<DOCUMENT>
<TYPE>20FR12G
<SEQUENCE>1
<FILENAME>a2094458z20fr12g.txt
<DESCRIPTION>20FR12G
<TEXT>
<PAGE>

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

                                    FORM 20-F

(Mark One)

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

                                       OR

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

For the fiscal year ended ____________________________________________________

                                       OR

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

For the transition period from _______________________________________________

Commission file number________________________________________________________

                                GOLAR LNG LIMITED
----------------------------------------------------------------------------
            (Exact name of Registrant as specified in its charter)

                                GOLAR LNG LIMITED
----------------------------------------------------------------------------
                (Translation of Registrant's name into English)

                                     Bermuda
----------------------------------------------------------------------------
                (Jurisdiction of incorporation or organization)

 Par-la-Ville Place, 14 Par-la-Ville Road, 4th Floor, Hamilton, HM 08, Bermuda
----------------------------------------------------------------------------
                   (Address of principal executive offices)

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

            Title of each class                   Name of each exchange
                                                   on which registered
                                      NONE
----------------------------------------------------------------------------
Securities registered or to be registered pursuant to section 12(g) of the Act.

Common Shares, par value one dollar per share.

----------------------------------------------------------------------------
                                (Title of class)

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

                                      NONE
----------------------------------------------------------------------------
                                (Title of class)

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

56,012,000 common shares, par value one dollar 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                No      X
                            --------          ---------


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

                    Item 17              Item 18    X
                             -------             --------

<PAGE>
                                TABLE OF CONTENTS

                                                                            Page

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS....................1

   ITEM 1.  Identity Of Directors, Senior Management and Advisers............2

   ITEM 2.  Offer Statistics and Expected Timetable..........................3

   ITEM 3.  Key Information..................................................3

   ITEM 4.  Information On The Company......................................14

   ITEM 5.  Operating and Financial Review and Prospects....................36

   ITEM 6.  Directors, Senior Management and Employees......................54

   ITEM 7.  Major Shareholders and Related Party Transactions...............56

   ITEM 8.  Financial Information...........................................61

   ITEM 9.  The Offer and Listing...........................................62

   ITEM 10. Additional Information..........................................63

   ITEM 11. Quantitative and Qualitative Disclosures About Market Risk......73

   ITEM 12. Description of Securities Other Than Equity Securities..........74

   ITEM 13. Dividend Arrearages and Delinquencies...........................74

   ITEM 14. Material Modifications to the Rights of Security Holders
            and Use of Proceeds.............................................74

   ITEM 15. Reserved........................................................74

   ITEM 16. Reserved........................................................74

   ITEM 17. Financial Statements............................................74

   ITEM 18. Financial Statements............................................74

INDEX TO COMBINED FINANCIAL STATEMENTS......................................F-1

                                        i
<PAGE>

           CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

     This   registration    statement   contains   assumptions,    expectations,
projections,  intentions  and beliefs about future events,  in particular  under
Item 4,  "Information  on the  Company  - Our  Business  Strategy"  and  Item 5,
"Operating and Financial Review and Prospects". These statements are intended as
"forward-looking statements." We may also from time to time make forward-looking
statements in our periodic reports to the United States  Securities and Exchange
Commission,  other  information  sent to our  stockholders,  and  other  written
materials. We caution that assumptions,  expectations,  projections,  intentions
and beliefs  about future  events may and often do vary from actual  results and
the differences can be material.

     All statements in this document that are not statements of historical  fact
are forward-looking statements.  Forward-looking statements include, but are not
limited to, such matters as:

     o    future operating or financial results;

     o    statements  about  future,  pending or recent  acquisitions,  business
          strategy,  areas of possible expansion,  and expected capital spending
          or operating expenses;

     o    statements   about  LNG  market  trends,   including   charter  rates,
          development of a spot market, factors affecting supply and demand, and
          opportunities for the profitable trading of LNG;

     o    expectations  about the availability of vessels to purchase,  the time
          which it may take to construct new vessels,  or vessels' useful lives;
          and

     o    our ability to obtain additional financing.

     When  used  in  this   document,   words  such  as   "believe,"   "intend,"
"anticipate,"  "estimate,"  "project,"  "forecast," "plan," "potential," "will,"
"may,"  "should," and "expect" and similar  expressions are intended to identify
forward-looking  statements but are not the exclusive means of identifying  such
statements.

     We undertake no obligation to publicly update or revise any forward-looking
statements contained in this registration statement,  whether as a result of new
information,  future events or otherwise, except as required by law. In light of
these risks, uncertainties and assumptions, the forward-looking events discussed
in this  registration  statement  might not occur,  and our actual results could
differ materially from those anticipated in these forward-looking statements.

