UNITED
STATES


SECURITIES AND EXCHANGE
COMMISSION


WASHINGTON,
D.C. 20549





FORM
20-F





(Mark
One)




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


OR





x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d)OF
      THE SECURITIES EXCHANGE ACT OF 1934
              For
      the fiscal year
      ended          December
      31, 2009


OR





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d)OF
      THE SECURITIES EXCHANGE ACT OF 1934
              For
      the transition period
      from                    to


OR





o
            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 _______________________________








Commission
      file number
            033-79220-02





CalPetro
      Tankers (Bahamas II) Limited(Exact
      name of Registrant as specified in its charter)(Translation
      of Registrant's name into English)The
      Bahamas(Jurisdiction
      of incorporation or organization)Mareva
      House, 4 George Street, PO Box N-3937, Nassau, The
  Bahamas(Address
      of principal executive offices)





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








1


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





Title
      of each class
            
            Name
      of each exchange on which registeredNone
            
            Not
      applicable


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.





Unclassified
common shares: 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 o                                            Nox





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 o                                            No
x





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





Yes x                                            No
o





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





Yes o                                            No
o





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 o
            Accelerated
      filer  o
            Non-accelerated
      filer  x











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





U.S.
      GAAP x
            International
      Financial Reporting Standards as issued by the
              International
      Accounting Standards Board o
            Other
      o





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





Item
17 o                                           Item
18 o











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





Yes o                                            No
x











INDEX
TO REPORT ON FORM 20-F





PagePART
      IItem
      1.
            Identity
      of Directors, Senior Management and Advisers
            1Item
      2.
            Offer
      Statistics and Expected Timetable
            1Item
      3.
            Key
      Information
            1Item
      4.
            Information
      on the Company
            8Item
      4A.
            Unresolved
      Staff Comments
            13Item
      5.
            Operating
      and Financial Review and Prospects
            13Item
      6.
            Directors,
      Senior Management and Employees
            17Item
      7.
            Major
      Shareholders and Related Party Transactions
            18Item
      8.
            Financial
      Information
            19Item
      9.
            The
      Offer and Listing
            20Item
      10.
            Additional
      Information
            20Item
      11.
            Quantitative
      and Qualitative Disclosures about Market Risk
            21Item
      12.
            Description
      of Securities Other than Equity Securities
            22PART
      IIItem
      13.
            Defaults,
      Dividend Arrearages and Delinquencies
            23Item
      14.
            Material
      Modifications to the Rights of Security Holders and Use of
      Proceeds
            23Item
      15(T).
            Controls
      and Procedures
            23Item
      16.
            Reserved
            24Item
      16A.
            Audit
      Committee Financial Expert
            24Item
      16B.
            Code
      of Ethics
            24Item
      16C.
            Principal
      Accountant Fees and Services
            24Item
      16D.
            Exemptions
      from the Listing Rules for Audit Committees
            25Item
      16E.
            Purchases
      of Equity Securities by the Issuer and Affiliated
    Purchasers
            25Item
      16F.
            Change
      in Registrant's Certifying Accountant
            25Item
      16G.
            Corporate
      Governance
            25PART
      IIIItem
      17.
            Financial
      Statements
            26Item
      18.
            Financial
      Statements
            26Item
      19.
            Exhibits
            26











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 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," "anticipate," "intends," "estimate," "forecast," "project," "plan,"
"potential," "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,
fluctuations in currencies and interest rates, general market conditions,
including fluctuations in charterhire rates and vessel values, changes in demand
in the tanker market, changes in world wide oil production and consumption and
storage, changes in the company's operating expenses, 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 or Commission.











PART
I





Item
1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISERS





Not
      applicable.





Item
2.   OFFER STATISTICS AND EXPECTED TIMETABLE





Not
      applicable.





Item
3.   KEY INFORMATION





Throughout this report, the
"Company," "we," "us" and "our" all refer to CalPetro Tankers (Bahamas II)
Limited. We use the term deadweight ton, or dwt, in describing the size of
vessels. Dwt, expressed in metric tons, each of which is equivalent to 1,000
kilograms, refers to the maximum weight of cargo and supplies that a vessel can
carry. Unless otherwise indicated, all references to "USD" and "$" in this
report are to, and amounts are presented in, U.S. dollars.





A.
Selected Financial Data





The
selected statement of operations data of the Company with respect to the fiscal
years ended December 31, 2009, 2008 and 2007, and the selected balance sheet
data with respect to the fiscal years ended December 31, 2009 and 2008, 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
fiscal years ended December 31, 2006 and 2005, and the selected balance sheet
data with respect to the fiscal years ended December 31, 2007, 2006 and 2005,
have been derived from 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 U.S. dollars.





Fiscal
      Years ended December 31,2009
            
            
            2008
            
            
            2007
            
            
            2006
            
            
            2005(in
      thousands of $, except share data)Statement
      of operations data:Total
      operating revenues
            
            
            1,689
            
            
            
            1,987
            
            
            
            2,225
            
            
            
            2,547
            
            
            
            2,819Net
      loss
            
            
            (141
            )
            
            
            (83
            )
            
            
            (101
            )
            
            
            (37
            )
            
            
            (90
            )Per
      share data:Dividends
      per share
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance
      sheet data:Total
      assets
            
            
            20,686
            
            
            
            24,095
            
            
            
            27,428
            
            
            
            30,775
            
            
            
            34,052Current
      portion of long-term debt
            
            
            3,187
            
            
            
            3,187
            
            
            
            3,187
            
            
            
            3,187
            
            
            
            3,187Long-term
      debt
            
            
            15,930
            
            
            
            19,117
            
            
            
            22,304
            
            
            
            25,491
            
            
            
            28,678Stockholder's
      equity
            
            
            1,116
            
            
            
            1,257
            
            
            
            1,340
            
            
            
            1,441
            
            
            
            1,478Number
      of shares
            
            
            100
            
            
            
            100
            
            
            
            100
            
            
            
            100
            
            
            
            100











1


B.
Capitalization and Indebtedness





Not
applicable.





C.
Reasons for the offer and use of proceeds





Not
applicable.





D.
Risk Factors





We are
currently engaged in leasing a vessel that is involved in the transportation of
crude oil and oil products. Our vessel the Altair Voyager, or our Vessel, is
currently operated under a bareboat charter, or the Initial Charter, to Chevron
Transport Corporation, which we refer to as Chevron. The term of the Initial
Charter expires on April 1, 2015. Chevron's final option to terminate the
Charter on April 1, 2010 has now passed as no notice had been given twelve
months prior to the option date as required by the Initial Charter. On April 1,
2015, Chevron has the option to purchase our Vessel for $1.





The
following summarizes some of the risks that may materially affect our business,
financial condition or results of operations.





The
cyclical nature of the tanker industry may lead to volatile changes in charter
rates, which may adversely affect our earnings when the Initial Charter expires
if Chevron does not exercise its purchase option





Historically,
the tanker industry has been highly cyclical, with volatility in profitability
and asset values resulting from changes in the supply of, and demand for, tanker
capacity. If the tanker market is depressed, in the future our earnings and
available cash flow may decrease. Our ability to re-charter our Vessel on the
expiration of the Initial Charter if Chevron does not exercise its purchase
option and the charter rates payable under any renewal or replacement charter,
will depend upon, among other things, economic conditions in the tanker market.
Fluctuations in charter rates and vessel values result from changes in the
supply and demand for tanker capacity and changes in the supply and demand for
oil and oil products.





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




·
              demand
      for oil and oil products;·
              global
      and regional economic and political
conditions;
 ·
              changes
      in oil production and refining capacity;·
              environmental
      and other regulatory developments;
 ·
              the
      distance oil and oil products are to be moved by sea;
  and·
              changes
      in seaborne and other transportation
patterns.
 
