SECURITIES AND EXCHANGE COMMISSION

                                    FORM 20-F



/ /             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, 1997


                        Commission file number: 333-26227


                        GOLDEN STATE PETRO (IOM I-B) PLC
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                   ISLE OF MAN
                 (JURISDICTION OF INCORPORATION OR ORGANIZATION)

              C/O 15-19 ATHOL STREET, DOUGLAS, ISLE OF MAN IM1 1LB
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)



This form contains 43 pages. The exhibit index is located on page 24



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

          Title of each Class        Name of each exchange on which Registered
          -------------------        -----------------------------------------

          Not Applicable



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

                                      None


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

                Golden State Petroleum Transport Corporation
                8.04% First Preferred Mortgage Notes Due 2019


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.

                2 Shares of Common Stock, no par value per share


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

                      Yes    /X/                           No  / /


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

                      Item 17     / /                   Item 18  /X/









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                                     PART I


ITEM 1.    DESCRIPTION OF BUSINESS
----------------------------------

         Golden State Petroleum Transport Corporation, formed in 1996 as a
special purpose Delaware corporation, issued Notes as agent on behalf of the
Golden State Petro (IOM I-A) and Golden State Petro (IOM I-B) ("the Companies"
or "the Owner's"). The Companies are special purpose entities formed as public
limited companies in the Isle of Man. The proceeds from the offering and sale of
the Term Notes, together with the proceeds of the sale of the Serial Notes, are
being used by the Companies to fund the construction of two very large crude
carriers to be constructed by Samsung Corporation ("Samsung") and Samsung Heavy
Industries ("SHI" and, together with Samsung, the "Builders") under the
technical supervision of Chevron Shipping Company (the "Technical Advisor"), as
agent for the Chevron Transport Corporation ("Initial Charterer"), as well as to
pay capitalized interest on the Notes, through the delivery date for each Vessel
(each, a "Delivery Date"). The Vessels, upon acceptance by the Owners under the
ship building contracts (each, a "Building Contract"), will be chartered to the
Initial Charterer pursuant to initial charters (each an "Initial Charter"), each
of which is first terminable by the Initial Charterer on the eighth anniversary
of the Delivery Date for the related Vessel. The Initial Charterer's obligations
under each Initial Charter will be guaranteed by Chevron under two separate
Chevron guarantees (each, a "Chevron Guarantee"). The Initial Charterer is an
indirect, wholly-owned subsidiary of Chevron.

         The Owners' strategy is to acquire the Vessels and charter them to the
Initial Charterer under the Initial Charters which are expected to provide, so
long as the Initial Charters are in effect, (a) charter hire payments sufficient
to pay (i) the Owners' obligations under the Mortgage Notes, (ii) the Management
Fees under the Management Agreements, (iii) the estimated Recurring Fees, (iv)
the estimated fees payable to the Indenture Trustee and (v) any other costs and
expenses incidental to the ownership and chartering of the Vessels that are to
be paid by the Owners and to fund the Debt Service Reserve Fund and (b) that the
Vessels will be maintained in accordance with good commercial maintenance
practices, and to arrange for vessel management and remarketing services to be
available in case any Initial Charter is terminated or any Vessel is for any
other reason returned to the possession and use of the related Owner.

         Golden State Petro (IOM I-B) or ("the Company") was incorporated in
Isle of Man because it is a jurisdiction whose regulation of the shipping
industry and favorable tax laws have traditionally encouraged the organization
of shipping companies. Isle of Man is an "open registry" jurisdiction, which has
traditionally been associated with the shipping industry. The Company conducts
its business and is resident in Isle of Man; to date, it has not incurred
taxation on its income and should not, under current law and practice in such
jurisdictions, incur such taxation in the future.

         The principal executive offices of the Company are located at 15-19
Athol Street, Douglas, Isle of Man IM1 1LB and its telephone number is
011-44-1-62-4628575.

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MANAGEMENT OF THE COMPANY

         The Company was formed as an Isle of Man public limited company for the
purpose of acquiring and chartering one of the Vessels. The Company, Golden
State Petro (IOM I-A) and Golden State Petroleum Transport Corporation are
wholly-owned subsidiaries of Golden State Holdings I, Ltd., an Isle of Man
holding company (the "Ship Holding Company"), that is a wholly-owned subsidiary
of Cambridge Petroleum Transport Corporation, a closely held Cayman Islands
Corporation ("CPTC"). Under a management agreement (a "Management Agreement")
with each Owner, Cambridge Fund Management I L.L.C., a Delaware limited
liability company (the "Manager") and an affiliate of CPTC, will provide
administrative, ship management and advisory services to the Owners. The Manager
was established in 1995, and arranges and manages investment banking
opportunities primarily in the international shipping industry, including the
financing of existing and newly built vessels. Each of the Manager, CPTC and the
Ship Holding Company is an Affiliate of Cambridge Partners, L.L.C.
         On May 12, 1998 all of the Stock of Golden State Holdings I Ltd., the
parent company which owns 100% of the stock of the Company, Golden State Petro
(IOM I-B) and Golden State Petroleum Transport Corporation, was sold to
Frontline Ltd. a shipping company incorporated in Bermuda. In connection with
the sale of the stock of Golden State Holdings I Ltd., Independent Tankers or
its designee will assume management responsibilities for Golden State Petro (IOM
I-A), Golden State Petro (IOM I-B) and Golden State Petroleum Transport
Corporation at a date to be agreed upon.

         MANAGEMENT

         The Manager has agreed to provide administrative management and
advisory services to the Owners pursuant to the Management Agreements. Such
services include maintaining the books and records of each Owner, preparing and
filing the annual financial statements and annual tax returns of each Owner,
preparing and submitting invoices in connection with the operation of the
Vessels and various other administrative responsibilities. Pursuant to each
Management Agreement, the Manager will be entitled to a fee (the "Management
Fee") of $50,000 per year per Vessel for all periods commencing on the Original
Closing Date. All Recurring Fees are payable by the Manager from the Management
Fee. The Management Fee will be payable semi-annually on each Payment Date. The
Companies believe that the Management Fee will be sufficient to cover the
Companies' anticipated expenses.

CHARTER MARKET

         THE INITIAL CHARTERS

         Pursuant to the Initial Charters, the Initial Charterer has agreed to
charter the Vessel commencing on its Delivery Date and ending on the eighteenth
anniversary of such Delivery Date. Pursuant to the Initial
Charters,
the Initial Charterer has the right to terminate the Initial Charter on five
dates (each, an "Optional Termination Date") beginning on the expiration of the
period commencing on the Delivery Date for such Vessel and terminating on the
eighth anniversary thereof (each, a "Fixed Period") and on each of the four
subsequent two-year anniversaries thereof. During the Fixed Period, the charter
hire shall be $27,199 per day. If Additional Notes are issued due to the
incurrence of additional construction costs for the Vessel ("Additional
Construction Costs"), Additional Charter Hire will become payable during the
Fixed Period under the related Initial Charter

                                      - 4 -



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in an amount that, together with investment income thereon, will be sufficient
to cover the debt service on the Additional Notes. If there is a Net Reduction
in Construction Costs for a Vessel resulting in a mandatory redemption of the
Notes in an amount equal to the Net Reduction in Construction Costs, the Charter
Hire will be reduced by an amount necessary to reflect the amortization of the
Net Reduction in Construction Costs over the term of the Exchange Notes. Charter
Hire after the Fixed Period will be $28,500. During the term of the Initial
Charters, the Company is not liable for any expense in operating, registering,
documenting, insuring, repairing or maintaining the Vessels and is not required
to supply a vessel or any part thereof if the Vessel or any part thereof is
lost, damaged, rendered unfit for use, confiscated, seized, requisitioned,
restrained or appropriated. Pursuant to the Initial Charters, the Initial
Charterer is required to pay Charterhire in respect of each Vessel without
offset or deduction for any reason whatsoever.

         REMARKETING

         In the event the Initial Charterer gives notice to an Owner of its
intent to terminate an Initial Charter, the Manager, pursuant to the related
Management Agreement, is required to engage a remarketing agent. McQuilling
Brokerage Partners, Inc. ("McQuilling") and ACM Shipping Limited ("ACM
Shipping") have agreed to provide on a non-exclusive basis remarketing services
if the Initial Charterer exercises its option to terminate the Initial Charter
for the Vessel. McQuilling, established in 1972, is a leading New York-based
ship broker whose activities encompass all aspects of chartering, sale and
purchase, ship finance, demolition and project development. ACM Shipping is a
leading London ship broker which has strong relationships with the major oil
companies. ACM Shipping has been in the ship brokerage business since 1982.

         If the Initial Charterer elects to terminate an Initial Charter for the
Vessel on the first Optional Termination Date for such Initial Charter, the
Allocated Principal Amount of the Notes for such Vessel will be approximately
$63.55 million. All of the Serial Notes and all of the Additional Notes, if any,
will have matured on or prior to such date. If (i) the Initial Charterer elects
to terminate the Initial Charter for the Vessel, (ii) an Acceptable Replacement
Charter has not been entered into and (iii) such Vessel has not been sold, then
in order to make scheduled sinking fund and interest payments on the Notes, if
any, and to pay estimated ship expenses for the related Vessel, minimum bareboat
charter hire payments of approximately $18,569 per day per Vessel, would be
required upon recharter. The foregoing charter hire rates would not cover
$10,995,000 of the final principal payment allocated to each Vessel. The
$10,995,000 is less than current estimates of the approximate residual value of
the respective Vessels on the date of the final payment. No assurance can be
given as to the residual or scrap value of the Vessels on such date of the final
payment and no assurance can be given that the Manager would be able to obtain
charters at the foregoing charter hire rates.

CHARTER RATES AND THE MARKET FOR SECONDHAND VESSELS

         Historically, tanker charter rates have reflected changes in the supply
and demand characteristics of the tanker trade. Spot charter rates are
negotiated and fixed around the clock in a highly competitive and efficient
global spot charter market through brokers acting as intermediaries between
shipowners and charterers. Time charters are negotiated and fixed in a similar
manner and are influenced by, among other things, owners' and charterers'
expectations for future spot charter rates and do not reflect certain operating
costs borne by owners.
         According to McQuilling, historical average (calculated quarterly) time
charter rates for VLCC tankers, adjusted to reflect the specifications and
trading patterns of the Vessels are set forth in the chart below.