                                        1
<PAGE>

                                     PART I

ITEM 1.  Identity Of Directors, Senior Management and Advisers

Directors and Executive Officers

Name                 Business Address           Position
----                 ----------------           --------

John Fredriksen      Sandy Beach Apartments     Chairman of the Board,
                     Block 3, Flat Y3431        President and Director
                     61 Amathountos Avenue
                     4532 Ayios Tychonas Area
                     CY-3105 Limassol
                     Cyprus

Tor Olav Troim       Anna Court                 Deputy Chairman of the Board,
                     Block I, Flat B2           Chief Executive Officer, Vice
                     Georgiou 1                 President and Director
                     Yermasoyia
                     CY 4040 Limassol
                     Cyprus

A. Shaun Morris      Cedar House                Director
                     41 Cedar Avenue
                     P.O. Box HM 1179
                     HM EX Hamilton Bermuda

Timothy Counsell     Cedar House                Director
                     41 Cedar Avenue
                     P.O. Box HM 1179
                     HM EX Hamilton Bermuda

Sveinung Stohle      30 Marsh Wall              Executive Vice President
                     London, United Kingdom
                     E14 9TP

Graeme McDonald      30 Marsh Wall              Chairman of Golar Management
                     London, United Kingdom     Limited and Technical Director
                     E14 9TP

Graham Griffiths     30 Marsh Wall              General Manager of the Fleet
                     London, United Kingdom
                     E14 9TP

Kate Blankenship     Par-la-Ville Place,        Chief Accounting Officer and
                     14 Par-la-Ville Road,      Company Secretary
                     4th Floor
                     Hamilton, HM 08, Bermuda

Graham Robjohns      30 Marsh Wall              Group Financial Controller
                     London, United Kingdom
                     E14 9TP
Auditors

Name                    Address
----                    -------

PricewaterhouseCoopers  Harman House
                        1 George Street
                        Uxbridge, London UB8 1QQ
                        United Kingdom


                                        2
<PAGE>

ITEM 2.  Offer Statistics and Expected Timetable

      Not Applicable

ITEM 3.  Key Information

Selected Financial Data

     The following  selected  consolidated and combined financial and other data
summarize our historical  consolidated and combined financial  information.  The
selected  combined  financial  data as of and for the six months  ended June 30,
2002 and 2001 have been derived from our unaudited financial  statements and, in
the opinion of our  management,  include all  adjustments,  consisting of normal
recurring  accruals,  necessary for a fair presentation of that information.  We
derived the  information as of and for the years ended  December 31, 2001,  2000
and  1999  from our  audited  combined  and  consolidated  financial  statements
prepared in accordance  with  accounting  principles  generally  accepted in the
United States,  or U.S.  GAAP, and the  information as of and for the year ended
December 31,  1998,  from our  unaudited  combined  and  consolidated  financial
statements  prepared in accordance  with U.S. GAAP. This  information  should be
read in conjunction  with "Operating and Financial Review and Prospects" and our
historical financial statements and the notes thereto included elsewhere in this
registration statement.

     We are a holding  company formed on May 10, 2001. We acquired our liquefied
natural  gas,  or LNG,  operations  from  Osprey  Maritime  Limited,  a  company
indirectly  controlled by our Chairman,  President and controlling  shareholder,
John Fredriksen.  The LNG operations were a fully integrated  business of Osprey
Maritime Limited prior to our acquisition.  Accordingly, the following financial
information  for the year ended  December 31, 2000 and 1999 and for periods that
include  the five  months to May 31, 2001 has been  derived  from the  financial
statements  and  accounting  records of Osprey  Maritime  Limited  and  reflects
significant  assumptions  and  allocations.   The  following  annual  historical
financial  information does not reflect any significant  changes that will occur
in the  operations  and  funding  of  the  LNG  operations  as a  result  of our
acquisition. See "Unaudited Pro-Forma Financial Information." Consequently,  our
financial position, results of operations and cash flows could differ from those
that would have resulted if we operated autonomously or as an entity independent
of Osprey Maritime Limited in the period for which annual  historical  financial
data are presented for the year ended December 31, 2000 and 1999 and for periods
that include the five months to May 31, 2001 below,  and,  similarly  may not be
indicative  of our  future  operating  results  or  financial  performance.  The
financial  information  for the six months  ended  June 30,  2002  reflects  the
results of operations  and cash flows of our business on a stand alone  business
under the new ownership structure.

     We do not  include  selected  financial  information  for  the  year  ended
December  31,  1997.   Osprey   acquired  its  LNG   operations   by  purchasing
Gotaas-Larsen  Shipping  Corporation  from an unrelated  third party on July 31,
1997.  Gotaas-Larsen  had  substantial  other  operations in addition to its LNG
operations. Osprey acquired financial information relating to Gotaas-Larsen as a
whole,   but  did  not   acquire   separate   financial   records   relating  to
Gotaas-Larsen's LNG operations.  Therefore, we are not able to prepare financial
statements  for the  results of  Gotaas-Larsen's  LNG  operations  or to include
summary financial data for the year ended December 31, 1997.