 The
factors that influence the supply of tanker capacity include:
 
 ·
              the
      number of newbuilding deliveries;·
              the
      scrapping rate of older vessels;
 ·
              port
      or canal congestion;·
              vessel
      casualties;
 ·
              price
      of steel;·
              potential
      conversion of vessels to alternative
use;
 ·
              the
      number of vessels that are out of service; and·
              changes
      in environmental and other regulations that may effectively cause
      reductions in the carrying capacity of vessels or early obsolescence of
      tonnage.
 
  2


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





Any
decrease in shipments of crude oil may adversely affect our financial
performance at the end of the Initial Charter if Chevron does not exercise its
purchase option





The
demand for oil tankers derives primarily from demand for Arabian Gulf and West
African crude oil, which, in turn, primarily depends on the economies of the
world's industrial countries and competition from alternative energy sources. A
wide range of economic, social and other factors can significantly affect the
strength of the world's industrial economies and their demand for crude oil from
the mentioned geographical areas. One such factor is the price of worldwide
crude oil. The world's oil markets have experienced high levels of volatility in
the last 25 years. In July 2008, oil prices rose to a high of approximately $143
per barrel before decreasing to approximately $38 per barrel by the end of
December 2008, and rising to approximately $75 per barrel in mid-February
2010.





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





·
            increased
      crude oil production from other areas;·
            increased
      refining capacity in the Arabian Gulf or West
  Africa;


·
            increased
      use of existing and future crude oil pipelines in the Arabian Gulf or West
      Africa;·
            a
      decision by Arabian Gulf or West African oil-producing nations to increase
      their crude oil prices or to further decrease or limit their crude oil
      production;


·
            armed
      conflict in the Arabian Gulf and West Africa and political or other
      factors; and·
            the
      development and the relative costs of nuclear power, natural gas, coal and
      other alternative sources of
energy.





An
over-supply of tanker capacity may lead to reductions in charter rates, vessel
values, and profitability when the Initial Charter expires if Chevron does not
exercise its purchase option





Currently,
shipyards are booked to produce a large number of new tankers. If the capacity
of new ships delivered exceeds the capacity of tankers being scrapped and lost,
tanker capacity will increase. If the supply of tanker capacity increases and
the demand for tanker capacity does not increase correspondingly, charter rates
could materially decline. A reduction in charter rates may have a material
adverse effect on our results of operations when the Initial Charter expires if
Chevron does not exercise its purchase option.





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





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


3


Securities
and futures markets and the credit markets are subject to comprehensive
statutes, regulations and other requirements. The Securities and Exchange
Commission, other regulators, self-regulatory organizations and exchanges have
enacted temporary emergency regulations and may take other extraordinary actions
in the event of market emergencies and may effect permanent changes in law or
interpretations of existing laws. Recently, a number of financial institutions
have experienced serious financial difficulties and, in some cases, have entered
into bankruptcy proceedings or are in regulatory enforcement actions. These
difficulties have resulted, in part, from declining markets for assets held by
such institutions, particularly the reduction in the value of their mortgage and
asset-backed securities portfolios. These difficulties have been compounded by a
general decline in the willingness by banks and other financial institutions to
extend credit.





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





We
operate in the highly competitive international tanker market which could affect
our position when the Initial Charter expires if Chevron does not exercise its
purchase option





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 us.
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 the Initial
Charter with Chevron we are not exposed to the risk associated with this
competition. At the end of the Initial Charter if Chevron does not exercise its
purchase option, 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.





Safety,
environmental and other governmental requirements expose us to liability, and
compliance with current and future regulations could require significant
additional expenditures, which could have a material adverse effect on our
business and financial results at the end of the Initial Charter if Chevron does
not exercise its purchase option





Our
operations are affected by extensive and changing international, national, state
and local laws, regulations, treaties, conventions and standards in force in
international waters, the jurisdictions in which our Vessel operates and the
country in which our Vessel is registered, including those governing the
management and disposal of hazardous substances and wastes, the cleanup of oil
spills and other contamination, air emissions, water discharges and ballast
water management. These regulations include the United States Oil Pollution Act
of 1990, or OPA, the United States Clean Air Act and United States Clean Water
Act, the United States Marine Transportation Security Act of 2002, the
International Convention on Civil Liability for Oil Pollution Damage of 1969, as
amended, or CLC, the International Convention for the Prevention of Pollution
from Ships of 1975, the International Convention for the Safety of Life at Sea
of 1974, or SOLAS, the International Convention on Load Lines of 1966, or LL
Convention, and implementing regulations adopted by the International Maritime
Organization, or IMO (the United Nations agency for maritime safety and the
prevention of pollution by vessels), the European Union, and other
international, national and local regulatory bodies.





In
addition, vessel classification societies also impose significant safety and
other requirements on our Vessel. In complying with current and future
environmental requirements, vessel-owners and operators such as ourselves may
also incur significant additional costs in meeting new maintenance and
inspection requirements, in developing contingency arrangements for potential
spills and in obtaining insurance coverage. Government regulation of vessels,
particularly in the areas of safety and environmental requirements, can be
expected to become stricter in the future and require us to incur significant
capital expenditures on our Vessel to keep it in compliance, or even to scrap or
sell our Vessel altogether. For example, various jurisdictions, including the
United States, are considering or have enacted legislation imposing more
stringent requirements on air emissions and ballast water discharges from
vessels.






4





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





Under
local, national and foreign laws, as well as international treaties and
conventions, we could incur material liabilities, including cleanup obligations,
natural resource damages and third-party claims for personal injury or property
damages, in the event that there is a release of petroleum or other hazardous
substances from our Vessel or otherwise in connection with our current or
historic operations. We could also incur substantial penalties, fines and other
civil or criminal sanctions, including in certain instances seizure or detention
of our Vessel, as a result of violations of or liabilities under environmental
laws, regulations and other requirements. For example, OPA affects all
vessel-owners shipping oil to, from or within the United States. OPA allows for
potentially unlimited liability without regard to fault for owners, operators
and bareboat charterers of vessels for oil pollution in United States waters.
Similarly, the CLC, which has been adopted by most countries outside of the
United States, imposes liability for oil pollution in international waters. OPA
expressly permits individual states to impose their own liability regimes with
regard to hazardous materials and oil pollution incidents occurring within their
boundaries. Coastal states in the United States have enacted pollution
prevention liability and response laws, many providing for unlimited
liability.





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 the Initial Charter, these expenses could have an adverse
effect on our business operations at any time after the expiration of the
Initial Charter or in the event Chevron fails to make a necessary
payment.





We
may not have adequate insurance at the end of the Initial Charter if Chevron
does not exercise its purchase option





There are
a number of risks associated with the operation of oceangoing vessels, including
mechanical failure, collision, human error, war, terrorism, property loss, cargo
loss or damage and business interruption due to political circumstances in
foreign countries, hostilities and labor strikes. Any of these events may result
in loss of revenues, increased costs and decreased cash flows. In addition,
following the terrorist attack in New York City on September 11, 2001, and the
military response of the United States, the likelihood of future acts of
terrorism may increase, and our Vessel may face higher risks of attack. Future
hostilities or other political instability, as shown by the attack on the Limburg in Yemen in October
2002, could affect our trade patterns and adversely affect our operations and
our revenues, cash flows and profitability. 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
Initial Charter, Chevron bears all risks associated with the operation of our
Vessel including the total loss of our Vessel. However, we cannot assure holders
of the Notes that we will adequately insure against all risks at the end of the
Initial Charter if Chevron does not exercise its purchase option. 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. For example, a
catastrophic spill could exceed our insurance coverage and have a material
adverse effect on our financial condition. In addition, we may not be able to
procure adequate insurance coverage at commercially reasonable rates in the
future and we cannot guarantee that any particular claim will be paid. In the
past, new and stricter environmental regulations have led to higher costs for
insurance covering environmental damage or pollution, and new regulations could
lead to similar increases or even make this type of insurance unavailable.
Furthermore, even if insurance coverage is adequate to cover our losses, we may
not be able to timely obtain a replacement ship in the event of a loss. We may
also be subject to calls, or premiums, in amounts based not only on our own
claim records but also the claim records of all other members of the protection
and indemnity associations through which we receive indemnity insurance coverage
for tort liability. Our payment of these calls could result in significant
expenses to us that could reduce our cash flows and place strains on our
liquidity and capital resources.