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             AVERAGE VLCC TIME CHARTER RATES (CALCULATED QUARTERLY)


                                                           Average VLCC Rates
                    Year                                    ($000s per day)
                    ----                                    ---------------
                  1986                                          20200
                                                                18467
                                                                26867
                                                                13500
                  1987                                          14233
                                                                20333
                                                                30533
                                                                28100
                                                                22800
                  1988                                          22800
                                                                22433
                                                                22967
                                                                32767
                  1989                                          31700
                                                                17500
                                                                25867
                                                                41300
                  1990                                          36033
                                                                40767
                                                                32467
                                                                36833
                  1991                                          66700
                                                                37900
                                                                41700
                                                                33833
                  1992                                          25033
                                                                18500
                                                                21500
                                                                25333
                  1993                                          29700
                                                                23667
                                                                25300
                                                                22267
                  1994                                          16333
                                                                17167
                                                                21033
                                                                25600
                  1995                                          25600
                                                                22200
                                                                38200
                                                                33333
                  1996                                          36633
                                                                31600
                                                                38567

              SOURCE:  MCQUILLING BROKERAGE PARTNERS, INC.

         VLCC time charter rates rose during the late 1980s due to a substantial
increase in oil exports from the Middle East. Time charter rates further
increased during the Gulf War as a substantial amount of tonnage was 

                                      - 6 -



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used for floating storage. Furthermore, the war had the effect of increasing
total transportation demand as the blockade on exports through the pipeline from
Iraq to the eastern Mediterranean created additional demands for shipments of
oil from the Arabian Gulf. Time charter rates fell in 1992 due to the release of
tonnage from floating storage and the increase of supply of VLCCs. The impact of
the additional capacity was exacerbated by the deepening of the recession,
particularly in Europe and Japan. With worldwide economic growth and increasing
oil consumption, particularly in developing Asia, VLCC time charter rates have
increased steadily since 1994.

         VESSEL VALUES AND NEWBUILDING PRICES

         Historically, secondhand vessel values and newbuilding prices have also
reflected changes in the fundamental supply and demand characteristics of the
tanker trade and have exhibited a strong correlation to changes in charter
rates. Changes in charter rates influence potential buyers' and sellers'
estimates of future operating cash flows from vessels, and, therefore, vessel
values. Newbuilding prices are also influenced by shipbuilding capacity and
shipyard costs. The following table shows VLCC tanker newbuilding prices since
1978:

                                NEWBUILDING COSTS



           YEAR         SINGLE-HULL                 DOUBLE-HULL
           ----         -----------                 -----------
         1978               49
         1979               62.5
         1980               70
         1981               70
         1982               50
         1983               47
         1984               39
         1985               37
         1986               37
         1987               43
         1988               55
         1989               76
         1990               87
         1991               88                          105.5
         1992               87                          102
         1993               80                          93
         1994               72.25                       85
         1995                                           86
         1996                                           84
      10/1996                                           84

                  SOURCE:  R.S. PLATOU

         As the above tables illustrate, the average price of VLCC newbuildings
increased steadily from 1985 through 1991. This was due to the cost levels of
Japanese shipyards as the yen strengthened against the dollar 

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and as newbuilding orders rose following the increase in time charter rates. The
relatively high level of newbuilding prices forced the entire market upward as
secondhand vessels of good quality could be sold at attractive prices. Recently,
newbuilding prices have been stable and since 1992, eight-year-old VLCC vessels
have sold, on average, for a price approximately 94% of their newbuilding
prices. Although VLCC vessels of this age have retained great value there is no
assurance that such trend will continue in the future.

COMPETITION

     Competition in the operation and sale of tankers is intense. There are
numerous owners of such vessels, most of which own a relatively small number of
vessels. Competition is based primarily upon price and location of a vessel and
secondarily upon the reputation of the vessel and its operator. In addition, as
older vessels become less desirable for hire because of environmental and safety
concerns, competition for the employment of such older vessels (i.e., those
older than 15 years becomes even more intense.

INSPECTION, INSURANCE AND REGULATION

          INSPECTION BY CLASSIFICATION SOCIETY

     Every commercial vessel's hull and machinery must be "classed" by a
classification society authorized by its country of registry. The classification
society ensures that a vessel is constructed and equipped in accordance with the
International Maritime Organization regulations and the Safety of Life at Sea
Convention.

         A vessel must be inspected by a surveyor of the classification society
every year ("Annual Survey"), every two years ("Intermediate Survey") and every
four years ("Special Survey"). Each vessel is also required to be dry docked
every 30 to 60 months for inspection of the underwater parts of the vessel. If
any defects are found, the classification surveyor will issue a "recommendation"
which has to be acted upon, and the defect must be rectified by the shipowner
within a prescribed time limit. At the Special Survey, the vessel is examined
thoroughly, including an inspection to determine the thickness of the steel
plates in various parts of the vessel, and repairs may be recommended. For
example, if the thickness of the steel plates is found to be less than class
requirements, steel renewals will be prescribed. A one-year grace period may be
granted by the classification society to the shipowner for completion of the
Special Survey. If the vessel experiences excessive wear and tear, substantial
amounts of money may have to be spent for steel renewals to pass a Special
Survey. In lieu of the Special Survey every four years (five years, if grace is
given), a shipowner has the option of arranging with the classification society
for the vessel's hull or machinery to be on a continuous survey cycle, whereby
every part of the vessel is surveyed within a five-year cycle. Insurance
underwriters make it a condition of insurance coverage for the vessel to be
"classed" and "class maintained" and the failure of a vessel to be "classed" and
"class maintained" may render such a vessel unusable.
         The Vessels will be maintained during the term of the Initial Charters
by the Initial Charterer in accordance with good commercial maintenance practice
commensurate with other vessels in the Initial Charterer's fleet of similar size
and trade, as required by the Initial Charters. The Initial Charters require the
Initial Charterer to return any Vessel whose Initial Charter has been terminated
to the Company in class under the rules of the American Bureau of Shipping (or
other classification society previously approved by the Company). In addition,
the Company has the right to inspect the Vessel and to require surveys upon
redelivery, and the Initial Charterer will be responsible for making or
compensating the Company for certain necessary

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repairs in connection with such redelivery.

INSURANCE

         The operation of any ocean-going vessel carries an inherent risk of
catastrophic marine disasters, environmental mishaps, cargo and property losses
or damage and business interruptions caused by adverse weather and ocean
conditions, mechanical failures, human error, political action in various
countries, war, terrorism, piracy, labor strikes and other circumstances or
events. Pursuant to the Initial Charters, the Vessels may be operated through
the world in any lawful trade for which the vessels are 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 or
revenues or assets, including a Vessel.

         Under the Initial Charters, the Initial Charterer is entitled to
self-insure against marine and war risks relating to the Vessels and against
protections and indemnity risks relating to the Vessels during the term of the
Initial Charters 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 the Company will be able to procure adequate insurance coverage at
commercially reasonable rates in the future. In particular, stricter
environmental regulations may result in increased costs for, or the lack of
availability or, insurance against the risks of environmental damage or
pollution.

         The Initial Charterer will, pursuant to the Initial Charters, indemnify
the Company from damages arising from a failure to maintain any financial
responsibility requirements whether relating to oil or other pollution damage.
The Initial Charterer will also indemnify the Owners to the extent losses,
damages or expenses are incurred by the Company relating to oil or other
pollution damage as a result of the operation of the Vessels by the Initial
Charterer.


ENVIRONMENTAL AND OTHER REGULATIONS

         The Vessels and the operation of the Vessels must comply with extensive
and changing environmental protection laws and regulations. Compliance with
these laws and regulations may entail significant expenses, including expenses
for ship modifications and changes in operating procedures. These laws and
regulations could have a material adverse effect on the business and the
operations of the Company and any charterer of the Vessels. In particular, the
United States Oil Pollution Act of 1990, as amended ("OPA 90"), provides for
strict liability for owners, operators and demise charterers of any vessel for
certain oil pollution incidents in the waters of the United States or adjoining
shorelines or the exclusive economic zone. The United States Coast Guard has
adopted a final rule (the "Final Rule") under OPA 90 published on March 7, 1996
which requires owners, operators and demise charterers of self-propelled tanker
vessels operating in United States waters to meet the aggregate financial
responsibility requirements required under OPA 90 as well as under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA").
The Initial Charterer has agreed, pursuant to the Initial Charters, to furnish
evidence of financial responsibility with respect to the Vessels to the

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United States Coast Guard as required by the Final Rule.

         The Final Rule requires owners, operators and demise charterers to
furnish the United States Coast Guard with evidence of financial responsibility
in compliance with the limits specified by OPA 90 and CERCLA. Owners, operators
and demise charterers can demonstrate their financial responsibility through
types of self-insurance that require that tangible assets located within the
United States be measured against worldwide liabilities, as well as through
insurance, guaranties or surety bond guaranties. Insurance has been one of the
principal methods used to satisfy financial responsibility. The Final Rule
subjects insurers and other guarantors to direct actions and would require
insurers and other guarantors to waive certain customary insurance policy
defenses. In the event that the insurer, surety or other party is sued directly,
it is limited to asserting the following defenses: (i) that the incident was
caused by the willful misconduct of the responsible party; (ii) those available
to the responsible party under OPA 90 or CERCLA; (iii) that the claim exceeds
the amount of the guarantee; (iv) that the claim exceeds the proper amount of
the guarantee based on the gross tonnage of the vessel; and (v) that the claim
is not one made under either OPA 90 or CERCLA. Most of the protection and
indemnity organizations ("P & I Clubs") that provide insurance to ship owners
and operators have refused to furnish evidence of insurance to owners and
operators of vessels entering United States ports under these terms. However,
certain newly formed insurance companies, which have been deemed acceptable
guarantors by the United States Coast Guard, have furnished the guaranties
pursuant to the Final Rule. If any charterer of the Vessels is unable to comply
with the Final Rule it would have a material adverse effect on the Owners and
the Holders of the Exchange Notes.

         The International Maritime Organization, an agency of the United
Nations (the "IMO"), recently adopted regulations designed to reduce oil
pollution in international waters. In complying with OPA 90, the IMO regulations
and other regulations that may be adopted, the Company and any charterer of the
Vessels may be forced to incur additional costs in meeting new maintenance and
inspection requirements, in developing contingency arrangements for potential
spills and in obtaining insurance coverage. Certain states in the United States,
the European Community and certain other countries have adopted or are also
considering adopting stricter technical and operational requirements for
tankers. Additional laws and regulations may be adopted which may have a
material adverse effect on the business and the operations of the Company, any
charterer of the Vessels and the Holders of the Exchange Notes.

         The business and the operations of the Company and any charterer of the
Vessels are materially affected by government regulation in the form of
international conventions, national, state and local laws and regulations in
force in the jurisdictions in which the Vessels operate, as well as in the
country or countries of their registration. Because such conventions, laws and
regulations are often revised, the Company cannot predict the ultimate cost of
complying with such revised conventions, laws and regulations or the impact
thereof on the resale price or useful life of the Vessels.