                                        3
<PAGE>


<TABLE>
<CAPTION>
                                                At or for the                                       At or for the
                                                   Six Months                                         Fiscal Year
                                                        Ended                                               Ended
                                                      June 30                                         December 31
                                            2002         2001         2001         2000         1999         1998
                                         -------      -------      -------       ------      -------      -------
(in thousands of $, except             (unaudited)(unaudited)                                         (unaudited)
per common share data
and fleet data)
<S>                                      <C>          <C>          <C>          <C>          <C>          <C>
Income Statement Data:
Total operating revenues                  64,520       53,779      114,223      113,009       81,792       78,254
Vessel operating costs (1)                13,594       11,410       24,537       20,973       18,249       19,969
Administrative expenses                    2,708        2,656        8,232        7,715        7,935       10,007
Restructuring costs                           --        1,894        1,894           --           --           --
Depreciation and amortization             15,682       16,238       31,614       36,488       29,464       29,715
Net operating income                      32,536       21,581       47,946       47,833       26,144       18,563
Net financial expenses                   (17,375)     (22,422)     (41,617)     (44,820)     (27,764)     (31,591)
Net income (loss) before                  15,161         (841)       6,329        3,013       (1,620)     (13,028)
income taxes and minority
interests
Income taxes and minority                    (42)       1,702        1,963        3,517          237         (236)
interests
Net income (loss)                         15,119       (2,543)       4,366         (504)      (1,857)     (12,792)
Earnings (loss) per common
share - basic and diluted (2)               0.27        (0.05)        0.08        (0.01)       (0.03)       (0.23)
Cash dividends per
common share                                  --           --           --           --           --           --
Weighted average number                   56,012       56,012       56,012       56,012       56,012       56,012
of shares - basic (2)
Weighted average number                   56,019       56,012       56,019       56,012       56,012       56,012
of shares - diluted (2)

Balance Sheet Data (at
end of period):
Cash and cash equivalents                 51,613       37,874       57,569        5,741        2,567        1,806
Restricted cash and
short-term investments                    13,235       13,690       14,163       13,091           --           --
Short-term investments                        --       18,417           --       14,231           --           --
Amounts due from related
parties                                      231           27          261           --           --           --
Newbuildings                             234,216       32,612      132,856           --      158,110           --
Vessels and equipment, net               630,313      648,737      641,371      765,559      541,922      568,959
Total assets                             941,344      763,067      855,991      817,990      724,101      594,264
Current portion of
long-term debt                            42,341       25,603       41,053       10,171           --           --
Current indebtedness due                  16,259           --       85,278       12,000       12,000           --
to related parties
Long-term debt                           593,478      508,918      483,276      204,329      126,308           --
Long-term debt due to
related parties                           32,703           --           --      287,400      329,400      352,400
Minority interest                         18,188       25,765       25,820       26,011       14,250           --
Stockholders' equity                     189,515      163,552      174,397      257,034      225,056      220,641
Common shares outstanding(2)              56,012       56,012       56,012       56,012       56,012       56,012

Fleet Data (unaudited)
Number of vessels at end of                    6            6            6            6            5            5
period (3)
Average number of vessels                      6            6            6            6            5            5
during period (3)
Average age of vessels                      20.9         19.9         20.4         19.4         22.1         21.1
Total calendar days
for fleet                                  1,086        1,086        2,190        2,182        1,825        1,825
Total operating days for
fleet (4)                                  1,064          991        2,060        2,103        1,673        1,566
Average daily time charter
earnings (5)                             $58,900      $51,000      $53,600      $50,900      $43,300      $42,100
Average daily vessel
operating costs (6)                      $12,500      $10,500      $11,200       $9,600      $10,000      $10,900
</TABLE>