5





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





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





We
are highly dependent on Chevron and Chevron Corporation





We are
highly dependent on the performance by Chevron of its obligations under the
Initial Charter and by its guarantor, Chevron Corporation, of its obligations
under its guarantee. A failure by Chevron and Chevron Corporation to perform
their obligations under the Initial Charter could result in our inability to
service the Term Loans, defined below. If the Notes holders had to enforce the
mortgages securing the Notes, defined below, 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





Currently,
we 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 Loans, defined below, 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 Term Loans.





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





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





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








6


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





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





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, defined below, are not listed on any national securities exchange 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 them, 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 of 1933, as amended and the Securities Exchange Act of 1934,
as amended. 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, 2009, we had $19.1 million in total
indebtedness outstanding and stockholders' equity of $1.1 million. The degree to
which we are leveraged could have important consequences for the holders of the
Notes, including:





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





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





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





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





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





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 Initial Charter with
Chevron, we expect that the only source of operating revenue from which we may
pay principal and interest on the Term Loans will be from such
charter.


7








Item
4.  INFORMATION ON THE COMPANY





A.  History
and Development of 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. In addition, CalPetro Tankers (IOM)
Limited was incorporated in the Isle of Man. These entities, or the Owners, were
organized as special purpose companies for the purpose of acquiring one of four
oil tankers from Chevron which were concurrently chartered on long-term charter
agreements back to Chevron.





We, along
with CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas III)
Limited  and CalPetro Tankers (IOM) Limited 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, or ITC, a Cayman Islands company.
ITC is itself  wholly-owned by Independent Tankers Corporation
Limited, or ITCL. ITCL was established in February 2008 and it is 82.47% owned
by Frontline Ltd., or Frontline, a Bermuda company whose shares are listed on
the New York Stock Exchange, London Stock Exchange and Oslo Stock
Exchange.





California
Petroleum Transport Corporation, or California Petroleum or CPTC, a Delaware
corporation which we refer to as acting as agent on behalf of the Owners, issued
as full recourse obligations $167,500,000 Serial First Preferred Mortgage Notes,
or the Serial Notes, and $117,900,000 8.52% First Preferred Mortgage Notes due
in 2015, which we refer to as the Term Notes and together with the Serial Notes
as the Notes. The Serial Notes were fully repaid April 1, 2006. 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 in 2015, to the Owners to fund
the acquisition of the oil tankers from Chevron. We were allocated $46,620,000
of the Serial Loans and $35,052,000 of the Term Loans and acquired our Vessel 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.





Our
principal executive offices are located at Mareva House, 4 George Street, PO Box
N-3937, Nassau, The Bahamas.





B.  Business
Overview





Our
Vessel is a 130,000 dwt Suezmax oil tanker, which was acquired from Chevron.
Suezmax tankers are medium-sized vessels ranging from approximately 120,000 to
200,000 dwt, and of the maximum length, breadth and draft requirements to be
capable of passing fully loaded through the Suez Canal.





Our
Vessel is initially chartered to Chevron for a term expiring on April 1, 2015,
subject to Chevron's right to terminate the Initial Charter on April 1, 2010. No
notice was received within the 12 months prior to the option date as required by
the Initial Charter, so Chevron was prevented from invoking its right to
terminate on April 1, 2010, therefore, the charter continues to April 1, 2015.
Chevron has the option to purchase our Vessel for $1 on April 1, 2015 provided
the Initial Charter is still in place.





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 us that it expects to
use our Vessel worldwide as permitted under the Initial Charter. The obligations
of Chevron under the Initial Charter are guaranteed by Chevron Corporation, a
major international oil company, pursuant to a guarantee, or the Chevron
Guarantee. Chevron is an indirect, wholly-owned subsidiary of Chevron
Corporation.





Our
Vessel is a double hull oil carrier and is presently registered under The
Bahamas flag. Our 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 our Vessel
was Ishikawajima- Harima Heavy Industries Co., Ltd.






8





Management





On March
31, 1999, Frontline became our manager and technical advisor, pursuant to an
assignment of our management agreement, or the Management Agreement. Under the
Management Agreement, Frontline provides administrative, ship management and
advisory services to the Company as manager, or Manager. Pursuant to the
Management Agreement, the Manager receives an annual fee, of $13,625 for each
Vessel, along with an additional annual fee of $3,000 covering all four Vessels.
The technical advisor's fee consists of an annual fee of $10,000 for each
vessel, payable semi-annually in arrears. Both the management fee and the
technical advisor's fee, which together we refer to as the Management Fee, is
payable semi-annually in arrears for the period until the third anniversary of
the closing of the issue of the Notes, then increasing by four percent on each
subsequent anniversary of the closing of the issue of the Notes.





Environmental
and Other Regulations





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





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





We
believe that the heightened levels of environmental and quality concerns among
insurance underwriters, regulators and charterers have led to greater inspection
and safety requirements on all vessels and may accelerate the scrapping of older
vessels throughout the industry.  Increasing environmental concerns have
created a demand for vessels that conform to stricter environmental standards.
 We believe that the operation of our Vessel is in substantial compliance
with applicable environmental laws and regulations and that our Vessel has all
material permits, licenses, certificates or other authorizations necessary for
the conduct of our operations; however, because such laws and regulations are
frequently changed and may impose increasingly stricter requirements, we cannot
predict the ultimate cost of complying with these requirements, or the impact of
these requirements on the resale value or useful life of our Vessel.  In
addition additional legislation or regulation applicable to the operation of our
Vessel that may be implemented in the future could negatively affect our
profitability.





International
Maritime Organization





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





The
operation of our vessel is also affected by the requirements contained in the
International Safety Management Code for
the Safe Operation of Ships and for Pollution Prevention, or ISM Code,
promulgated by the IMO under the International Convention for the Safety of Life
at Sea, or SOLAS. The ISM Code requires the party with operational control of a
vessel to develop an extensive safety management system that includes, among
other things, the adoption  of a safety and environmental protection policy
setting forth instructions and procedures for operating its vessels safely and
describing procedures for responding to emergencies. We intend to rely upon the
safety management system that our appointed ship  managers have
developed.






9





In
December 2003, the Marine Environmental Protection Committee of the IMO, or
MEPC, adopted an amendment to the MARPOL Convention, which became effective in
April 2005. The amendment revised an existing regulation 13G accelerating the
phase-out of single hull oil tankers and adopted a new regulation 13H on the
prevention of oil pollution from oil tankers when carrying heavy grade oil.
Under the revised regulation, single hull oil tankers were required to be phased
out no later than April 5, 2005 or the anniversary of the date of delivery of
the ship on the date or in the year specified in the following
table:





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





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




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




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




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





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





·
            bitumen,
      tar and their emulsions.





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







10





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




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





Noncompliance
with the ISM Code or with other IMO regulations may subject a shipowner or
bareboat charterer to increased liability, may lead to decreases in available
insurance coverage for affected vessels and may result in the denial of access
to, or detention in, some ports, including United States and European Union
ports.





United
States





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





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





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





OPA
limits the liability of responsible parties with respect to tankers over 3,000
gross tons to the greater of $3,000 per gross tons or $22.0 million per single
hull tanker, and $1,900 per gross ton or $16.0 million per double hull tanker,
respectively, and specifically permits individual states to impose their own
liability regimes with regard to oil pollution incidents occurring within their
boundaries. Some states have enacted legislation providing for unlimited
liability for discharge of pollutants within their waters, however, in some
cases, states which have enacted this type of legislation have not yet issued
implementing regulations defining tanker owners' responsibilities under these
laws.  CERCLA, which applies to owners and operators of vessels,
contains a similar liability regime and provides for cleanup, removal and
natural resource damages.  Liability under CERCLA is limited to the
greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous
substance as cargo and the greater of $300 per gross ton or $0.5 million for any
other vessel.