         OPA 90

         The United States Oil Pollution Act of 1990 was enacted and became
effective in 1990 (as amended, "OPA 90"). OPA 90 applies to all vessels that
trade in the United States or its territories or possessions or operate in
United States waters, which include the United States territorial seas and the
two hundred nautical mile exclusive economic zone of the United States. Under
OPA 90, vessel owners, operators and demise charterers are "responsible parties"
with strict liability on a joint and several basis (unless the spill results
solely from the

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act or omission of a third party (subject to certain statutory qualifications),
an act of God or an act of war for all oil spill containment and clean-up costs
and other damages arising from actual and threatened oil spills pertaining to
their vessels. These other damages include (i) natural resources damages and the
costs of assessment thereof, (ii) real and personal property damages, (iii) net
loss of taxes, royalties, rent, fees and other lost government revenues, (iv)
lost profits or impairment of earning capacity due to property or natural
resource damage, (v) net cost of public services necessitated by a spill
response, such as protection from fire, safety or health hazards, and (vi) loss
of subsistence use of natural resources. OPA 90 limits the liability of
responsible parties to the greater of $1,200 per gross ton or $10 million per
tanker (subject to possible adjustment for inflation); however, that limit would
not apply if the incident were approximately caused by violation of applicable
United States federal safety, construction or operating regulations or by the
responsible party's gross negligence or willful misconduct, or if the
responsible party fails or refuses to report an incident which the responsible
party knows or has reason to know of, or to provide all reasonable cooperation
and assistance requested by a responsible official in connection with oil
removal activities. OPA 90 does not by its terms impose liability on lenders or
the holders of mortgages on vessels; however, there is no specific exclusion for
such entities under OPA 90. In addition, if the Indenture Trustee or any holder
exercises remedies and becomes an "owner" or "operator" or "demise charterer" of
a Vessel following a Mortgage Event of Default, such persons or entities may be
subject to liability under OPA 90. A catastrophic spill could exceed the
liability limits of any insurance coverage available, in which event there could
be a material adverse effect on the owner and the operator of the vessel
involved in the spill.

         OPA 90 requires owners and operators of vessels to establish and
maintain with the United States Coast Guard evidence of insurance or of
qualification as a self-insurer or other evidence of financial responsibility
sufficient to meet their potential strict liability limit under OPA 90 and
CERCLA. The United States Coast Guard has adopted a final rule (the "Final
Rule") published on March 7, 1996 which requires evidence of financial
responsibility equal to the aggregate of OPA 90's strict liability limit and
CERCLA's limits demonstrated by insurance, surety bond, self-insurance or
guarantee. Failure to furnish such certificates would have the effect of
preventing vessels from trading to United States ports or in United States
waters. The Initial Charterer has agreed, pursuant to the Initial Charters, to
furnish evidence of financial responsibility with respect to the Vessels to the
United States Coast Guard as required by the Final Rule.

         The Final Rule states that claimants may bring suit directly against an
insurer or guarantor that furnishes certificates of financial responsibility and
requires insurers to waive certain customary insurance policy defenses. In the
event that the insurer, surety or other party is sued directly, it is limited to
asserting the following defenses: (i) that the incident was caused by the
willful misconduct of the responsible party; (ii) those available to the
responsible party under OPA or CERCLA; (iii) that the claim exceeds the amount
of the guarantee; (iv) that the claim exceeds the proper amount of the guarantee
based on the gross tonnage of the vessel; and (v) that the claim is not one made
under either OPA or CERCLA. Most of the P&I Clubs that typically provide
certificates of financial responsibility have refused to furnish evidence of
insurance for vessel owners and operators if such insurance organizations are
subject to direct actions or required to waive insurance policy defenses.
However, certain newly formed insurance companies, which have been deemed
acceptable guarantors by the United States Coast Guard, have furnished the
guaranties pursuant to the Final Rule.

         The Final Rule may also be satisfied by evidence of a surety bond or
guarantee. However, the financial credit of some owners and operators may make
the furnishing of surety bonds or guaranties economically infeasible.
Additionally, vessel owners and operators may give evidence of self-insurance to
satisfy the United

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States Coast Guard's regulations. Under these provisions, the shipowner or
operator must have net worth and working capital, measured in assets located in
the United States against liabilities located anywhere in the world, that
exceeds the applicable amount of financial responsibility.

         If the prospective recharterers of the Vessels fail to comply with the
Final Rule, it would have a material adverse effect on the Company and Holders
of the Exchange Notes and Holders of the untendered Existing
Notes, if any.

         Owners or operators of tankers operating in United States waters must
file vessel response plans with the United States Coast Guard and their tankers
must operate in compliance with their United States Coast Guard approved plans.
Such response plans must, among other things, (i) identify and ensure, through
contract or other approved means, the availability of necessary private response
resources to respond to a "worst case" discharge, (ii) describe crew training
and drills, (iii) identify a qualified individual with full authority to
implement removal actions and (iv) describe mitigation and response actions.
Vessel response plans have been approved for the Vessels.

         OPA 90 specifically permits individual states to impose their own
liability regimes with regard to oil pollution incidents occurring within their
boundaries, and many states have enacted legislation providing for unlimited
liability for oil spills. In some cases, states which have enacted such
legislation have not yet issued implementing regulations defining tanker owners'
responsibilities under these laws. Additionally, under OPA 90 the liability of
responsible parties, United States or foreign, with regard to oil pollution
damage in the United States is not preempted by any international convention.

         IMO

         The International Maritime Organization ("IMO") is an agency organized
in 1958 by the United Nations. Over 100 national governments are members of the
IMO, whose purpose is to provide for international regulations and practices
affecting shipping and international trade and to encourage the adoption of
standards of safety and navigation. During the last 35 years the IMO has
initiated over 700 resolutions and 30 major conventions and protocols. All IMO
agreements must be ratified by the individual government constituents. Outside
the United States, many countries have ratified and follow the liability scheme
adopted by the IMO and set out in the International Convention on Civil
Liability for Oil Pollution Damage of 1969 ("CLC"), as amended by the 1992
Protocol, which entered into force May 30, 1996. Under the CLC, an oil tanker's
registered owner is strictly liable for pollution damage caused on the
territorial waters of a contracting state by a discharge of oil, subject to
certain defenses and limits. The current limit for a ship not exceeding 5,000
gross tons is 3 million Special Drawing Rights ("SDR") and, for each additional
ton on a larger vessel, an additional 420 SDRs, up to a maximum of 59.7 million
SDRs. (An SDR is defined by the International Monetary Fund on the basis of a
basket of currencies. The exchange rate in effect on June 16, 1997 for the U.S.
dollar equivalent of the SDR was approximately 1.39, making the maximum
liability approximately U.S. $84 million.) The right to limit liability is
forfeited only where the spill is caused by the owner's actual fault or the
fault of a third party with whom the owner has a direct contractual
relationship. Vessels trading to contracting states must establish evidence of
insurance covering the limited liability of the owner.

         In jurisdictions where the CLC has not been adopted, various 
legislative schemes or common law govern

                                     - 12 -



<PAGE>



and liability is imposed either on the basis of fault or in a manner similar to
the CLC.

         On March 6, 1992, the IMO adopted regulations which set forth new and
upgraded requirements for pollution prevention for tankers. These regulations
went into effect on July 6, 1995. Both Vessels will comply
with such IMO regulations.

         The IMO continues to review and introduce new regulations on a regular
basis. It is impossible to predict what additional regulations, if any, may be
passed by the IMO, whether those regulations will be adopted by member countries
and what effect, if any, such regulations might have on the operation of oil


ITEM 2.    DESCRIPTION OF PROPERTIES

THE VESSELS

         The Vessel to be acquired by The Company is a very large crude carrier
("VLCC"). VLCCs are large-sized vessels ranging from approximately 200,000 to
320,000 deadweight tonnes ("dwt"). The Vessel will be constructed pursuant to a
Building Contract entered into by The Company and the Builders. Pursuant to an
agreement (a "Technical Supervision Agreement"), the Vessel's construction will
be supervised by and will meet the technical specifications of the Technical
Supervisor. Those specifications have been designed 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 and additional crew
quarters to facilitate added manning and to comply with all material existing
and currently proposed regulatory requirements affecting the Vessels and their
operations such as the United States Oil Pollution Act of 1990 ("OPA"). The
delivered cost and expenses of issuance with respect to The Company's Allocated
Principal Amount of the Mortgage Notes is approximately $95.8 million. If the
Technical Supervisor or the Initial Charterer wish to alter the specifications
of the Vessel after the date of the issuance of the Existing Notes (the
"Original Closing Date") and prior to the date such Vessel is to be delivered to
the Company, and such alteration results in an increase in the construction
costs of the Vessel, additional notes (the "Additional Notes") may be issued by
the Company to finance such increased costs, which shall not exceed $250,000
without the consent of the Company. In the event the Builders fail to deliver
the Vessel on or before 180 days from the Contractual Delivery Date for such
Vessel and the Contractual Delivery Date is not extended as provided in the
Building Contract, then the Builders are required to refund to the Company an
amount equal to the installments made by the Company, together with certain
other amounts described herein. Pursuant to each Building Contract, the Company
may either cancel the related Building Contract and receive the Refund Amount
(as described herein) or may extend the Contractual Delivery Date and reserve
the right to liquidated damages in an amount equal to $24,200 per day if such
extension does not adversely affect the then current rating of the Notes. The
Refund Amount shall be deposited into the Pre-Funding Account and shall be used
to refund the Allocated Principal Amount of the Notes for the Vessel. Neither
Building Contract sets forth a final date beyond which delivery of the Vessel
may not be extended. The obligations of the Builders to refund these amounts are
guaranteed by The Korea Development Bank, Seoul, South Korea, pursuant to an
Irrevocable Installment Payment Letter of Guarantee (each, a "Building Contract
Guarantee").


                                     - 13 -



<PAGE>



THE BUILDERS

         Samsung Corporation is one of the major affiliated companies of the
Samsung Group, which is the world's 14th largest conglomerate (Fortune 1994
global list). Samsung Corporation's main businesses are represented by general
trade, construction & engineering, motor sales & marketing, and fashion &
retails with total revenues of $24.8 billion in 1995 with 115 offices and
facilities throughout 60 countries.