Footnotes

(1)  Vessel  operating  expenses are the direct costs  associated with running a
     vessel including crew wages, vessel supplies, routine repairs,  maintenance
     and  insurance.  In  addition,  they  include an  allocation  of  overheads
     allocable to vessel operating expenses.
(2)  Since our  financial  results were "carved out" of those of Osprey,  we did
     not record any  specific  share  capital for the period  before we acquired
     Osprey's LNG assets and  operations.  To provide a measurement  of earnings
     per share,  we use for basic earnings per share the 12,000 shares issued in
     connection  with the formation of Golar on May 10, 2001 and the  subsequent
     issuance of 56 million  shares in our  Norwegian  placement as described in
     Note 1 to our Combined  Financial  Statements.  Basic earnings per share is
     computed based on the income (loss)  available to common  shareholders  and
     the weighted  average  number of shares  outstanding.  The  computation  of
     diluted  earnings per share assumes the conversion of potentially  dilutive
     instruments.
(3)  We own 60 percent of one of our vessels and 100 percent of our  remaining
     five vessels.
(4)  The  operating  days for our fleet is the  total  number of days in a given
     period that the vessels  were in our  possession  less the total  number of
     days offhire. We define days offhire as days spent on repairs, drydockings,
     special surveys and vessel upgrades or awaiting  employment during which we
     do not earn charter hire.
(5)  We  calculate  average  daily time  charter  earnings by dividing  our time
     charter  revenues by the number of calendar  days minus days for  scheduled
     offhire.  We do this  calculation  on a  vessel  by  vessel  basis.
(6)  We  calculate  average  daily  vessel  operating  costs by dividing  vessel
     operating costs by the number of calendar days. We do this calculation on a
     vessel by vessel basis.

                         Capitalization and indebtedness

The following table sets forth our unaudited  capitalization as of September 30,
2002 calculated on an actual basis at June 30, 2002 adjusted to reflect drawdown
from and repayment of our various facilities and the reclassification of amounts
deemed current.

                                       4
<PAGE>


This table should be read with "Operating and Financial Review and Prospects"
and the audited financial statements, unaudited interim financial statements,
unaudited pro-forma combined financial information and other financial
information included in this Registration Statement.

                                                                       As
                                                     Actual        Adjusted
    (in thousands of $)                                            (Unaudited)
    Current portion of long-term debt                 42,341   (a)    43,135
    Short-term debt due to related parties            16,259   (b)         -
    Long-term debt                                   593,478   (a)   587,557
    Long-term debt due to related parties             32,703   (b)    48,962
                                                    ---------      ----------
         Total Debt                                  684,781   (c)   679,654
                                                    ---------      ----------

    Stockholders' equity
    Share Capital                                     56,012          56,012
    Additional Paid in Capital                       112,281         112,281
    Accumulated Other Comprehensive Income (Loss)    (1,472)         (1,472)
    Retained Earnings                                 22,694          22,694
                                                    ---------      ----------
         Total Stockholders' equity                  189,515         189,515
                                                    ---------      ----------

                                                    ---------      ----------
    Total capitalization                             874,296         869,169
                                                   ==========      ==========

     (a) This adjustment reflects repayments of debt which occurred between July
     1, 2002 and September 30, 2002, drawdown under an existing facility and the
     reclassification of amounts deemed current as of September 30, 2002.

     Between  July 1, 2002 and  September  30,  2002,  $7.5  million of debt was
     repaid in relation to the Golar LNG facility  and $2.4 million  relating to
     capitalized interest was drawndown under the Newbuilding facility.

     (b) This adjustment reflects the reclassification of amounts deemed current
     as of September 30, 2002. At June 30, 2002 outstanding loans from Greenwich
     totaled $49.0 million, of which $16.3 million was due in October 2002.

     In September, 2002, Greenwich confirmed the availability of an extension to
     these loans such that the total  amount  drawn down under this  facility of
     $49.0 million can remain outstanding, if required, until December 2003.

     (c) At September 30, 2002 our indebtedness consisted of the following:

    (in thousands of $)
                                                   Unaudited
    Related party loans from Greenwich                48,962
    Mazo facility                                    198,917
    Golar LNG facility                               297,500
    Newbuilding facility                             134,275
                                                  ----------
                                                     679,654
                                                  ----------

     All loans are  secured  principally  by existing  vessels or vessels  under
     construction.

     The related party loans from Greenwich  were financed by Greenwich  through
     third party bank  borrowings,  which we have  guaranteed.  Our guarantee of
     Greenwich's  third party loans are secured by an  assignment of the related
     shipbuilding  contacts,  refund  guarantees  and,  where  applicable,   the
     shipowning subsidiaries' bank accounts.

     The Mazo  facility is secured by a mortgage on the vessel  Golar Mazo,  the
     capital stock of the partly-owned  subsidiary that owns the vessel,  and an
     assignment  to the  lender  of the  vessel's  earnings,  insurance  and the
     vessel's  charter.  In addition,  in connection  with the Mazo facility,  a
     collateral  agreement  has been entered into with a bank  consortium  and a
     bank Trust  Company.  This  agreement  requires that certain cash balances,
     representing interest and principal payments for defined future periods, be
     held by the Trust Company during the period of the Mazo loan.

     The  Golar  LNG  facility  is  secured  by a  mortgage  on each of our five
     wholly-owned  vessels,  the capital  stock of our  wholly-owned  shipowning
     subsidiaries which owns each vessel, and an assignment to the lender of our
     wholly-owned vessels' earnings, insurance and the vessels' charters.