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





OPA also
requires owners and operators of vessels to establish and maintain with the U.S.
Coast Guard evidence of financial responsibility sufficient to meet the limit of
their potential strict liability under the act. Under the regulations, evidence
of financial responsibility may be demonstrated by insurance, surety bond,
self-insurance or guaranty. Under OPA regulations, an owner or operator of more
than one tanker is required to demonstrate evidence of financial responsibility
for the entire fleet in an amount equal only to the financial responsibility
requirement of the tanker having the greatest maximum strict liability under OPA
and CERCLA.  We have provided such evidence and received certificates
of financial responsibility from the U.S. Coast Guard for our Vessel as
required.






11





Other
U.S. Environmental Initiatives





The U.S.
Clean Water Act, or CWA, prohibits the discharge of oil, hazardous substances,
and ballast water in U.S. navigable waters unless authorized by a duly-issued
permit or exemption, and imposes strict liability in the form of penalties for
any unauthorized discharges. The CWA also imposes substantial liability for the
costs of removal, remediation and damages and complements the remedies available
under OPA and CERCLA. Furthermore, most U.S. states that border a navigable
waterway have enacted environmental pollution laws that impose strict liability
on a person for removal costs and damages resulting from a discharge of oil or a
release of a hazardous substance. These laws may be more stringent than U.S.
federal law.





The U.S.
Clean Air Act of 1970, as amended by the Clean Air Act Amendments of 1977 and
1990, or the CAA, requires the EPA to promulgate standards applicable to
emissions of volatile organic compounds and other air contaminants. Our 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. Our vessel, to the extent it operates in such port areas
with restricted cargoes, is equipped with vapor recovery systems that satisfy
these requirements. The CAA also requires states to draft State Implementation
Plans, or SIPs, designed to attain national health-based air quality standards
in primarily major metropolitan and/or industrial areas. Several SIPs regulate
emissions resulting from vessel loading and unloading operations by requiring
the installation of vapor control equipment. As indicated above, our Vessel, to
the extent it operates in covered port areas, is already equipped with vapor
recovery systems that satisfy these existing requirements.





European
Union





The
European Union has adopted legislation that would: (1) ban manifestly
sub-standard vessels (defined as those over 15 years old that have been detained
by port authorities at least twice in a six month period) from European waters
and create an obligation of port states to inspect vessels posing a high risk to
maritime safety or the marine environment; and (2) provide the European Union
with greater authority and control over classification societies, including the
ability to seek to suspend or revoke the authority of negligent societies. In
addition, European Union regulations enacted in 2003 now prohibit all single
hull tankers from entering into its ports or offshore terminals.





Greenhouse
Gas Regulation





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





Vessel
Security Regulations





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





Inspection
by Classification Societies





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






12





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




Risk
of Loss and 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, labor strikes and other circumstances or events. Pursuant to
the Initial Charter, our Vessel may be operated throughout the world in any
lawful trade for which our 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
our Vessel.





Under the
Initial Charter, Chevron is entitled to self-insure against marine and war risks
relating to our Vessel and against protections and indemnity risks relating to
our Vessel during the term of the Initial 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 of, insurance against the risks of
environmental damage or pollution.





Chevron
will, pursuant to the Initial 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 our Vessel by
Chevron.





C.  Organizational
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 CalPetro Holdings Limited. CalPetro Holdings
Limited is a wholly-owned subsidiary of ITC. ITC is a wholly-owned subsidiary of
ITCL and 82.47% of the common shares of ITCL are owned by
Frontline.


D.  Property, Plants and
Equipment





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





Item
4A.  UNRESOLVED STAFF COMMENTS





None.





Item
5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS





Overview





The
following discussion should be read in conjunction with Item 3-Selected
Financial Data and the Company's audited Financial Statements and Notes thereto
included herein.






13





Our
Vessel has been chartered to Chevron under a bareboat charter which
provides:





a)
            charterhire
      payments sufficient to pay, so long as the Initial Charter is in
      effect:i.
            the
      obligations under the loans for acquiring our
  Vessel,





ii.
            management
      fees and technical advisor's fees,iii.
            recurring
      fees and taxes, and





iv.
            any
      other costs and expenses incidental to the ownership and chartering of our
      Vessel;





b)
            termination
      payments sufficient to make sinking fund and interest payments on the Term
      Loans, to the extent allocable to our Vessel for which the related Initial
      Charter has been terminated, for at least two years following any such
      termination, during which time our Vessel may be sold or re-chartered;
      and





c)
            that
      our Vessel will be maintained in accordance with the good commercial
      maintenance practices required by the Initial Charter and to arrange for
      vessel management and remarketing services to be available in case the
      Initial Charter is terminated by Chevron, or our Vessel is for any other
      reason returned to our possession and
use.





Our
Vessel was initially chartered to Chevron for a term expiring on April 1, 2015,
subject to Chevron's right to terminate the Initial Charter on April 1, 2010. No
notice was received within the 12 months prior to the option date as required by
the Initial Charter, so Chevron was prevented from invoking its right to
terminate on April 1, 2010, therefore, the charter continues to April 1,
2015.





Market
Overview and Trend Information





According
to Industry sources, the average TCE rate for a modern Suezmax was $27,000/day
throughout the year; ranging from a high of $57,000/day in the beginning of
January to a low of $7,000/day in mid-August. The average TCE rate for the first
quarter was $42,600/day compared to $24,000/day, $14,000/day and $27,500/day for
the remaining quarters respectively.





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





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





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




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






14





The IEA
further estimates that the average world oil demand was 84.9 million barrels per
day in 2009, which represents a decrease of 1.5% or 1.3 million barrels per day
from 2008. For 2010, the world oil demand is estimated at 86.6 million barrels
per day, representing an increase of 2% or 1.7 million barrels per day from
2009.





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





The
bunker (vessel fuel oil) market followed movements in the oil market closely in
2009. The average bunker price in Philadelphia was approximately $378/mt, which
represents a decrease of $133/mt from 2008. The prices ranged from a low of
$221/mt at the beginning of January to a high of $491.5/mt at the beginning of
December.





According
to the 'World Economic Outlook
- Update' published by The International Monetary Fund, or "IMF", in
January 2010, World Output, or GDP, decreased 0.8% in 2009, which was a
substantial downward shift compared to the 2009 3% growth estimate as reported
in October 2008. For 2010 and 2011, however, the IMF forecasts World GDP growth
of 4.2% and 4.3%, respectively.





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





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





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





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





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


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





Operating
results





Year
ended December 31, 2009 compared with the year ended December 31,
2008





Total
Revenues





(in
      thousands of $)
            
            2009
            
            
            2008
            
            
            %
      ChangeFinance
      lease interest income
            
            
            1,689
            
            
            
            1,987
            
            
            
            (15
            )%






15





Revenue
comes in the form of charterhire from Chevron which is then allocated between
capital and interest. Interest income has fallen in line with expectations. As
the value of the finance lease falls on an annual basis, so does the interest
allocated to the finance lease.





Expenses





(in
      thousands of $)
            
            2009
            
            
            2008
            
            
            %
      ChangeInterest
      expense
            
            
            1,697
            
            
            
            1,968
            
            
            
            (14)
            %Amortization
      of deferred charges
            
            
            22
            
            
            
            20
            
            
            
            10
            %





Interest
expense has decreased in line with expectations, with interest expense falling
in line with the principal loan outstanding each year. The Company amortizes the
deferred charges over the life of the Term Loans.





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





Total
Revenues





(in
      thousands of $)
            
            2008
            
            
            2007
            
            
            %
      ChangeFinance
      lease interest income
            
            
            1,987
            
            
            
            2,225
            
            
            
            (11
            )%





Revenue
comes in the form of charterhire from Chevron which is then allocated between
capital and interest. Interest income has fallen in line with expectations. As
the value of the finance lease falls on an annual basis, so does the interest
allocated to the finance lease.