         Samsung Heavy Industries Co., Ltd. ("SHI") is also an affiliated 
company of the Samsung Group, which manufactures a wide range of products,
including industrial plant, ships, offshore structures, construction equipment
and commercial vehicles. As of 1995, SHI had 13,400 employees and annual sales
in excess of $3.8 billion. SHI shipbuilding capacity was increased to 1.8
million gross tons in 1995, making SHI one of the world's leading shipbuilders.
SHI operates four technologically advanced research and development centers and
one integrated engineering center where highly economical, next-generation ships
like high-speed cargo and passenger ships, and offshore-related ships, such as
the drillship and Floating Production Storage Make (FPSO) vessels, are
developed. To date, SHI has constructed three VLCCs for other owners. SHI has
advised the Companies that all three VLCCs were delivered on time.

THE BUILDING CONTRACT GUARANTOR

         The Korea Development Bank ("KDB") was established as a government
financial institution pursuant to The Korea Development Bank Act (the "KDB
Act""). All of KDB's paid-in capital is owned by the government of the Republic
of Korea pursuant to the KDB Act. At the time the Notes were issued Standard and
Poors Rating Services issued an equivalent long-term debt rating of AA- for debt
issued by the government of the Republic of Korea and the Korean Development
Bank. Due to the economic crisis in Asia, Standard and Poors Rating Services
subsequently revised the rating for long-term debt issued by the government of
the Republic of Korea and the Korean Development Bank downward to a long-term
debt rating of BB+.

         The production and delivery of the vessel is subject to the risk of
nonperformance by the shipyard due to political or economic changes in the
Republic of Korea as well as interruptions in sea or air transportation in the
area. Although the Company has received various guarantees from the shipyard and
its bank to recover its investment in the event of nonperformance, there can be
no assurance that the counterparties will perform. Also, the Company's future
shipping operations would be significantly disrupted if such an event were to
occur.

SECURITY

         Prior to the Delivery Date of the Vessel, the Notes will be secured
(subject to the priority of payment described herein), by the Pre-Funding
Account, the assignment of the Building Contracts and the Technical Supervision
Agreement and the assignment of the Building Contract Guarantee prior to the
delivery the Vessel, and thereafter by the Debt Service Reserve Fund, the first
preferred ship mortgage on the Vessel, an assignment of any charters for the
Vessel including an assignment of the Initial Charter and the Charter
Supplements and an assignment of the related Chevron Guarantee, as well as
certain other collateral, including an assignment the earnings and insurance
proceeds, an assignment of the Management Agreement relating to the Vessel and a
pledge of all of the outstanding stock of the Company (collectively, the
"Collateral").


                                     - 14 -



<PAGE>




ITEM 3.    LEGAL PROCEEDINGS

         The Company is not a party to any pending legal proceedings and no such
proceedings are known to be contemplated.


ITEM 4.    CONTROL OF REGISTRANT

         The Company was organized in 1996 as a public limited company under the
laws of the Isle of Man. The principal executive office of the Owners c/o 15-19
Athol Street, Douglas, Isle of Man IM1 1LB. All of the Company's issued and
outstanding ordinary shares have been pledged to the Indenture Trustee as part
of the Collateral. The Notes will be full recourse obligations of the Company,
secured solely by the Collateral. However, recourse under the Indenture and the
Notes against the incorporators, directors, officers and stockholders of the
Owners and their respective successors will be expressly waived. Accordingly,
the incorporators, directors, officers and stockholders of the Company and their
respective successors will not be liable for any payments of debt service on the
Notes.

         The following table summarizes the beneficial ownership of each of the
Owners as of April 25, 1997.

<TABLE>
<CAPTION>

Name and Address of Beneficial Owner        Title of Class of Securities            Number of Shares
------------------------------------        ----------------------------            ----------------
<S>                          <C>                                                       
Golden State Holdings I, Ltd.(1)            Ordinary Shares                         Two
15-19 Athol Street
Douglas, Isle of Man
</TABLE>

(1)  All of the issued and outstanding shares of Golden State Holdings I, Ltd.
     are owned by Cambridge Petroleum Transport Corporation. On May 12, 1998 all
     of the Stock of Golden State Holdings I Ltd the parent company which owns
     100% of the stock of the Company, Golden State Petro (IOM I-B) and Golden
     State Petroleum Transport Corporation, was sold to Frontline Ltd. a
     shipping company incorporated in Bermuda.


ITEM 5.    NATURE OF TRADING MARKET

         The Notes do not trade on an organized exchange but rather trade in
private transactions among the parties.

ITEM 6.    EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING
           SECURITY HOLDERS

           Inapplicable.

ITEM 7.    TAXATION


                                     - 15 -



<PAGE>



TAXATION OF HOLDERS

         Assuming that the Notes are characterized as indebtedness, generally,
interest on the Notes will be taxable as ordinary income for federal income tax
purposes when received by holders using the cash method of accounting and when
accrued by holders using the accrual method of accounting.

         ORIGINAL ISSUE DISCOUNT

         The Notes were not issued with original issue discount within the
meaning of Section 1273 of the Code.

         MARKET DISCOUNT

         A subsequent holder who purchases a Note at a discount may be subject
to the "market discount" rules of the Code. These rules provide, in part, for
the treatment of gain attributable to accrued market discount as ordinary income
upon the receipt of partial principal payments or on the sale or other
disposition of a Note, and for the deferral of interest deductions with respect
to debt incurred to acquire or carry such market discount Note. In particular,
under Section 1276 of the Code, a holder who purchases a Note at a discount that
exceeds de minimis market discount (as defined below) generally will be required
to allocate a portion of each such partial principal payment or proceeds of
disposition to accrued market discount not previously included in income, and to
recognize ordinary income to that extent. Accordingly, holders are advised to
consult their own tax advisors regarding the impact of such requirement if the
Notes are purchased at a discount. A holder may elect to include such market
discount (including de minimus market discount, as defined below) in income
currently as it accrues rather than including it on a deferred basis in
accordance with the foregoing. If made, such election will apply to all
market-discount bonds acquired by such holder on or after the first day of the
first taxable year to which such election applied and may be revoked only with
the consent of the Internal Revenue Service. If such election is made, the
interest deferral rule described above will not apply.

         If a Note is purchased at a de minimis market discount, the actual
discount will be required to be allocated among the principal payments to be
made on such Note, and the portion of such discount allocated to each principal
payment will be required to be reported as income as each principal payment is
made (unless the above described election to accrue market discount in income
currently is made). Market discount with respect to a Note will be considered to
be de minimis for purposes of Section 1276 of the Code if such market discount
is less than .25 % of the principal payment of such Note multiplied by the
number of complete years to maturity remaining after the date of its purchase.

         PREMIUM

         In the event that a Note is purchased at a premium (i.e., generally,
the purchase price exceeds the sum of principal payments to be made thereon),
such premium will be amortizable by a holder as an offset to interest income
(with a corresponding reduction in the holder's basis) under a constant yield
method over the term of such Note if the holder makes (or has in effect) an
election under Section 171 of the Code. An election to amortize bond premium
applies to all taxable debt obligations then owned and thereafter acquired by
the taxpayer and may be revoked only with the consent of the Internal Revenue
Service.


                                     - 16 -



<PAGE>



         CONSTANT YIELD ELECTION

         Under Treasury Regulations, a holder may make an election (the
"Constant Yield Election") to include in gross income all interest, discount
(including de minimis market or original issue discount) and premium that
accrues on a Note in accordance with a constant yield method based on the
compounding of interest. If a holder makes a Constant Yield Election for a Note
with amortizable bond premium or market discount, such election will result in a
deemed election to amortize bond premium or accrue market discount for all of
the holder's debt instruments with amortizable bond premium or market discount
and may be revoked only with the permission of the Internal Revenue Service.

         DISPOSITIONS OF EXCHANGE NOTES

         Except as described above with respect to the market discount rules and
as provided under Section 582(c) of the Code in the case of banks and other
financial institutions, any gain or loss, equal to the difference between the
amount realized on the sale or exchange and the adjusted basis of an Exchange
Note, recognized on the sale or exchange of such Exchange Note by an investor
who holds such Exchange Note as a capital asset will be capital gain or loss.
For these purposes, amount realized does not include amounts attributable to
accrued but unpaid interest. Such amounts are treated as interest as described
above. The adjusted basis of an Exchange Note generally will equal its cost,
increased by any income previously reported (including any market discount
income) by the selling holder and reduced (but not below zero) by any deduction
previously allowed for losses and any amortized premium and by any payments
previously received with respect to such Exchange Note. Principal payments on
the Exchange Notes will be treated as amounts received upon a sale or exchange
of the Exchange Notes under the foregoing rules.

INFORMATION REPORTING

         The Indenture Trustee is required to furnish or cause to be furnished
to each holder with each payment a statement setting forth the amount of such
payment allocable to principal on the Note and to interest thereon at the
applicable interest rate. In addition, the Indenture Trustee is required to
furnish or cause to be furnished, within a reasonable time after the end of each
calendar year, to each holder who was such a holder at any time during such
year, a report indicating such other customary factual information as the
Indenture Trustee deems necessary to enable holders of Note to prepare their tax
returns. Holders should consult their own tax advisors to determine the amount
of any market discount includible in income during a calendar year.

FOREIGN INVESTORS

         A holder that is not a "United States person" (as defined below) and is
not subject to federal income tax as a result of any direct or indirect
connection to the United States in addition to its ownership of a Note generally
will not be subject to United States federal income or withholding tax in
respect of interest (including accrued market discount) paid on a Note provided
that the holder complies to the extent necessary with certain identification
requirements by delivery (or causing to be delivered) to the Indenture Trustee
an appropriate form (such as of an IRS Form W-8 (or any successor form) or
substantially similar statement, signed by the holder under penalties of
perjury, certifying that such holder is not a United States person, and
providing the name and address of such holder). Notwithstanding the foregoing,
United States withholding tax may be imposed with

                                     - 17 -



<PAGE>



respect to interest paid on Notes held by a holder that directly or indirectly
owns a 10% or greater interest in either of the Owners, is a controlled foreign
corporation related, directly or indirectly, to the company through stock
ownership or is a bank receiving interest described in Section 881(c)(3)(A) of
the Code. Such a holder may be subject to a United States withholding tax on
interest paid on the Notes at a 30% rate, subject to rate reduction available
under any applicable tax treaty.

         Amounts allocable to interest received by a holder that is not a United
States person, which constitute income that is effectively connected with a
United States trade or business carried on by the holder, will not be subject to
withholding tax, but rather will be subject to United States income tax at the
graduated rates applicable to United States persons, provided the holder
supplies (at the time of its initial purchase, and at such subsequent times as
are required under the Treasury regulations) a completed IRS Form 4224 (or any
successor form) to report its exemption from withholding.