     The Newbuilding  facility is secured by the shipbuilding  contract for hull
     number 2215, and a pledge of the shipowning  subsidiary's bank accounts and
     capital stock.


                                       5
<PAGE>

                         Pro-Forma Financial Information

     We are a holding  company  formed on May 10, 2001,  that currently owns and
operates  a fleet  of six LNG  carriers.  We own  five  of our  vessels  through
wholly-owned  subsidiaries  and we  have a 60 percent  interest  in the  sixth
vessel. This last vessel, the Golar Mazo, was delivered to us in January 2000 as
a newbuilding.  Additionally,  we have contracts to build four LNG carriers. Our
six LNG carriers are all currently employed under long-term charter contracts.

     Our  business  was  originally  founded in 1946 as  Gotaas-Larsen  Shipping
Corporation.  Gotaas-Larsen  entered the LNG shipping  business in 1970, and was
acquired by Osprey Maritime  Limited,  a Singapore  publicly traded company,  in
1997.

     In August 2000, World Shipholding Ltd., a company indirectly  controlled by
John Fredriksen, our chairman, president and controlling shareholder,  commenced
an acquisition of Osprey.  World  Shipholding  gained a controlling  interest of
more than 50 percent of Osprey in November 2000 and  increased  this interest to
over 90 percent in January 2001. World Shipholding  completed its acquisition in
May  2001.  This  acquisition  was  accounted  for  as a  step-by-step  purchase
transaction  and the purchase  price was  therefore  allocated to the assets and
liabilities  acquired based on their fair value as of each acquisition date with
vessels being valued on the basis of discounted  expected  future cash flows. In
each step of the acquisition, the fair value of the net assets acquired exceeded
the purchase price with resulting  negative  goodwill  allocated to the recorded
values of the vessels.  These  purchase price  allocations  were pushed down and
reflected in our financial statements from February 1, 2001.

     On May 31, 2001,  we acquired the LNG shipping  interests of Osprey,  which
included  one  newbuilding  contract  and an option  for a  further  newbuilding
contract.  We also entered into a purchase agreement with Seatankers  Management
Company Ltd., to purchase its one newbuilding contract for a LNG carrier and its
option to build three new LNG carriers.

     In addition to controlling  Seatankers,  Mr. Fredriksen indirectly controls
50.01 percent of our shares  through World  Shipholding.  As required under U.S.
GAAP,  our  purchase of the LNG  operations  of Osprey and  Seatankers  has been
reflected in our financial  statements as  transactions  between  entities under
common  control.  We have recorded the LNG assets and liabilities we acquired at
the  amounts  previously  reflected  in  the  books  of  World  Shipholding  and
Seatankers  on what is known as a  "predecessor  basis".  Under the  predecessor
basis of accounting,  tangible and intangible  assets  acquired and  liabilities
assumed  are  recorded  in our books at the amount at which they would have been
recorded  in the  books of World  Shipholding  and  Seatankers.  The  difference
between  our  purchase  price  and this  predecessor  basis was  reflected  as a
reduction in equity in a capital reorganization.

     The following  unaudited  pro-forma condensed statement of operations gives
effect to our  acquisition of the LNG interests of Osprey and  Seatankers  under
the predecessor basis of accounting the push down of World  Shipholding's  basis
of accounting, and our capital reorganization as if these events had occurred on
and from January 1, 2001.  The  pro-forma  condensed  statement of operations is
presented for  illustrative  purposes only. The pro-forma  adjustments are based
upon  available   information  and  assumptions  that  management  believes  are
reasonable.  The pro-forma condensed statement of operations does not purport to
represent  what the  results  of  operations  would  actually  have  been if the
acquisition  had in fact  occurred on such date,  nor do they purport to project
our results of operations for any future period or as of any date, respectively.

     The unaudited  pro-forma  condensed  statement of operations  does not give
effect to any  restructuring  costs or to any  potential  costs savings or other
operating  efficiencies  that  could  result  from  our  acquisition  of the LNG
interests of Osprey and Seatankers.  The unaudited pro-forma condensed statement
of operations  should be read in conjunction  with our financial  statements and
the related notes,  and the other financial  information  included  elsewhere in
this Registration Statement.

     Our  condensed  historical  statement  of  operations  for the  year  ended
December  31,  2001  is  derived  from  the  audited  historical  statements  of
operations included in Item 18 of this Registration Statement.