Expenses





(in
      thousands of $)
            
            2008
            
            
            2007
            
            
            %
      ChangeInterest
      expense
            
            
            1,968
            
            
            
            2,240
            
            
            
            (12
            )%Amortization
      of deferred charges
            
            
            20
            
            
            
            20
            
            
            
            -





Interest
expense has decreased in line with expectations, with interest expense falling
in line with the principal loan outstanding each year. The Company amortizes the
deferred charges over the life of the Term Loans.





Liquidity
and Capital Resources





As of
December 31, 2009, revenues from the Initial Charter were sufficient to pay our
obligations under the Term Loans. Chevron's option to terminate the Initial
charter on the last specified termination date, April 1, 2010, has now passed,
as no notice had been given twelve months prior to the option date as required
by the Initial Charter,


therefore
the charter will run until April 1, 2015.





Off-balance Sheet
Arrangements





None.





Tabular
disclosure of Contractual Obligations





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





Payments
      due by period(in
      thousands of $)
            
            Less
      than 1 year
            
            
            1-3
      years
            
            
            3-5
      years
            
            
            More
      than 5 years
            
            
            TotalTerm
      Loans (8.52%)
            
            
            3,187
            
            
            
            6,374
            
            
            
            6,374
            
            
            
            3,182
            
            
            
            19,117Interest
      payable
            
            
            1,493
            
            
            
            2,171
            
            
            
            1,085
            
            
            
            136
            
            
            
            4,885Total
      contractual obligations
            
            
            4,680
            
            
            
            8,545
            
            
            
            7,459
            
            
            
            3,318
            
            
            
            24,002






16





Interest
is payable on the Term Loans at a fixed rate of 8.52% until
maturity.





Critical
Accounting Policies





Our
principal accounting policies are described in Note 2 to the financial
statements, which are included in Item 18-Financial Statements, of this Annual
Report. The most critical accounting policy is finance lease and revenue
recognition. 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 amortized 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.





Recent
accounting pronouncements





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





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





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





Item
6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES





A.
Directors and Senior Management




Name
            Age
            PositionTor
      Olav Trøim
            47
            Director
      and PresidentKate
      Blankenship
            45
            Director
      and Secretary







17


Tor Olav Trøim has been a
director of the Company since October 31, 2001. Mr. Trøim graduated as M.Sc
Naval Architect from the University of Trondheim, Norway in 1985. He was
formerly an Equity Portfolio Manager with Storebrand ASA (1987-1990), and Chief
Executive Officer for the Norwegian Oil Company DNO AS (1992-1995). Since 1995
Mr. Trøim has been a director of Seatankers Management in Cyprus. Mr. Trøim
serves as a director of ITCL, Seadrill Limited, Golden Ocean Group Limited,
Golar LNG Energy Limited, Aktiv Kapital ASA, Marine Harvest Group and as an
alternate director of Frontline Ltd.





Kate Blankenship has been a
director of the Company since October 31, 2001. Mrs. Blankenship has been a
director of the Manager since March 2000. Mrs. Blankenship served as the Chief
Accounting Officer and Secretary of Frontline from 1994 until October 2005. Mrs.
Blankenship served as Chief Financial Officer of Knightsbridge Tankers Limited
from April 2000 to September 2007 and Secretary of Knightsbridge from December
2000 to March 2007. Mrs. Blankenship has been a director of Ship Finance
International Limited since October 2003. Mrs. Blankenship has served as a
director of ITCL since February 2008, Golar LNG Limited since July 2003, Golden
Ocean Group Limited since November 2004 and Golar LNG Energy Limited since June
2009. Mrs. Blankenship has served as a director of Seadrill Limited since May
2005. She is a member of the Institute of Chartered Accountants in England and
Wales.





B.  Compensation





During
the year ended December 31, 2009, we paid no compensation to our directors and
officers.





C.  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.





We have
neither an audit nor a remuneration committee.





D.  Employees





We do not
have any employees involved in the management of our Vessel.





Frontline
is our Manager as described below in Item 7 "Major Shareholders and Related
Party Transactions – Related Party Transactions".





E.  Share
Ownership





The
directors of the Company have no share ownership in the Company and do not have
any arrangement that involves the issue or grant of securities of the
Company.





Item
7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS





A.
Major Shareholders





As of
April 29, 2010, except as set forth below, the Company is not aware of any
beneficial owner of more than 5% of its Common Stock.





Class
      of Shares
            Name
      and address of
              Beneficial
      Owners
            Number
      of Shares
            Percent
      of ClassUnclassified
      Common Shares
            California
      Tankers Investment Limited(1)
            100
            100%





(1)
            The
      issued and outstanding shares of the Company are owned by California
      Tankers Investment Limited. All of the issued and outstanding shares of
      California Tankers Investment Limited are owned by CalPetro Holdings
      Limited. All of the issued and outstanding shares of CalPetro Holdings
      Limited are owned by Independent Tankers Corporation. All of the issued
      and outstanding shares of Independent Tankers Corporation are owned by
      Independent Tankers Corporation Limited, which is 82.47% owned by
      Frontline Ltd.






18





All the
issued and outstanding shares of our capital stock have been pledged by us to
California Petroleum Transport Corporation, or CPTC, pursuant to the stock
pledge agreement between us and CPTC and are being held by the Bank of New York,
as successor to the Chase Manhattan Trust Company of California and JP Morgan
Chase, or the Collateral Trustee as part of the collateral for the Notes. ITC
has full voting control over us subject to the rights of the Collateral
Trustee.





The
Company is not aware of any arrangements, the operation of which may at a
subsequent date result in a change in control of the Company.





B.
Related Party Transactions





As
discussed in Item 4 "Information on the Company", Frontline, our ultimate
parent, is also our Manager. 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 an annual fee
of $13,625 for each Vessel, along with an additional annual fee of $3,000
covering all four Vessels. The technical advisor's fee consists of an annual fee
of $10,000 for each Vessel, payable semi-annually in arrears. Both the
management fee and the technical advisor's fee, which we jointly refer to as the
Management Fee, is payable semi-annually in arrears for the period until the
third anniversary of the closing of the Notes issue then increasing by four
percent on each subsequent anniversary of the closing of the issue of the
Notes.





In
addition, the technical advisor is entitled to be reimbursed for the fees, costs
and expenses of conducting periodic inspections of our Vessels.





Pursuant
to a designated representative agreement, CalPetro Holdings Limited 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 Commission. The fee
payable to such designated representative during the initial three year period
described above was $15,000 per annum with a four percent increase on each
subsequent anniversary of the closing of the issue of the Notes.





Management
fee expenses and management fees payable for the years ended and as of December
31, 2009, 2008 and 2007 are as follows:





(in
      thousands of $)
            
            2009
            
            
            2008
            
            
            2007Management
      fee expenses
            
            
            45
            
            
            
            43
            
            
            
            41Management
      fee payable
            
            
            11
            
            
            
            21
            
            
            
            10








Item
8.  FINANCIAL INFORMATION





A.
Consolidated Statements and Other Financial Information





See Item
18 "Financial Statements" below.





Legal
Proceedings





To the
best of the Company's knowledge, there are no legal or arbitration proceedings
existing or pending which have had or may have significant effects on the
Company's financial position or profitability and no such proceedings are
pending or known to be contemplated by governmental authorities.





Dividend
Policy





The
Company does not pay dividends.




19





B.
Significant Changes





None.





Item
9.  THE OFFER AND LISTING





Not
applicable.





Item
10.  ADDITIONAL INFORMATION





A.
            Share
      Capital





Not
applicable.





B.
            Memorandum
      and Articles of Association





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





All
shares issued are unclassified; there is no authorization in force to issue
other classes of shares.  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 authorized capital may be increased and that the Company may
divide or combine shares within the same class.





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





Company
meetings may be convened by the directors or held on request of members holding
50% of the voting shares. 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.





