and outstanding share capital:

                                                                2005      2004
     100 common shares of $1 par value                           100       100
     ==========================================================================

9.   FINANCIAL INSTRUMENTS

     Fair values
     The carrying  value and  estimated  fair value of the  Company's  financial
     instruments at December 31, 2005 and 2004 are as follows:

                                              2005     2005      2004      2004
     (in thousands of $)                  Carrying     Fair    Carrying   Fair
                                             Value    Value     Value     Value
     Cash and cash equivalents               2,033    2,033     2,010     2,010
     8.52% Mortgage Loans due 2015          31,865   35,689    35,052    40,178


     The methods and assumptions used in estimating the fair values of financial
     instruments are as follows:

     The carrying value of cash and cash  equivalents,  which are highly liquid,
     is a reasonable estimate of fair value.

     The estimated  fair value for fixed rate debt is based on the quoted market
     price of these or similar debt when available.

     Concentrations of risk
     The  Company's  only source of funds for the repayment of the principal and
     interest  on  the  Loans  are  from  charterhire   payments  from  Chevron,
     investment  income and the  proceeds,  if any, from the sale of the Vessel.
     Accordingly,  the Company's ability to service its obligations on the Loans
     is wholly dependent upon the financial condition, results of operations and
     cash flows from Chevron.

10.  COMMITMENTS AND CONTINGENCIES

     The Term and Serial Loans are  collateralised by first preference  mortgage
     on the Vessel to California Petroleum Transport  Corporation.  The earnings
     and  insurance  relating  to the  Vessel  have been  collaterally  assigned
     pursuant to an Assignment of Earnings and Insurance to California Petroleum
     Transport  Corporation,  which  in turn has  assigned  such  Assignment  of
     Earnings and Insurance to the Collateral  Trustee.  The Initial Charter and
     Chevron Guarantee  relating to the Vessel have been  collaterally  assigned
     pursuant to the  Assignment  of Initial  Charter and  Assignment of Initial
     Charter Guarantee to California Petroleum Transport  Corporation,  which in
     turn has assigned such  Assignment to the Collateral  Trustee.  The Capital
     Stock of the Company has been  pledged to  California  Petroleum  Transport
     Corporation pursuant to the Stock Pledge Agreement.

     As at December 31, 2005, Chevron holds an option to purchase the Vessel for
     $1 on April 1, 2015 provided the Initial Charter is still in place.

11.  RELATED PARTY TRANSACTIONS

     Pursuant to a management agreement,  Frontline is the Company's Manager and
     Technical Advisor. Under the management agreement, Frontline is entitled to
     a Management Fee and a Technical Advisor's Fee.

     Under the terms of the management agreement, the Management Fee consists of
     a fee of $13,625  initially per annum for each Vessel,  along with a fee of
     $3,000 covering all four Vessels,  payable semi-annually in arrears for the
     period until the third  anniversary  of the closing of the Notes issue then
     increasing by 4% on each subsequent anniversary of the closing of the issue
     of the Notes.

     The  Technical  Advisor's  Fee was  initially  $10,000  per  annum for each
     Vessel,  payable  semi-annually in arrears,  during the initial first three
     year period as  described  above.  On each  subsequent  anniversary  of the
     closing  of the  issue  of the  Notes,  the fee  will  increase  by 4%.  In
     addition,  the Technical Advisor is entitled to be reimbursed for the fees,
     costs and expenses of conducting periodic inspections of the Vessels.

     Pursuant  to  a  Designated  Representative  Agreement,  CalPetro  Holdings
     Limited  (the  "Designated  Representative")  was  appointed  to  represent
     California Petroleum as its Designated  Representative to act on its behalf
     with  respect  to  certain  administrative  matters  such as the  filing of
     periodic reports and financial  statements with the Securities and Exchange
     Commission.   The  fee  payable  to  the  Designated   Representative  (the
     "Designated  Representative  Fee")  during the  initial  three year  period
     described above was $15,000 per annum with a 4% increase on each subsequent
     anniversary of the closing of the issue of the Notes.

     Management fee expenses and management fee payable as of December 31, 2005,
     2004, and 2003 are as follows:

                                                        2005      2004      2003
      Management fee expenses                         38,120    36,654    43,800
      Management fee payable                           9,622     9,253     8,897

<PAGE>

                                   SIGNATURES

Subject 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.


                      CalPetro Tankers (Bahamas II) Limited



                              /s/ Kate Blankenship


                                Kate Blankenship
                             Director and Secretary




Date: June 30, 2006



SK 02089 0006 682071