                                       6
<PAGE>


            Unaudited Pro-Forma Combined Statement of Operations
                      for the Year Ended December 31, 2001

                                             Golar       Pro-Forma      Golar
                                   Notes   Historical   Adjustments   Pro-Forma
                                   -----   ----------   -----------   ---------
(in thousands of $, except
per share data)

Total operating revenues                      114,223            --     114,223

Vessel operating costs                         24,537            --      24,537
Administrative expenses                         8,232            --       8,232
Restructuring expenses                          1,894            --       1,894

Depreciation and amortization          1       31,614          (621)     30,993

                                             ----------------------------------
Net operating income                           47,946           621      48,567
                                             ----------------------------------

Interest income                                 3,254            --       3,254
Interest expense                       2      (32,508)          866          --
Other financial items                  3      (12,363)        4,935      (7,428)

                                             ----------------------------------
Income before taxes and
minority interest                               6,329         6,422      12,751
                                             ----------------------------------

Minority interest                               1,607            --       1,607
Taxes                                             356            --         356

                                             ----------------------------------
Net income                                      4,366         6,422      10,788
                                             ----------------------------------

Earnings per share -
basic and diluted                      4        $0.08         $0.11       $0.19

Notes to Pro-Forma Unaudited Combined Statements of Operations

1.   This  adjustment  reflects the  estimated  adjustment to  depreciation  and
     amortization  expense had the push down basis of accounting been applied as
     of January 1, 2001.

2.   In May 2001 we entered into a secured  loan  facility for an amount of $325
     million that was specifically obtained for financing the acquisition of the
     LNG interests of Osprey. This adjustment  represents the estimated decrease
     in interest  expense that would have  occurred if the  financing  had taken
     place as of January 1, 2001.  The pro-forma  adjustment  for the year ended
     December 31, 2001 for interest expense is calculated as follows:


                                       7
<PAGE>

                                                              Interest from
(in thousands of $, except               Interest   Annual    January 1, 2001
interest rate)                    Amount     Rate   Interest  to May 31, 2001(c)
--------------                    ------      ----   --------  -----------------

 Golar LNG facility (a)         $325,000  5.49%(b)    $17,843             $7,434

Interest expense associated
with the refinanced facility                                               8,300
reflected in the financial
statements from January 1,
2001 to May 31, 2001
                                                               -----------------
Total pro-forma interest                                                     866
adjustment
                                                               -----------------

     (a)  Assumes the entire  principal  balance of $325 million was outstanding
          from January 1, 2001 to May 31, 2001.
     (b)  Interest on the Golar LNG  facility is based on LIBOR + 1.50 percent.
          As of May 31,  2001 the three  month  LIBOR rate was 3.99 percent.

     A change in the  underlying  interest rate of 1/8 percent for the Golar LNG
     facility  would  result in an  increase/decrease  in  interest  expense  of
     $406,000 for the year ended  December 31, 2001.  (c)  Calculated  by taking
     5/12th of the annual interest calculation.

3.   This  adjustment  represents the estimated  adjustment of  amortization  of
     deferred charges and financing fees resulting from our recapitalization. In
     particular, it assumes the refinancing of five of our vessels in accordance
     with the financing terms we obtained in May 2001 as mentioned above.

     The adjustment  also reflects the  elimination  of the financial  impact of
     interest  rate  swaps  maintained  by  Osprey  and  allocated  to us in the
     preparation of the combined historical  financial  statements until our May
     2001 separation. These swap agreements were not assumed by us.

     The adjustment comprises the following amounts:

     (in thousands of $)

      Amortization of deferred charges and financing fees                  3,056
      Impact of elimination of interest rate swaps                         1,879
                                                                   -------------
                                                                           4,935
                                                                   -------------

     The pro-forma adjustment for amortization of deferred charges and financing
     fees is calculated as follows:

                                                                    Charge from
                                                                     January 1,
                                                                        2001 to
                                                                        May 31,
                                                                           2001
                                                                     ----------
     Amortization of deferred charges and financing fees from
     January 1, 2001 to May 31, 2001 associated with Golar LNG              195
     facility

     Amortization  of  deferred  charges and  financing  fees
     reflected in the financial  statements from January 1, 2001
     to May 31, 2001 associated with refinanced Facility                   (939)

     Deferred finance charges associated with refinanced
     facility written off as a result of refinancing reflected
     in the financial statements from January 1, 2001 to
     May 31, 2001                                                        (2,312)
                                                                     ----------

     Total pro forma adjustment                                           3,056)
                                                                     ----------

4.   To provide a measurement of pro forma earnings per share,  we use for basic
     earnings  per  share  the  12,000  shares  issued  in  connection  with the
     formation  of  Golar  on May 10,  2001 and the  subsequent  issuance  of 56
     million  shares in our  Norwegian  placement  as described in Note 1 to our
     Audited  Financial  Statements.  Pro forma  earnings  per share is computed
     based  on the  income  (loss)  available  to  common  shareholders  and the
     weighted  average number of shares  outstanding.  As noted in Note 9 to the
     Audited Financial Statements,  the increase in weighted average outstanding
     shares for potentially dilutive securities was approximately 7,000 shares.