C.
            Material
      Contracts





The
Company entered into an amendment to the Collateral Trust
Agreement.





D.
            Exchange
      Controls





The
Company was registered under the International Business Companies Act, 1989 of
the Commonwealth of The Bahamas, or 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.






20





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.





E.
            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 The Bahamas but an exchange of information treaty on tax
issues is in effect.





F.
            Dividends
      and Paying Agents





Not
applicable.





G.
            Statement
      by Experts





Not
applicable.





H.
            Documents
      on Display





We are
subject to the informational requirements of the Securities Exchange Act of
1934, as amended. In accordance with these requirements, we file reports and
other information with the Commission. These materials, including this annual
report and the accompanying exhibits, may be inspected and copied at the public
reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. You may obtain information on the operation of the
public reference room by calling 1 (800) SEC-0330. The Commission maintains a
website (http://www.sec.gov.) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. In addition, documents referred to in this annual report
may be inspected at the our registered office at Mareva House, 4 George Street,
PO Box N-3937, Nassau, The Bahamas or at the offices of our Manager at
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, Bermuda HM 08.





I.
            Subsidiary
      Information





Not
applicable


Item
11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





(a)
Quantitative information about market risk





Quantitative
information about market risk instruments at December 31, 2009 is as
follows:





The Term
Loans bear interest at a rate of 8.52% per annum. Interest is payable on April 1
and October 1 of each year. Principal is repayable on the Term Loans in
accordance with a remaining 6-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.





Scheduled
      payment date
            $'000April
      1, 2010
            3,187April
      1, 2011
            3,187April
      1, 2012
            3,187April
      1, 2013
            3,187April
      1, 2014
            3,187April
      1, 2015
            3,18219,117






21





(b)
Qualitative information about market risk





We were
organized for the purpose of acquiring and chartering our Vessel, which is
currently on a bareboat charter until 2015. We have no sources for the payment
of the principal of, and the interest on, the Notes except for the Restricted
Cash accounts held by the Trustee. Accordingly, our ability to pay debt service
on the Notes is wholly dependent upon our financial condition, results of
operation and cash flows from our Vessel's operation. As such, we believe that
we are not exposed to any material market risk.





There is
a concentration of credit risk with respect to Restricted Cash to the extent
that all of the amounts are invested with The Bank of New York
Mellon.





There is
a concentration of credit risk due to the fact that the sole source of charter
income is Chevron Transport Corporation. The Company does not consider this is a
significant risk.








Item
12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES





Not
applicable.


22





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(T).  CONTROLS AND PROCEDURES





(a) 
Disclosure controls and procedures





Management
assessed the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities
Exchange Act of 1934, as of December 31, 2009, the end of the period covered by
this annual report. Based upon that evaluation, the principal executive officer
and principal financial officer concluded that the Company's disclosure controls
and procedures are effective as of the evaluation date.





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





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





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





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




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




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





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





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





Our
management with the participation of our principal executive officer and
principal financial officer assessed the effectiveness
of the design and operation of the Company's internal controls over financial
reporting pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as of
December 31, 2009. Based upon that evaluation, the principal executive officer
and principal financial officer concluded that the Company's internal controls
over financial reporting are effective as of December 31, 2009.






23





This
annual report does not include an attestation report of the Company's current
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
current registered public accounting firm pursuant to temporary rules of the SEC
that permit the Company to provide only management's report in this annual
report.





(c)
            Changes
      in internal controls over financial
reporting





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





Item
16.  RESERVED





Item
16A. AUDIT COMMITTEE FINANCIAL EXPERT





Our
equity is neither listed nor publicly traded. The equity is held by one
beneficial holder Our obligations toward our bondholders are set out in detail
in covenants contained in the Indenture for their Notes. Accordingly our board
of directors has determined that the role played by an audit committee would
have no applicability us and we do not have any audit committee. The functions
of the audit committee are performed by the full board of
directors.





Item
16B. CODE OF ETHICS





Our
equity is neither listed nor publicly traded. The equity is held by one
beneficial holder. Our obligations toward our bondholders are set out in detail
in covenants contained in the Indenture for their Notes. Accordingly our board
of directors has determined that the role played by a code of ethics would have
no applicability to us and we have not adopted a code of ethics.





Item
16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES





Our
principal accountant for 2009 and 2008 was PricewaterhouseCoopers AS. The
following table sets forth for the two most recent fiscal years the fees paid or
accrued for audit and services provided by PricewaterhouseCoopers
AS.





(in
      thousands of $)
            
            2009
            
            
            2008Audit
      fees (a)
            
            
            40
            
            
            
            25Audit
      related fees (b)
            
            
            -
            
            
            
            -Tax
      fees (c)
            
            
            -
            
            
            
            -All
      other fees (d)
            
            
            -
            
            
            
            -Total
            
            
            40
            
            
            
            25





a)
            Audit
      Fees


Audit
fees represent professional services rendered 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.





b)
            Audit
      Related Fees


Audit-related
fees consist of 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.


24








c)
            Tax
      Fees


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





d)
            All
      Other Fees


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





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 STANDARDS FOR AUDIT COMMITTEES





Please
refer to Item 16A above.





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





None.





Item
16F.  CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT





On August
13, 2008, the Company's board of directors, or the Board, approved the
engagement of PricewaterhouseCoopers AS, or PricewaterhouseCoopers, as the
Company's independent registered public accounting firm for the year ending
December 31, 2008. The Board determined not to renew the engagement of Grant
Thornton LLP, or Grant Thornton, the Company's independent registered public
accounting firm for the year ending December 31, 2007. The Board determined to
engage PricewaterhouseCoopers in order to realize economies and efficiencies,
since PricewaterhouseCoopers acts as the independent registered public
accounting firm for Frontline Ltd., the ultimate parent of the Company, and
other companies connected with the Company.





The
report of Grant Thornton on the financial statements of the Company as of
December 31, 2007 did not contain an adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles.





In
connection with the audit of the Company's financial statements for the year
ended December 31, 2007 and through the period ended August 13, 2008, there were
no disagreements with Grant Thornton on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope and procedures
which, if not resolved to the satisfaction of Grant Thornton, would have caused
Grant Thornton to make reference to the matter of such disagreements in their
reports.





The
Company has provided Grant Thornton with a copy of this report.





The
Company engaged PricewaterhouseCoopers as its new independent registered public
accounting firm as of August 13, 2008. During the Company's two most recent
fiscal years neither the Company nor anyone on its behalf has consulted with
PricewaterhouseCoopers regarding either (i) the application of accounting
principles to a specified transaction, either completed or proposed; or the type
of audit opinion that might be rendered on the Company's financial statements,
and neither a written report was provided to the Company nor oral advice was
provided by PricewaterhouseCoopers that was an important factor considered by
the Company in reaching a decision as to any accounting, auditing or financial
reporting issue; or (ii) any matter that was the subject of a disagreement, as
that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related
instructions to Item 304 of Regulation S-K, or a reportable event, as that term
is defined in Item 304(a)(1)(v) of Regulation S-K.


Item
16G.  CORPORATE GOVERNANCE





Not
applicable.





25


PART
III





Item
17.    FINANCIAL STATEMENTS





Not
applicable.





Item
18.    FINANCIAL STATEMENTS





The
following financial statements and notes, together with the report of the
PricewaterhouseCoopers AS and Grant Thornton LLP thereon are filed as part of
this annual report:





PageReport
      of Independent Registered Public Accounting Firm - PricewaterhouseCoopers
      AS
            F-1Report
      of Independent Registered Public Accounting Firm - Grant Thornton
      LLP
            F-2Statements
      of Operations and Retained Earnings for the Years Ended December 31, 2009,
      2008 and 2007
            F-3Balance
      Sheets as of December 31, 2009 and 2008
            F-4Statements
      of Cash Flows for the Years Ended December 31, 2009, 2008 and
      2007
            F-5Notes
      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.






26





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.





2.10*
            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.






27





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.