         For these purposes, "United States person" means a citizen or resident
of the United States, a corporation, partnership or other entity created or
organized in, or under the laws of, the United States or any political
subdivision thereof, or an estate whose income is subject to United States
federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States fiduciaries have the authority to
control all substantial decisions of the trust. Holders who are not United
States persons should consult their own tax advisors regarding the tax
consequences of purchasing, owning or disposing of a Note.

BACKUP WITHHOLDING

         Payments of interest and principal, as well as payments of proceeds
from the sale of Notes, may be subject to the "backup withholding tax" under
Section 3406 of the Code at a rate of 31% if recipients of such payments fail to
furnish to the payor certain information, including their taxpayer
identification numbers, or otherwise fail to establish an exemption from such
tax. Any amounts deducted and withheld from a distribution to a recipient would
be allowed as a credit against such recipient's federal income tax liability.
Furthermore, certain penalties may be imposed by the IRS on a recipient of
payments that is required to supply information but that does not do so in the
proper manner. Information returns will be sent annually to the IRS and each
holder setting forth the amount of interest paid on the Notes and the amount of
any tax withheld thereon.

STATE, LOCAL, FOREIGN AND OTHER TAXES

         Investors should consult their own tax advisors regarding whether the
purchase of the Notes, either alone or in conjunction with an investor's other
activities, may subject an investor to any state or local taxes, or to taxes
imposed by any taxing jurisdiction outside the United States, based on an
assertion that the investor is either "doing business" in, or deriving income
from a source located in, any state, local or foreign jurisdiction, including
any such assertion arising from the presence, use, trading or operation of any
of the Vessels in such jurisdiction or any activities in such jurisdiction of an
Owner or any other person. Additionally, potential investors should consider the
state, local, foreign and other tax consequences of purchasing, owning or
disposing of a Note. State, local and foreign tax law may differ substantially
from the corresponding federal tax law, and the foregoing discussion does not
purport to describe any aspect of the tax laws of any state or other
jurisdiction. Accordingly, potential investors should consult their own tax
advisors with regard to such matters.

                                     - 18 -



<PAGE>




         While there is no reciprocal income tax treaty between the United
States and the Isle of Man, a transportation agreement was signed in August 1989
by the United States and the United Kingdom of Great Britain and Northern
Ireland (on behalf of the Isle of Man) confirming that both the United States
and the Isle of Man grant an equivalent exemption for qualified shipping income.


ITEM 8.    SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                        FOR THE YEAR                      FOR THE PERIOD FROM
                                                           ENDED                              INCEPTION TO
                                                     DECEMBER 31, 1997                     DECEMBER 31, 1996
                                                     -----------------                     -----------------

<S>                                                  <C>                                   <C>
Operating Income                                             --                                    --
Income from Continuing Operations                            --                                    --
Dividends on Common Stock                                    --                                    --
</TABLE>


<TABLE>
<CAPTION>

                                                                                          FOR THE PERIOD FROM
                                                                                           DECEMBER 24, 1996
                                                        FOR THE YEAR                        (COMMENCEMENT OF
                                                           ENDED                             OPERATIONS) TO
                                                     DECEMBER 31, 1997                     DECEMBER 31, 1996
                                                     -----------------                     -----------------

<S>                                                   <C>                                   <C>       
Total Assets                                          91,508,808                            62,468,436
Total Long Term Obligation                            90,350,000                            63,350,000
</TABLE>



         The data herein and in the Financial Statements of the Company, with
respect to the years ended December 31, 1997 and for the period from inception
to December 31, 1996, should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained below of the Company, which is incorporated into this Annual Report on
Form 20-F, and the audited consolidated financial statements and related notes
of the Company on pages F-1 to F-13 of the annexed Annual Report of the Company,
which is incorporated into this Annual Report on Form 20-F, and the other
financial information included elsewhere in this Annual Report on Form 20-F.


ITEM 9.    MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW

         The Company was formed as an Isle of Man public limited company for the
purpose of acquiring and chartering a Vessel. As of the Original Closing Date,
the Company had no operating history and had nominal capitalization.


                                     - 19 -



<PAGE>



         On the Closing Date, the Company (i) received the proceeds, net of the
Initial Purchaser's discounts and commissions and financial advisory fees, from
the sale of the Serial Notes and the Existing Notes, (ii) paid the first
installment of the purchase price of the Vessel, (iii) paid certain legal,
printing, rating and other fees and expenses, and (iv) deposited the balance of
the net proceeds from the sale of the Notes into the Pre-Funding Account. In
addition, the Company entered into the Building Contracts, the Technical
Supervision Agreements, the Initial Charter, the Management Agreements and
certain security agreements for the benefit of the holders of the Notes and
became the beneficiary of the Building Contract Guarantees and the Chevron
Guarantees.

         Between the Closing Date and the Delivery Date of its Vessel, the
operations of the Company will consist solely of (i) making payments of interest
on the Notes, (ii) making payments of Recurring Fees and Management Fees, (iii)
making additional installments under the Building Contracts, (iv) receiving
interest on amounts held in the Pre-Funding Account, (v) receiving certain
non-cash contributions from the Technical Supervisor of services and Owners'
Items and (vi) fulfilling its obligations under the Registration Rights
Agreement.

         On and after the Delivery Date of its Vessel, the operations of the
Company will consist solely of (i) receiving charter hire payments under its
Initial Charter, Acceptable Replacement Charters and other charters, (ii)
receiving proceeds from the sale, if any, of the Vessel, (iii) making payments
of interest and principal on the Mortgage Notes (including Additional Notes, if
any are issued on the Delivery Date), (iv) making payments of Recurring Fees and
Management Fees and (v) receiving interest income on amounts held in the Trust
Accounts.

CAPITAL RESOURCES AND LIQUIDITY

         Through the Contractual Delivery Date of the Vessel, interest on the
Notes will be payable from amounts on deposit in the Pre-Funding Account. To the
extent the Delivery Date for the Vessel is delayed, payments by the Builders
under the related Building Contracts will be reflected as a decrease in the
amount of the final installment due under such Building Contract. After the
Delivery Date, the Owners' sources of funds will be charter hire payments for
the Vessel, earnings on Permitted Investments and the proceeds from the sale, if
any, of the Vessel. The Company does not have, nor will it have in the future,
any other source of capital for payment of the Mortgage Notes.

         On the Closing Date, Golden State Petro (IOM I-B) PLC (i) received
$89.1 million reflecting the proceeds from the sale of the Serial Notes and the
Existing Notes, net of the Initial Purchaser's discounts and commissions and
financial advisory fees, (ii) paid $38.9 million which represents the first
installment of the contract purchase price of its Vessel (iii) paid $0.5 million
in legal, printing, rating and other fees and expenses
and (iv) deposited $49.7 million into the Pre-Funding Account.

         From the closing date to December 31, 1997, Golden State Petro (IOM
I-B) PLC earned $3,574,409 of interest income on deposits held in the
pre-funding account, incurred $7,024,039 in interest charges of which $2,995,848
were capitalized to the vessel construction costs and incurred $45,833 in
management fee expenses. Interest payments on the notes and management fee
payments of $4,153,180 and $25,000, respectively were made from funds on deposit
in the pre-funding account.

         From the Closing Date to the Delivery Date of its Vessel, the Company
will use amounts held in the Pre-Funding Account, plus interest earned thereon
to fund (i) the subsequent installments of the purchase price

                                     - 20 -



<PAGE>



of the Vessel, (ii) interest payable on the Notes prior to the Contractual
Delivery Date and (iii) Recurring Fees, fees and expenses of the Indenture
Trustee and Management Fees payable prior to the Contractual Delivery Date. The
costs of registration of the Existing Notes will be paid by the Manager.

         From the Delivery Date of its Vessel to the end of the Fixed Period of
its Initial Charter, the Company will use Charter Hire payments under the
Initial Charter and an interest earned on the Trust Accounts to: (i) make
payments of interest on the Notes, (ii) make payments of principal on the Serial
Notes, which payments will retire all such Serial Notes and (iii) make payments
of Recurring Fees and Management Fees. On the first Optional Termination Date
with respect to the Vessel, the Company will have a balance in the Debt Service
Reserve Fund of at least $9.1 million, assuming no prior withdrawals from the
Debt Service Reserve Fund, and will have outstanding an aggregate principal
amount of Exchange Notes and the untendered Existing Notes, if any, of $63.55
million.

         To the extent that the Initial Charterer does not terminate the Initial
Charter, the balance of funds on deposit in the Debt Service Reserve Fund will
exceed the amount of the Exchange Notes and the untendered Existing Notes, if
any, outstanding by approximately August 1, 2014. To the extent that the Initial
Charterer terminates the Initial Charter at the first Optional Termination Date
thereof, the average daily bareboat charter hire rate that would be sufficient
to permit timely payments of principal and interest on the Exchange Notes and
the untendered Existing Notes, if any, until their maturity date is
approximately $18,569.

         Charter Hire payments under the Initial Charter, and progress payments
under the Building Contract, have been structured so that approximately $50,000
annually will be available to pay the Management Fees which will be used to pay
the anticipated expenses with respect to the Vessel which are not directly
payable by the Initial Charterer under such Initial Charter. Because
substantially all of the annual operating expenses of the Vessel are required to
be paid by the Initial Charterer, the Company believes that only nominal costs
will be incurred and that $50,000 will be more than adequate.

         The foregoing determination assumes that amounts remaining in the Trust
Accounts will be invested in Permitted Investments that will provide a return of
7.0% per annum compounded monthly for funds on deposit in the Pre-Funding
Account and a return of 6.0% per annum compounded monthly for funds on deposit
in the Revenue Account and the Debt Service Reserve Fund. On the Original
Closing Date, guaranteed investment contracts for funds on deposit in the
Pre-Funding Account and Revenue Account (until the latest maturity date of the
Serial Note) rated at least "Aa" or "AA." by Moody's or Standard & Poor's,
respectively, were available with at least the assumed annual rate of return and
the Owners believe that guaranteed investment contracts for certain funds on
deposit with the Indenture Trustee other than in the Pre-Funding Account or the
Revenue Account (until the latest maturity date of the Serial Notes) rated at
least "A" by Moody's or Standard & Poor's will be available with at least the
assumed annual rate of return for such amounts until the latest maturity date of
the Exchange Notes and the untendered Existing Notes, if any. The annual rate of
return on Permitted Investments of amounts remaining in any Trust Account on or
after August 1, 2014 cannot be predicted.

RESULTS OF OPERATIONS

         The Company's results of operations will depend on the charter hire
payments for the Vessel under the related Initial Charter and, upon any
termination of such Initial Charter, any charter hire under any subsequent

                                     - 21 -



<PAGE>



charter or proceeds from any sale of such Vessel, earnings on Permitted
Investments and the level of operating expenses.