                                       8
<PAGE>

Risk Factors

     Some of the following  risks relate  principally  to our business or to the
industry in which we operate.  Other risks relate  principally to the securities
market and ownership of our shares.  Any of these risks, or any additional risks
not  presently  known  to  us  or  that  we  currently  deem  immaterial,  could
significantly and adversely affect our business,  our financial  condition,  our
operating results and the trading price of our shares.

Risks Related to our Business

Currently,  we generate  substantially  all of our revenue  under six  long-term
agreements  with  two  customers,  and the  unanticipated  loss of any of  these
agreements or either customer would likely interrupt our related cash flow.

     We currently generate substantially all of our revenue under a total of six
long-term charters with two large and established  customers.  In the year ended
December 31, 2001, British Gas accounted for 40 percent and Pertamina  accounted
for 55  percent  of  our  total  operating  revenues,  respectively.  All of our
charters  have  fixed  terms,  but  might  nevertheless  be lost in the event of
unanticipated  developments  such as a  customer's  breach.  Our  customers  may
terminate their charters with us if, among other events,  the relevant vessel is
lost or damaged beyond repair.  The unanticipated  loss of any of these charters
or either  customer  would  likely  interrupt  our related  cash flow because we
cannot  be sure  that we  would  be able to enter  into  attractive  replacement
charters on short notice.  A persistent and continued  interruption  of our cash
flow could, in turn, substantially and adversely affect our financial condition.

If  construction  of any of the four LNG  carriers  we have  ordered  were to be
substantially  delayed or left incomplete,  our earnings and financial condition
could suffer.

     We have binding contracts for the construction of four new LNG carriers, or
newbuildings,  by two  established  Korean  shipyards.  While each  shipbuilding
contract contains a liquidated damages clause requiring the shipyard to refund a
portion of the  purchase  price if delivery of a vessel is delayed  more than 30
days,  any such delay could  adversely  affect our  earnings  and our  financial
condition.  In addition,  if these shipyards were unable to deliver a particular
vessel on time, we might be unable to perform under a related  long-term charter
and our earnings and financial condition could suffer.

Completion of our newbuilding program is dependent on additional debt financing.

     To pay the anticipated  installments on the  construction  cost of our four
newbuildings,  we will need to obtain  further  loans or other  financing in the
amount of  approximately  $316 million as at October 2002. It is standard in the
shipping  industry to finance between 60 and 80 percent of the purchase price of
vessels,  or construction cost in the case of newbuildings,  through traditional
bank  financing.  In the case of vessels  that have charter  coverage,  the debt
finance percentage may increase significantly.  One of our newbuildings has been
employed on a long-term charter with British Gas and we have obtained  financing
for 100 percent of the cost of the vessel.  If we were to obtain 60 percent debt
financing  to cover  the  installments  due on our  three  remaining  unfinanced
newbuildings,  this would equate to  additional  finance of  approximately  $235
million of the $316 million  required.  For further  information  concerning our
future  financing  plans,  including  our  current  reliance  on  related  party
financing, see Item 5; "Operating and Financial Review and Prospects,  Liquidity
and Capital Resources - Newbuilding Contracts and Capital  Commitments".  To the
extent we do not  timely  obtain  necessary  financing  for a  newbuilding,  the
completion  of that  newbuilding  could be delayed or we could suffer  financial
loss,  including  the loss of all or a portion of the  progress  payments we had
made to the shipyard.

We are considering various alternatives for the employment of our newbuildings,
failure to find profitable employment for them could adversely affect our
operations.


                                       9
<PAGE>

     We will  incur  substantial  costs for the four  newbuildings  that we have
ordered. The first newbuilding that will be delivered to us has been employed on
a long-term charter that will commence on delivery.  We are considering  various
employment  opportunities for the remaining three  newbuildings that may include
medium-term or long-term charter  contracts,  trading in the developing spot LNG
carrier charter market,  that is, carrying LNG under short-term  contracts of up
to one year or on a per voyage  basis,  and entering  LNG trading.  If we cannot
obtain profitable  employment for these vessels, our earnings will suffer. If we
are unable to secure term charter  coverage for a newbuilding,  we may be unable
to obtain the  financing  necessary to complete that  newbuilding.  In addition,
whether or not we employ our newbuildings  profitably,  we must service the debt
that we incur to finance them.

If we do not accomplish our strategic  objective of entering into other areas of
the LNG industry,  we may incur losses and our strategy to continue  growing and
increasing operating margins may not be realized.