4.4
            Amendment
      No. 2 to the Collateral Trust Agreement among CalPetro Tankers (Bahamas I)
      Limited, CalPetro Tankers (Bahamas II) Limited, CalPetro Tankers (Bahamas
      III) Limited, CalPetro Tankers (IOM) Limited, The Bank of New York Mellon
      Trust Company, N.A., as indenture trustee, The Bank of New York Trust
      Company, N.A., as collateral trustee and California Petroleum Transport
      Corporation, dated as of April 1,
2010.





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





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





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





13.2
            Certification
      of the Principal Financial Officer pursuant to 18 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.





28





Report of
Independent Registered Public Accounting Firm








To
the Board of Directors and Shareholder


CalPetro
Tankers (Bahamas II) Limited








We have
audited the accompanying balance sheet of CalPetro Tankers (Bahamas II) Limited
(the "Company") as of December 31, 2009 and December 31, 2008, and the related
statements of operations and retained earnings, and cash flows for each of 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 audits. The financial statements of the
Company as of December 31, 2007 and for the year then ended were audited by
other auditors whose report dated June 20, 2008 expressed an unqualified opinion
on those statements.





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





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of CalPetro Tankers (Bahamas II)Limited as of December 31,
2009 and December 31, 2008 and the results of its operations and retained
earnings and cash flows for each of the two years ended, in conformity with
accounting principles generally accepted in the United States of
America.








/s/
PricewaterhouseCoopers AS





PricewaterhouseCoopers
AS


Oslo,
Norway


April 29,
2010








F-1





Report
of Independent Registered Public Accounting Firm











To the
Board of Directors


CalPetro
Tankers (Bahamas II) Limited





We have
audited the accompanying statements of operations and retained earnings, and
cash flows of CalPetro Tankers (Bahamas II) Limited for the year ended December
31, 2007. 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 results of operations and cash flows of CalPetro Tankers
(Bahamas II) Limited for the year ended December 31, 2007, in conformity with
accounting principles generally accepted in the United States of
America.














/s/ Grant
Thornton LLP




Grant
Thornton LLP


New York,
New York


June 20,
2008








F-2





CalPetro
Tankers (Bahamas II) Limited


Statements
of Operations and Retained Earnings for the years ended December 31, 2009, 2008
and 2007


(in
thousands of $)




2009
              
              
              2008
              
              
              2007Operating
      revenuesFinance
      lease interest income
              
              1,689
              
              
              
              1,987
              
              
              
              2,225Total
      operating revenues
              
              1,689
              
              
              
              1,987
              
              
              
              2,225Operating
      expensesAdministrative
      expenses
              
              (119
              )
              
              
              (114
              )
              
              
              (119
              )Total
      operating expenses
              
              (119
              )
              
              
              (114
              )
              
              
              (119
              )Net
      operating income
              
              1,570
              
              
              
              1,873
              
              
              
              2,106Other
      income (expenses)Interest
      income
              
              8
              
              
              
              32
              
              
              
              53Interest
      expense
              
              (1,697
              )
              
              
              (1,968
              )
              
              
              (2,240
              )Amortization
      of deferred charges
              
              (22
              )
              
              
              (20
              )
              
              
              (20
              )Net
      other expenses
              
              (1,711
              )
              
              
              (1,956
              )
              
              
              (2,207
              )Net
      loss
              
              (141
              )
              
              
              (83
              )
              
              
              (101
              )Retained
      earnings at the start of the year
              
              1,257
              
              
              
              1,340
              
              
              
              1,441Retained
      earnings at the end of the year
              
              1,116
              
              
              
              1,257
              
              
              
              1,340
  The
accompanying notes are an integral part of these financial
statements.


F-3





CalPetro
Tankers (Bahamas II) Limited


Balance
Sheets as of December 31, 2009 and 2008


(in
thousands of $)






2009
              
              
              2008ASSETSCurrent
      assets:Restricted
      cash
              
              1,993
              
              
              
              2,056Current portion of net investment in finance lease
              
              3,297
              
              
              
              3,294Interest
      receivable
              
              379
              
              
              
              447Other
      current assets
              
              -
              
              
              
              1Total
      current assets
              
              5,669
              
              
              
              5,798Net
      investment in finance lease, less current portion
              
              14,903
              
              
              
              18,162Deferred
      charges
              
              114
              
              
              
              135Total
      assets
              
              20,686
              
              
              
              24,095LIABILITIES
      AND STOCKHOLDER'S EQUITYCurrent
      liabilities:Accrued
      interest
              
              407
              
              
              
              475Current
      portion of long-term debt
              
              3,187
              
              
              
              3,187Other
      current liabilities
              
              46
              
              
              
              59Total
      current liabilities
              
              3,640
              
              
              
              3,721Long-term
      debt
              
              15,930
              
              
              
              19,117Total
      liabilities
              
              19,570
              
              
              
              22,838Stockholder's
      equity:Unclassified
      stock: 100 shares of $1 par value
              
              -
              
              
              
              -Retained
      earnings
              
              1,116
              
              
              
              1,257Total
      stockholder's equity
              
              1,116
              
              
              
              1,257Total
      liabilities and stockholder's equity
              
              20,686
              
              
              
              24,095


The
accompanying notes are an integral part of these financial
statements.


F-4


CalPetro
Tankers (Bahamas II) Limited


Statements
of Cash Flows for the years ended December 31, 2009, 2008 and 2007


(in
thousands of $)





2009
            
            
            2008
            
            
            2007Net
      loss
            
            (141
            )
            
            
            (83
            )
            
            
            (101
            )Adjustments
      to reconcile net loss to net cash  used in  operating
      activities:Amortization
      of discount on loans
            
            21
            
            
            
            20
            
            
            
            20Changes
      in assets and liabilities:Interest
      receivable
            
            68
            
            
            
            69
            
            
            
            68Other
      current assets
            
            1
            
            
            
            7
            
            
            
            -Accrued
      interest payable
            
            (68
            )
            
            
            (68
            )
            
            
            (68
            )Other
      current liabilities
            
            (13
            )
            
            
            5
            
            
            
            9Net
      cash used in operating activities
            
            (132
            )
            
            
            (50
            )
            
            
            (72
            )Investing
      activities:Finance
      lease payments received
            
            3,256
            
            
            
            3,228
            
            
            
            3,263Maturity
      (placement) of restricted cash
            
            63
            
            
            
            9
            
            
            
            (4
            )Net
      cash provided by investing activities
            
            3,319
            
            
            
            3,237
            
            
            
            3,259Financing
      activities:Repayments
      of debt
            
            (3,187
            )
            
            
            (3,187
            )
            
            
            (3,187
            )Net
      cash used in financing activities
            
            (3,187
            )
            
            
            (3,187
            )
            
            
            (3,187
            )Net
      increase in cash and cash equivalents
            
            -
            
            
            
            -
            
            
            
            -Cash
      and cash equivalents at start of the year
            
            -
            
            
            
            -
            
            
            
            -Cash
      and cash equivalents at end of the year
            
            -
            
            
            
            -
            
            
            
            -Supplemental
      disclosure of cash flow information:Interest
      paid
            
            1,765
            
            
            
            2,036
            
            
            
            2,308







The
accompanying notes are an integral part of these financial
statements.


F-5


CalPetro
Tankers (Bahamas II) Limited


Notes
to the Financial Statements





1.  DESCRIPTION
OF BUSINESS





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
organized 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.





The
Company along with CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas III) Limited,  and CalPetro Tankers (IOM) Limited 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 ("ITC"), a Cayman
Islands company. ITC is itself is wholly-owned by Independent Tankers
Corporation Limited ("ITCL"). ITCL was established in February 2008 and it is
82.47% owned by  Frontline Ltd., ("Frontline"), a Bermuda company
whose shares are listed on the New York Stock Exchange, London Stock Exchange
and Oslo Stock Exchange.