ITEM 9A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

             Inapplicable.


ITEM 10.     DIRECTORS AND OFFICERS OF REGISTRANT

         The Company will not have any employees involved in the management of
the Vessel. The following table sets forth the name, age and principal position
with the Company of each of its executive directors.


NAME                        AGE                POSITION WITH THE COMPANY
----                        ---                -------------------------
Andrew Baker                39                 Director, Secretary
Kate Blankenship            33                 Director
Tor Olav Tr0im              35                 Director
Nunzio LiPomi               41                 Director

         Officers are appointed by the Board of Directors and will serve until 
they resign or are removed by the Board of Directors.

Andrew James Baker, (British) non-executive Isle of Man resident director since
December 1996. Mr. Baker is a solicitor with Cains, Isle of Man who are legal
advisers to the Company and as such are entitled to charge for professional
advice and services. He has been a solicitor with Cains since March 1994. Prior
to that he was a partner with the law firm Pennington's since 1987.

Kate Blankenship, director. Mrs. Blankenship has been a director of Golden State
Petro (IOM I-B) PLC since July 22, 1998. She has served as group financial
controller and secretary of Frontline Ltd. (Formerly, London & Overseas
Freighters Limited) since 1994. Prior to joining Frontline, she was a manager
with KPMG Peat Marwick in Bermuda. Mrs. Blankenship is a member of the Institute
of Chartered Accountants in England and Wales. She is a citizen of the United
Kingdom and a resident of Bermuda.

Tor Olav Tr0im, (Norwegian) director. Mr. Tr0im has been a director of Golden
State Petro (IOM I-B) PLC since July 22, 1998. Mr. Troim serves as director and
vice-president of Frontline Ltd. He also serves as a director of Frontline AB, a
wholly-owned subsidiary of Frontline, and is the Chief Executive Officer of
Frontline Management AS, which company supports the Company in the
implementation of decisions made by the Board of Directors. Mr. Tr0im also
serves as a consultant to Sea Tankers. He is a director of Aktiv Inkasso ASA and
Northern Offshore ASA, both Norwegian publicly listed companies. Prior to his
service with Frontline from January 1992, Mr. Tr0im served as managing director
and a member of the Board of Directors of DNO AS, a Norwegian oil company.

Nunzio LiPomi, (American) executive director since October 26, 1998. Mr. LiPomi
is an accountant with

                                     - 22 -



<PAGE>



Cambridge Partners, L.L.C., New York since 1996. From 1995 to 1996 he was an
accountant with Lipardi & Associates Financial Group. Prior to that he worked as
an independent accountant.


ITEM 11.     COMPENSATION OF DIRECTORS AND OFFICERS

         None of the directors or executive officers of either Golden State
Petroleum Transport Corporation or the Company receive any compensation in
connection with their respective positions. Such persons expect to receive
compensation in connection with their business activities. Neither Golden State
Petroleum Transport Corporation nor the Company has entered into any affiliate
transactions, other than the Management Agreements
with the Manager.


ITEM 12.     OPTIONS TO PURCHASE SECURITIES FROM THE REGISTRANT
             OR SUBSIDIARIES

                      Inapplicable.


ITEM 13.     INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

                      Inapplicable.

                                     PART II


ITEM 14.     DESCRIPTION OF SECURITIES TO BE REGISTERED

         Securities have already been registered.

                                    PART III


ITEM 15.     DEFAULTS UPON SENIOR SECURITIES

                      Inapplicable.

ITEM 16.     CHANGES IN SECURITIES AND CHANGES IN SECURITY
             FOR REGISTERED SECURITIES

                      Inapplicable.

                                     PART IV


                                     - 23 -



<PAGE>



ITEM 17.     FINANCIAL STATEMENTS

         See Item 19 for a list of financial statements required under Item 18.
The financial information and the report of the Independent Certified Public
Accountants set forth on pages F-3 to F-18 of the annexed financial statements
of the Company are incorporated into this Annual Report on Form 20-F.

ITEM 18.     FINANCIAL STATEMENTS

ITEM 19.     FINANCIAL STATEMENTS AND EXHIBITS

         (a)    Financial Statements


<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS                                                              FINANCIAL
-----------------------------                                                             STATEMENTS
                                                                                          ----------

<S>                                                                                    <C>
          Report of Independent Certified Public Accountants                                  F-3
          (Grant Thornton LLP)

          Balance Sheets at December 31, 1997 and 1996                                        F-4

          Statements of Operations and Accumulated Deficit for
          the Year Ended December 31, 1997 and the period
          from December 24, 1996 (commencement of                                             F-5
          operations) to December 31, 1996

          Statements of Cash Flows for the Year Ended December 31, 1997 and the
          period from December 24,
          1996 (commencement of operations) to December 31,                                   F-6
          1996

          Notes to Financial Statements                                                    F-7-F-18

EXHIBITS

1. Copies of all amendments or modifications to exhibits                                Not Applicable.
previously filed.

2. Copies of all contracts and other documents of a character required to be
filed as an exhibit to an original registration statement which were executed or
in effect during the fiscal year and not previously filed.                              Not Applicable.
</TABLE>




                                     - 24 -



<PAGE>


SIGNATURES

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


 GOLDEN STATE PETRO (IOM I-B) PLC
---------------------------------
(REGISTRANT)

/s/ Nunzio LiPomi
---------------------------------
Nunzio LiPomi
(SIGNATURE)

Nunzio LiPomi, Director

--------------------------------------------------------------------------------
Name and Title of Signing Officer                         Date  10/26/98


                                     - 25 -



<PAGE>

                       FINANCIAL STATEMENTS AND REPORT OF
                    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

                        GOLDEN STATE PETRO (IOM I-B) PLC
                          (A WHOLLY-OWNED SUBSIDIARY OF
                         GOLDEN STATE HOLDINGS I, LTD.)

                Year ended December 31, 1997 and the period from
                       December 24, 1996 (commencement of
                        operations) to December 31, 1996






<PAGE>









                                 C O N T E N T S


                                                                      Page
                                                                      ----


Report of Independent Certified Public Accountants                    F-3


Financial Statements

       Balance Sheets                                                 F-4

       Statements of Operations and Accumulated Deficit               F-5

       Statements of Cash Flows                                       F-6

       Notes to Financial Statements                                  F-7 - F-18







<PAGE>












                         REPORT OF INDEPENDENT CERTIFIED
                               PUBLIC ACCOUNTANTS


Board of Directors
       GOLDEN STATE PETRO (IOM I-B) PLC


We have audited the balance sheets of Golden State Petro (IOM I-B) PLC (a
company incorporated in the Isle of Man) (a wholly-owned subsidiary of Golden
State Holdings I, Ltd.) as of December 31, 1997 and December 31, 1996, and the
related statements of operations and accumulated deficit, and cash flows for the
year ended December 31, 1997 and for the period from December 24, 1996
(commencement of operations) to December 31, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, based on our audits, the financial statements referred to above
present fairly, in all material respects, the financial position of Golden State
Petro (IOM I-B) PLC as of December 31, 1997 and December 31, 1996, and the
results of its operations and its cash flows for the year ended December 31,
1997 and for the period from December 24, 1996 (commencement of operations) to
December 31, 1996 in conformity with accounting principles generally accepted in
the United States of America.


New York, New York
May 8, 1998, except for Note H, for which
       the date is May 12, 1998

                                       F-3



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                                 BALANCE SHEETS

                                  December 31,


<TABLE>
<CAPTION>

                                                                                            1997                  1996
                                                                                       --------------        --------------
<S>                                                                                    <C>                   <C>           
Assets
    Restricted investments                                                             $   49,071,145        $   22,993,871
    Vessel under construction                                                              42,437,663            39,474,565
                                                                                       --------------        --------------

        Total assets                                                                   $   91,508,808        $   62,468,436
                                                                                       ==============        ==============

Liabilities
    Mortgage notes, net of debt issue costs of $1,129,311
        And $955,275, respectively                                                     $   89,220,689        $   62,394,725
    Interest payable and other liabilities                                                  2,891,693                91,763
                                                                                       --------------        --------------

        Total liabilities                                                                  92,112,382            62,486,488
                                                                                       --------------        --------------

Stockholder's equity
    Common stock, no par value; 2,000 shares authorized;
        2 shares issued and outstanding                                                            2                     2
    Accumulated deficit                                                                      (603,576)              (18,054)
                                                                                       --------------        --------------

        Total stockholder's deficit                                                          (603,574)              (18,052)
                                                                                       --------------        --------------

        Total liabilities and stockholder's deficit                                    $   91,508,808        $   62,468,436
                                                                                       ==============        ==============
</TABLE>




THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                       F-4



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                          STATEMENTS OF OPERATIONS AND
                               ACCUMULATED DEFICIT






<TABLE>
<CAPTION>



                                                                                                        
                                                                                                         The period from  
                                                                                                        December 24, 1996 
                                                                                                         (commencement of 
                                                                               YEAR ENDED                 operations) to  
                                                                            DECEMBER 31, 1997           December 31, 1996 
                                                                            -----------------           ----------------- 
<S>                                                                         <C>                         <C>             
Revenue
     Interest income                                                        $        3,525,454          $         48,955
                                                                            ------------------          ---------------- 
              Total revenue                                                          3,525,454                    48,955

Expenses
     Interest                                                                        3,969,179                    59,012
     Management fees                                                                    45,833                       -
     Amortization of debt issue costs                                                   95,964                     7,997
                                                                            ------------------          ----------------

              Total expenses                                                         4,110,976                   67,009

              NET LOSS                                                                (585,522)                 (18,054)

Accumulated deficit, beginning of period                                               (18,054)                     -
                                                                            ------------------          ----------------

Accumulated deficit, end of period                                          $         (603,576)         $        (18,054)
                                                                            ==================          ================
</TABLE>






THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                       F-5



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>

                                                                                                         The period from  
                                                                                                        December 24, 1996 
                                                                                                         (commencement of 
                                                                               YEAR ENDED                 operations) to  
                                                                            DECEMBER 31, 1997           December 31, 1996 
                                                                            -----------------           ----------------- 
<S>                                                                         <C>                         <C>             
Cash flows from operating activities
     Net loss                                                               $        (585,522)          $          (18,054)
     Adjustments to reconcile net loss to net cash
        provided by operating activities
              Amortization of debt issue costs                                         95,964                       7,997
     Changes in assets and liabilities
        Increase in interest payable and other liabilities                          2,799,929                      91,763
                                                                            -----------------           ----------------- 

              Net cash provided by operating activities                             2,310,371                      81,706
                                                                            -----------------           ----------------- 

Cash flows from investing activities
     Payments made under vessel construction contract                                -                        (38,941,814)
     Increase in restricted investments                                           (26,077,274)                (22,993,871)
     Interest capitalized                                                          (2,963,097)                    (32,751) 
     Transaction costs capitalized                                                   -                           (500,000)
                                                                            -----------------           ----------------- 
              Net cash used in investing activities                               (29,040,371)                (62,468,436)
                                                                            -----------------           ----------------- 

Cash flows from financing activities
     Proceeds from mortgage notes                                                  27,000,000                  63,350,000
     Debt issue costs                                                                (270,000)                   (963,272)
     Contribution of capital                                                         -                                  2
                                                                            -----------------           ----------------- 

              Net cash provided by financing activities                            26,730,000                  62,386,730
                                                                            -----------------           -----------------

              NET INCREASE IN CASH                                          $        -                  $        -
                                                                            =================           =================

Supplemental disclosures of cash flow information:
     Cash paid during the period for interest                               $       4,153,180           $        -
                                                                            =================           =================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.