California
Petroleum Transport Corporation ("California Petroleum" or "CPTC"), a Delaware
corporation, acting as agent on behalf of the Owners, issued as full recourse
obligations $167,500,000 Serial First Preferred Mortgage Notes (the "Serial
Notes") and $117,900,000 8.52% First Preferred Mortgage Notes due 2015 (the
"Term Notes")  (together the "Notes"). The Serial Notes were fully
repaid April 1, 2006. 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 their Vessels
from Chevron. The Company was allocated $46,620,000 of the Serial Loans and
$35,052,000 of the Term Loans and acquired its Vessel, the Altair Voyager. The
Company engages in no business other than the ownership and Initial Chartering
of its Vessel and activities resulting from or incidental to such ownership and
chartering.





The
Company's only source of funds with respect to the Term Loans is payments from
Chevron. The Company does not have any other source of funds for payment of the
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 (GAAP). The preparation of
financial statements in accordance with generally accepted accounting principles
requires that management make estimates and assumptions affecting the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.





Financing
lease and revenue recognition


The
long-term charter agreement between the Company and Chevron transfers to Chevron
all the risks and rewards associated with ownership, other than legal title, and
contains a bargain purchase option. As such, it is classified as a direct
financing lease in accordance with Statement of Financial Accounting Standards
No. 13 (codified ASC 840).





Accordingly,
the present value of the minimum payments under the charter agreement is
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 which is amortized 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.


F-6





CalPetro
Tankers (Bahamas II) Limited


Notes
to the Financial Statements (continued)








2.  ACCOUNTING
POLICIES (continued)





Interest
payable recognition


Interest
payable on the Term Loans is accrued on a daily basis.





Deferred
charges


Deferred
charges comprise expenses incurred in connection with the structuring of the
financing transactions and issuance of debt. Such expenses are being amortized
over the life of the debt on a straight line basis, which is not materially
different to the effective interest rate method.





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 The Bahamas but an exchange of information treaty on tax
issues is in effect.





Reporting
and functional currency


The
reporting currency is United States dollars. The functional currency is United
States dollars.





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
realized.





3.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS





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





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











F-7








CalPetro
Tankers (Bahamas II) Limited


Notes
to the Financial Statements (continued)








3.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (continued)





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





4.  RESTRICTED
CASH





The
restricted cash accounts were established and are maintained by The Bank of New
York Mellon (as successor to the Chase Manhattan Trust Company of
California and JPMorgan Chase) as the collateral trustee who maintains the
accounts as collateral agent for the equal and ratable benefit of the holders of
the 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 Term
Notes and any operating costs in relation to the Owners.





5.  FINANCE
LEASE





The
Company has chartered its Vessel on a long term bareboat charter (the "Initial
Charter") to Chevron Transport Corporation ("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 did not elect to terminate the Charter on any
of the specified dates, the last being April 1, 2010 as no notice had been given
twelve months prior to the option date as required by the Initial Charter.
Chevron has the option to purchase the Vessel for $1 on April 1,
2015.








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





(in
      thousands of $)
            
            2009
            
            
            2008Total
      minimum lease payments to be received
            
            
            22,747
            
            
            
            27,760Less:
      Unearned income
            
            
            (4,547
            )
            
            
            (6,304
            )Net
      investment in finance lease
            
            
            18,200
            
            
            
            21,456Less:
      current portion
            
            
            (3,297
            )
            
            
            (3,294
            )14,903
            
            
            
            18,162





Lease
revenues under the charter agreement for each of the succeeding years are as
follows:





(in
      thousands of $)Year
      ending December 31,2010
            
            
            4,7422011
            
            
            4,4702012
            
            
            4,1982013
            
            
            3,9272014
            
            
            3,6532015
            
            
            1,757Total
      minimum lease revenues
            
            
            22,747





F-8





CalPetro
Tankers (Bahamas II) Limited


Notes
to the Financial Statements (continued)





6.  DEFERRED
CHARGES





(in
      thousands of $)
            
            2009
            
            
            2008Debt
      arrangement fees
            
            
            1,006
            
            
            
            1,006Accumulated
      amortization
            
            
            (892
            )
            
            
            (871
            )114
            
            
            
            135





7.  DEBT





(in
      thousands of $)
            
            
            2009
            
            
            
            20088.52%
      Term Loans due 2015
            
            
            19,117
            
            
            
            22,304Less:
      current portion
            
            
            (3,187
            )
            
            
            (3,187
            )15,930
            
            
            
            19,117





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





(in
      thousands of $)Year
      ending December 31,2010
            
            
            3,1872011
            
            
            3,1872012
            
            
            3,1872013
            
            
            3,1872014
            
            
            3,1872015
            
            
            3,182Total
      debt
            
            
            19,117





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 six year sinking fund schedule. The
Term Loans notes include certain covenants such as restriction on the payment of
dividends and making additional loans or advances to affiliates.  At
December 31, 2009, the Company was in compliance with these
covenants.





The
Company is jointly and severally liable with the other Owners for all the Owners
obligations and liabilities in relation to the Term Loans but only to the extent
of the proceeds received by California Petroleum Transport Corporation from
California Petroleum Transport Corporation's right, title and interest in and to
the collateral.







8.  SHARE
CAPITAL





(in
      $)
            
            2009
            
            
            2008Authorized
      share capital:1,000
      shares of $1 each
            
            
            1,000
            
            
            
            1,000Issued
      and outstanding share capital:100
      shares of $1 each
            
            
            100
            
            
            
            100








F-9




CalPetro
Tankers (Bahamas II) Limited


Notes
to the Financial Statements (continued)




9.  FINANCIAL
INSTRUMENTS





Fair
values


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








(in
      thousands of $)
            
            2009
              Carrying
      value
            
            
            2009
              Fair
              value
            
            
            2008
              Carrying
              value
            
            
            2008
              Fair
              valueRestricted
      cash
            
            
            1,993
            
            
            
            1,993
            
            
            
            2,056
            
            
            
            2,0568.52%
      Term Loans due 2015
            
            
            19,117
            
            
            
            19,385
            
            
            
            22,304
            
            
            
            25,554





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





The
carrying value of restricted cash is a reasonable estimate of fair
value.





The
estimated fair value for fixed rate debt, being the Term Loans, is based on
quoted market prices.





Concentrations
of risk





The
Company's only source of funds for the repayment of the principal and interest
on the Term 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 Term Loans is wholly
dependent upon the financial condition, results of operations and cash flows
from Chevron.





There is
a concentration of credit risk with respect to Restricted Cash to the extent
that all of the amounts are invested with The Bank of New York
Mellon.





There is
a concentration of credit risk due to the fact that the sole source of charter
income is Chevron Transport Corporation. The Company does not consider this a
significant risk.





10.   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 the Vessel, along with a fee of $3,000 covering
all four Vessels in the California Petroleum Group, payable semi-annually in
arrears for the period until the third anniversary of the closing of the Notes
issue then increasing by four percent 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 the 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 increases by four percent. In addition, the Technical Advisor
is entitled to be reimbursed for the fees, costs and expenses of conducting
periodic inspections of the Vessel.


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






F-10





CalPetro
Tankers (Bahamas II) Limited


Notes
to the Financial Statements (continued)








10.           RELATED
PARTY TRANSACTIONS (continued)








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 four percent increase on each subsequent anniversary of
the closing of the issue of the Notes.





Management
fee expenses and management fees payable for the years ended and as of December
31, 2009, 2008, and 2007 are as follows:





(in
      thousands of $)
            
            2009
            
            
            2008
            
            
            2007Management
      fee expenses
            
            
            45
            
            
            
            43
            
            
            
            41Management
      fee payable
            
            
            11
            
            
            
            21
            
            
            
            10








11.           COLLATERAL
ARRANGEMENTS





The Term
Loans are collateralized 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.





As at
December 31, 2009, Chevron holds an option to purchase the Vessel for $1 on
April 1, 2015.








F-11





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 BlankenshipKate
      BlankenshipDirector
      and Secretary


Date:
April 29, 2010