                                       F-6



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                          NOTES TO FINANCIAL STATEMENTS

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996


NOTE A - DESCRIPTION OF LEASE OPERATION

     Golden State Petro (IOM I-B) PLC (the "Company"), together with Golden
     State Petro (IOM I-A) PLC ("IOM I-A"), has been formed as an Isle of Man
     public limited company for the purpose of acquiring
     and chartering two very large crude oil carriers ("VLCCs").

     Golden State Petroleum Transport Corporation ("GSPTC"), a Delaware
     corporation as an agent for the Company, and IOM I-A issued 8.04% First
     Preferred Mortgage Term Notes for $127,100,000 and Serial First Preferred
     Mortgage Notes for $51,700,000. The proceeds from the offering and sale of
     the Serial Notes, together with the proceeds of the sale of the Term Notes
     (collectively the "Notes"), will be used by the Company to fund the
     construction of a VLCC by Samsung Corporation and Samsung Heavy Industries
     Co., Ltd. (collectively, the "Builders") under the technical supervision of
     the Chevron Shipping Company as agent for Chevron Transport Corporation
     (the "Initial Charterer") which is an indirect, wholly-owned subsidiary of
     Chevron Corporation. The contracted delivery date of the VLCC is July 1,
     1999. The VLCC, once accepted by the Company under the building contract,
     will be chartered to the Initial Charterer pursuant to an initial charter
     for a term of eighteen years. The Initial Charterer has an option to
     terminate the charter on the eighth anniversary of the delivery date for
     the VLCC. The Initial Charterer's obligations under the initial charter
     will be guaranteed by Chevron Corporation.

     The Company, IOM I-A, and GSPTC are wholly-owned subsidiaries of Golden
     State Holdings I, Ltd., an Isle of Man holding company, which is a
     wholly-owned subsidiary of Cambridge Petroleum Transport Corporation
     ("CPTC"), a closely-held Cayman Islands corporation.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     1.       BASIS OF PRESENTATION

     The financial statements have been prepared in accordance with accounting
     principles generally accepted in the United States of America.

                                       F-7



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996

NOTE B (CONTINUED)

     The Financial Accounting Standards Board ("FASB") issued Statement of
     Financial Accounting Standards No. 130 ("SFAS No. 130"), "Reporting
     Comprehensive Income," which is effective for years beginning after
     December 15, 1997. This new standard requires entities presenting a
     complete set of financial statements to include details of comprehensive
     income. Comprehensive income consists of net income or loss for the current
     period and income, expenses, gains and losses that bypass the income
     statement and are reported directly in a separate component of equity. The
     adoption of SFAS No. 130 will not have a material effect on the
     presentation of the Company's balance sheet or results of operations and
     retained deficit.

     2.       ALLOCATION OF MORTGAGE NOTES

     The Company is jointly and severally liable under the Notes with IOM I-A
     for the issued amount of $178,800,000. In preparing the separate company
     financial statements of the Company and IOM I-A, the aggregate amount of
     the Notes has been allocated so as to reflect the difference in the
     contracted cost of the vessels.

     3.       OPERATING LEASE

     The operating lease commences upon the delivery of the vessel to the
     Initial Charterer. Income from the operating lease will be recognized
     ratably over the term of the leases.

     4.       VESSEL UNDER CONSTRUCTION

     Construction in progress is capitalized in accordance with contract
     payments made and also includes the capitalization of interest charges and
     certain transaction costs incurred during the period of the vessel's
     construction. Contract payments capitalized as of December 31, 1996 and
     1997 were $38,941,814, respectively. During the period from inception to
     December 31, 1996, interest charges of $32,751 were capitalized, and for
     the year ended December 31, 1997, interest charges of $2,963,097 were
     capitalized. Transaction costs of $500,000 were capitalized during the
     period from inception to December 31, 1996.

                                       F-8



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996

NOTE B (CONTINUED)

     5.       DEBT ISSUE COSTS

     Debt issue costs comprise expenses incurred in connection with the issuance
     of the Notes. Such expenses are being amortized over the weighted average
     life of the Serial Notes, and the life of the Term Notes, respectively.

     6.       FAIR VALUE OF FINANCIAL INSTRUMENTS

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

     RESTRICTED INVESTMENTS: The restricted investments balance represents an
     investment in a guaranteed investment contract which is readily convertible
     into cash. The carrying value of the guaranteed investment contract is
     stated at contract value which approximates fair value. This contract is
     with Pacific Mutual Life Insurance, a California life insurance company,
     and is held in the name of the United States Trust Company on behalf of the
     Company as the Indenture Trustee.

     MORTGAGE NOTES: The carrying value of the Notes approximates fair value as
     of December 31, 1997 and 1996 based upon the current borrowing rates
     available for financing with similar terms and maturities and the short
     elapsed time between the date of the balance sheet and the date of issuance
     of the Notes.

     INTEREST PAYABLE AND OTHER LIABILITIES: The carrying values approximate
     fair values due to their relatively short maturities.

     7.       ACCOUNTING ESTIMATES

     The preparation of financial statements in conformity with generally
     accepted accounting principles in the United States of America requires
     management to make estimates and assumptions in determining the reported
     amounts of assets and liabilities and disclosure of contingent assets and
     liabilities at the

                                       F-9



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996



NOTE B (CONTINUED)

     dates of the financial statements and the reported amounts of revenue and
     expenses during the reporting periods. Actual results could differ from
     such estimates. The most significant assumptions and estimates relate to
     the vessel under construction held for lease.

     8.       INCOME TAXES

     The Company is exempt from United States Federal, state and local income
     taxes and has been granted exemptions from the statutory 20% tax on profits
     required to be assessed against Isle of Man companies.


     Certain entities are exempt from U.S. corporate income tax on U.S. source
     income from their international shipping operations if (i) their countries
     of incorporation exempt shipping operations of U.S. persons from income tax
     (the "Incorporation Test") and (ii) they meet the "Ultimate Owner Test." A
     company meets the Ultimate Owner Test if more than 50% value of its stock
     is ultimately owned by individuals who are residents of a foreign country
     that exempts U.S. persons from tax on shipping earnings. The Company is
     involved in international shipping operations which meet the Incorporation
     Test because the Company is incorporated in the Isle of Man, which provides
     the required exemption to U.S. persons involved in shipping operations, and
     the Company believes more than 50% of the value of its outstanding shares
     is owned by individuals who are residents of countries which provide the
     required exemption to U.S. persons involved in shipping operations. The
     issue of residence is, however, inherently factual and cannot be determined
     with certainty.

     Based on the foregoing, the Company expects all of its income to remain
     exempt from United States Federal, state and local income taxes.
     Accordingly, no provision for taxes has been made in these financial
     statements.




                                      F-10



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996


NOTE C - RESTRICTED INVESTMENTS

     The Restricted Investments Account (the "Account") was established in the
     name and under the control of the United States Trust Company as the
     Indenture Trustee (the "Trustee"). The proceeds of the Notes issued on
     behalf of the Company were deposited into the Account in the form of a
     guaranteed investment contract. The funds in this account can be used only
     to fund the installment construction payments. The funds on deposit in the
     Account at December 31, 1997 and December 31, 1996 were $49,071,145 and
     $22,993,871, respectively.


NOTE D - MORTGAGE NOTES

     On December 24, 1996, GSPTC, a special purpose Delaware corporation which
     is an entity affiliated with the Company, acted as agent on behalf of the
     Company and IOM I-A and issued the Notes, certain terms of which are set
     forth below. The Company was allocated, along with IOM I-A, a share of the
     proceeds from the offering and sale of the Notes, which totaled
     $90,350,000. These funds were used by the Company to fund the construction
     and acquisition of a VLCC.

     The Notes have priority of payment as described in the Indenture Agreement
     and are collateralized by a statutory first mortgage on the vessel and
     assignment of the following to the Trustee: (i) the building contract with
     the Builders and a technical supervision agreement; (ii) the building
     contract performance guarantee with the Korea Development Bank; (iii) the
     initial charter; (iv) the charter supplement (pursuant to the issuance of
     Additional Notes); (v) the Chevron Corporation guarantee; (vi) the
     management agreement with Cambridge Fund Management L.L.C.; and (vii)
     certain other collateral.

     SERIAL NOTES

     The Serial Notes were issued in the aggregate principal amount of
     $51,700,000, of which $26,800,000 was allocated to the Company. Set forth
     below are the allocated principal amounts and the interest rates of the
     Serial Notes payable on each maturity date for the Company.

                                      F-11



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996

NOTE D (CONTINUED)
 
                                               DECEMBER 31,       December 31,  
                                                   1997               1996      
         Maturity Date      Interest Rate    (IN THOUSANDS)     (in thousands) 
--------------------------------------------------------------------------------
     February 1, 2000          6.360%             2,650             2,650
                                                                         
     February 1, 2001          6.465              3,450             3,450
                                                                         
     February 1, 2002          6.550              3,700             3,700
                                                                         
     February 1, 2003          6.610              3,950             3,950
                                                                         
     February 1, 2004          6.700              4,200             4,200
                                                                         
     February 1, 2005          6.800              4,450             4,450
                                                                         
     February 1, 2006          6.855              4,400             4,400
                                                  -----             -----
                                                                          
                                                $26,800           $26,800
                                                =======           =======

     Interest has been accrued for the Serial Notes from December 24, 1996, and
     is payable on February 1 and August 1 of each year commencing August 1,
     1997. As of December 31, 1997 and 1996, the effective interest rate for the
     Serial Notes was 6.641%.

     TERM NOTES

     The Term Notes were issued by GSPTC, acting as an agent for both the
     Company and IOM I-A, in the aggregate principal amount of $127,100,000. The
     allocated principal amount of Term Notes to the Company is $63,550,000.
     Interest on the Term Notes will accrue from the date of issuance thereof at
     a rate per annum equal to 8.04%, and will be payable on each February 1 and
     August 1 (each a "Payment Date"), commencing August 1, 1997. Interest on
     the Term Notes will accrue from the most recent date to which interest has
     been paid or, if no interest has been paid, from December 24, 1996.

     The Term Notes will be subject to redemption through the operation of a
     mandatory sinking fund on each payment date commencing February 1, 2008 up
     to and including August 1, 2018, according to the schedule of sinking fund
     redemption payments set forth below. The sinking fund redemption

                                      F-12



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996

NOTE D (CONTINUED)

     price is 100% of the principal amount of Term Notes being redeemed,
     together with accrued and unpaid interest to the date fixed for redemption.
     The Term Notes will mature, and the final payment of principal and interest
     on the Term Notes will be due, on February 1, 2019. The amortization
     schedule will approximate the level of debt service through to the maturity
     date with an additional principal payment on the maturity date of
     $10,995,000. The following table provides the scheduled sinking fund
     redemption amounts and final principal payment on the Term Notes.


                         Sinking fund redemption amounts
                           and final principal payment
--------------------------------------------------------------------------------


                        Scheduled payment date    Amount (in thousands)
--------------------------------------------------------------------------------
                        February 1, 2008          $1,430
                        August 1, 2008             1,490
                        February 1, 2009           1,550
                        August 1, 2009             1,610
                        February 1, 2010           1,675
                        August 1, 2010             1,745
                        February 1, 2011           1,815
                        August 1, 2011             1,885
                        February 1, 2012           1,960
                        August 1, 2012             2,040
                        February 1, 2013           2,125
                        August 1, 2013             2,210
                        February 1, 2014           2,295
                        August 1, 2014             2,390
                        February 1, 2015           2,485
                        August 1, 2015             2,585
                        February 1, 2016           2,690
                        August 1, 2016             2,800
                        February 1, 2017           2,910
                        August 1, 2017             3,025
                        February 1, 2018           3,150
                        August 1, 2018             3,275
                        February 1, 2019          14,410
                                                 -------
                                                 $63,550
                                                 ======= 

                                      F-13


<PAGE>

                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996

NOTE D (CONTINUED)

         The Term Notes were sold by the Company and an affiliated entity,
         Golden State Petro (IOM I-A) PLC, (together, the "Owners") in a private
         placement through their agent, Golden State Petroleum Transport
         Corporation. In connection with such sale, the Owners and certain other
         parties (the "Parties") entered into a Registration Rights Agreement
         for the benefit of the purchasers. Pursuant thereto, the Parties agreed
         to use their best efforts to effect an Exchange Offer to exchange up to
         $127,100,000 in aggregate principal amount of the Notes issued by the
         Owners.

         ADDITIONAL NOTES

         The Company shall be entitled to issue an additional series of first
         preferred mortgage notes (the "Additional Notes") upon the delivery
         date of the vessel. The proceeds of the Additional Notes will be used
         by the Company to fund any additional construction costs of the vessel.

         The term and maturity of any Additional Notes will be determined at
         the discretion of management at the date of issue.

         MANDATORY REDEMPTION

         The Serial Notes, together with the Term Notes and the Additional
         Notes, will be subject to mandatory redemption on a pro rata basis in
         an aggregate principal amount equal to the allocated principal amount
         of the Notes of the vessel if: (i) the vessel is not delivered on, or
         before 180 days from, the contractual delivery date for the vessel and
         the contractual delivery date is not extended as provided in the
         building contract or (ii) the Company rejects or cancels the related
         building contract pursuant to the terms and conditions set forth
         therein or (iii) the vessel is a total loss, at a redemption price
         equal to 100% of the principal amount thereof, plus accrued and unpaid
         interest (including default interest) to the date fixed for redemption.

         If a net reduction in construction cost occurs, the Company shall
         redeem outstanding Serial Notes and Term Notes, on a pro rata basis, in
         an aggregate principal amount equal to the net reduction in
         construction costs, at a redemption price of 100% of the principal
         amount thereof, together with accrued and unpaid interest on such Notes
         to be redeemed, to the date fixed for redemption.


                                      F-14



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996

NOTE D (CONTINUED)

         If the Initial Charterer exercised any of its termination options as
         defined in the Initial Charter, and the Company does not enter into an
         acceptable replacement charter for the vessel on or before the date
         which is one week prior to the next sinking fund payment date for the
         Term Notes following the effective date of such termination and the
         vessel is sold, with the consent of all the holders of the Term Notes,
         then the outstanding Term Notes will be redeemed in part, from the net
         proceeds of the sale of the vessel and the allocable portion of the
         Restricted Cash - Pre-Funding account, in an aggregate principal amount
         of Term Notes equal to the allocated principal amount of the Notes for
         the vessel, at an aggregate redemption price equal to the sum of such
         net proceeds and the allocable portion of the debt service reserve
         fund. The debt service reserve fund, together with the interest earned
         thereon, provides for the payment of the average annual sinking fund
         payment and interest on the Term Notes. If all the holders of the Term
         Notes do not consent to such a sale, Cambridge Fund Management, L.L.C.
         will attempt to recharter the vessel.

         OPTIONAL REDEMPTION

         The Serial Notes will not be subject to optional redemption prior to
         the respective maturity dates.

         The Term Notes may be redeemed in whole or in part at the discretion of
         the Company on any payment date on or after the later of (a) August 1,
         1999 or (b) the delivery date of the last vessel (whether the vessel of
         the Company or the vessel of IOM I-A to be delivered at a redemption
         price equal to 100% of the principal amount thereof plus accrued and
         unpaid interest to the date fixed for redemption, provided that if (i)
         such redemption occurs prior to February 1, 2018 and (ii) a vessel is
         then subject to the related Initial Charter or to an acceptable
         replacement charter pursuant to which the charterer thereunder is
         required to pay charter hire equal to or greater than the charter hire
         payable by the Initial Charterer during the fixed period, then the
         make-whole premium, as defined in the Offering Memorandum, shall be
         payable with respect to Mortgage Notes in an amount equal to allocated
         principal amount of the Mortgage Notes for such vessel. The Company may
         not exercise such optional redemption if such optional redemption would
         adversely affect the then applicable ratings on the Serial Notes. In
         addition, Term Notes may be redeemed in part in an aggregate principal
         amount equal to the allocated principal amount of the Notes for the
         vessel if the Initial Charter for the vessel is terminated and an
         acceptable

                                      F-14



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996

NOTE D (CONTINUED)

         replacement charter is not entered into, at a redemption price equal to
         100% of the principal amount thereof plus accrued interest to the date
         fixed for redemption.

         DEBT COVENANTS

         The Indenture includes certain covenants that, among other things,
         prohibit the Company and GSPTC from incurring additional indebtedness
         (other than Additional Notes or subordinated loans) and impose
         limitations on the amount of investments, on loans, advances, mergers,
         the payment of dividends and the making of certain other payments, the
         creation of liens and certain transactions with affiliates.

NOTE E - CONTINGENCIES AND COMMITMENTS

         The following is a schedule by years of minimum future rental income on
         the noncancellable portion of the operating lease for the fiscal years
         ending December 31:




                                    
                  1998                               $       -
                  1999                                 4,950,218
                  2000                                 9,927,635
                  2001                                 9,927,635
                  2002                                 9,927,635
                  2003-2008                           44,687,957
                                                     -----------
                                                     $79,421,080
         

         Future contractual payments to be made under the shipbuilding contract
         for each of the two succeeding fiscal years ending December 31, until
         completion, are as follows:


                  1998                                    $ 11,251,224
                  1999                                      27,690,590
                                                          ------------ 
                                                          $ 38,941,814


                                      F-16



<PAGE>



                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996



NOTE F - CONCENTRATION OF CREDIT RISK AND OTHER RISK

         The Company has no sources for the payment of the principal of, and the
         interest on, the Notes except for the pre-funding and capitalized
         interest accounts held by the Trustee. Accordingly, the Company's
         ability to pay debt service on the Notes is wholly dependent upon its
         financial condition, results of operations and cash flows when the
         vessel is in operation.

         The Company's vessel under construction is produced under a contract
         with a shipyard in the Republic of Korea ("RK"). The production and
         delivery of this vessel is subject to the risk of nonperformance by the
         shipyard due to political or economic changes in the RK, as well as
         interruptions in sea or air transportation in the area. Although the
         Company has received various performance guarantees from the shipyard
         and its bank to recover its investment in the event of nonperformance,
         there can be no conclusive assurance that the counterparties will
         perform. Also, the Company's future shipping operations would be 
         significantly disrupted if such an event were to occur.


NOTE G - RELATED PARTY TRANSACTIONS

         Pursuant to an agreement (the "Management Agreement") between the
         Company and Cambridge Fund Management, L.L.C. (the "Manager"), an
         affiliate of the Company, the Manager has agreed to provide
         administrative management and advisory services to the Company at an
         annual fee of $50,000. The charges will be payable to the Manager
         semiannually on each interest payment date. All recurring fees are
         payable by the Manager from the Management Fee. Management fee
         expenses and management fee payable as of December 31, 1997 and 1996
         are as follows:



                                             1997              1996
                                         ---------------- ------------------
           
           Management fee expenses        $ 45,833              $
           Management fee payable         $ 20,833

         In connection with the issuance of the Notes, the Company paid
         structuring fees of $500,000 in 1996 to CPTC, an affiliated entity.

                                      F-17



<PAGE>


                        Golden State Petro (IOM I-B) PLC
                          (a wholly-owned subsidiary of
                         Golden State Holdings I, Ltd.)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                        Year ended December 31, 1997 and
                        the period from December 24, 1996
                (commencement of operations) to December 31, 1996



NOTE G (CONTINUED)

         CPTC has contributed or waived and expects to continue to contribute or
         waive shipbuilding brokerage commissions and other services during the
         construction of the VLCC. The Company has reflected these contributed
         services of approximately $1,092,000 as a reduction of the delivered
         cost of the vessel in the balance sheets as of December 31, 1996 and
         1997.


NOTE H - SUBSEQUENT EVENTS

         On April 21, 1998, CPTC entered into a stock purchase agreement with
         Frontline Ltd., whereby CPTC sold its investment in Golden State
         Holdings I, Ltd. for $2,400,000. On May 12, 1998, the sale was closed.



                                      F-18