     A part of our strategy  reflects our  assessment  that we should be able to
expand profitably into areas of the LNG industry other than the carriage of LNG.
We have not  previously  been involved in other LNG industry  businesses and our
expansion  into these  areas may not be  profitable.  Our  strategy  to possibly
expand into LNG trading as a principal is subject to material  risks  concerning
availability  of LNG production and terminal  capacity,  and expansion of a spot
trading  market for LNG and inherent  trading risk.  Our plan does not currently
envision  trading  energy  derivatives.  Our plan to consider  opportunities  to
integrate  vertically  into  upstream  and  downstream  LNG  activities  depends
materially  on our ability to identify  attractive  partners  and  projects  and
obtain project financing at a reasonable cost.

Our loan agreements  impose  restrictions that may adversely affect our earnings
or that may prevent our shipowning  subsidiaries,  and our intermediate  holding
company that owns them,  from taking actions that could be in our  shareholders'
best interest.

      Covenants in our loan agreements limit the ability of all our shipowning
subsidiaries to:

     o    merge into or  consolidate  with any other entity or sell or otherwise
          dispose of all or substantially all of their assets;

     o    make or pay equity distributions;

     o    incur additional indebtedness;

     o    incur or make any capital expenditure; or

     o    materially  amend, or terminate,  any of our current charter contracts
          or management agreements.

In addition,  if the ownership interest in us of John Fredriksen,  our chairman,
and his  affiliated  entities  falls  below 25 percent of our share  capital,  a
default of a $325 million loan agreement to which we are a party would occur.

     In addition,  covenants in our loan agreements may  effectively  prevent us
from  paying  dividends  should  our  board of  directors  wish to do so and may
require  us to obtain  permission  from our  lenders  to  engage  in some  other
corporate  actions.  Our lenders'  interests may be different  from those of our
shareholders  and we cannot  guarantee  investors that we will be able to obtain
our lenders'  permission when needed. This may adversely affect our earnings and
prevent  us  from  taking  actions  that  could  be in  our  shareholders'  best
interests.

If we do not maintain the financial ratios contained in our loan agreements, we
could face acceleration of the due date of our bank loans and the loss of our
vessels.


                                       10
<PAGE>

     Our loan agreements  require us to maintain  specific  financial levels and
ratios,  including  minimum  available cash, ratios of current assets to current
liabilities  (excluding  current  long-term  debt)  and  ratios  of net  debt to
earnings  before  interest,  tax,  depreciation  and  amortization.  Although we
currently comply with these requirements,  if we were to fall below these levels
we would  be in  default  of our  loans  and the due  date of our debt  could be
accelerated, which could result in the loss of our vessels.

Servicing our debt substantially limits our funds available for other purposes.

     A large part of our cash flow from operations  must go to paying  principal
and interest on our debt. As of September 30, 2002, our total  indebtedness  was
$680 million and our ratio of indebtedness  to total capital was 79 percent.  We
may incur  additional  debt of as much as $316 million to fund completion of our
four newbuildings, and we may incur additional indebtedness to fund our possible
expansion into other areas of the LNG industry.  Debt payments  reduce our funds
available for expansion into other parts of the LNG industry,  working  capital,
capital  expenditures and other purposes.  In addition,  our business is capital
intensive  and requires  significant  capital  outlays that result in high fixed
costs.  We cannot assure  investors that our existing and future  contracts will
provide revenues adequate to cover all of our fixed and variable costs.

Maritime claimants could arrest our vessels, which could interrupt our cash
flow.

     If we are in  default on some  kinds of  obligations,  such as those to our
crew  members,  suppliers  of goods and  services  to our vessels or shippers of
cargo,  these  parties may be entitled to a maritime lien against one or more of
our vessels. In many jurisdictions,  a maritime lien holder may enforce its lien
by arresting a vessel through foreclosure  proceedings.  In a few jurisdictions,
claimants could try to assert "sister ship" liability  against one vessel in our
fleet for claims relating to another of our vessels. The arrest or attachment of
one or more of our vessels  could  interrupt our cash flow and require us to pay
to have the arrest lifted. Under some of our present charters,  if the vessel is
arrested or detained for as little as 14 days as a result of a claim against us,
we may be in default of our charter and the charterer may terminate the charter.

It may be  difficult  to serve  process on or enforce a United  States  judgment
against us, our officers, our directors or some of our experts or to initiate an
action based on United States  federal or state  securities  laws outside of the
United States.

     We are a Bermuda  corporation and our executive offices are located outside
of the United  States.  Our officers and directors and some of the experts named
in this registration statement reside outside of the United States. In addition,
substantially  all of our assets and the assets of our  officers,  directors and
some of our experts are located outside of the United States.  As a result,  you
may have  difficulty  serving legal process  within the United States upon us or
any of these  persons or  enforcing a judgment  obtained in a U.S.  court to the
extent  assets  located in the United  States are  insufficient  to satisfy  the
judgment. In addition,  there is uncertainty as to whether the courts outside of
the United  States would  enforce  judgments of United  States  courts  obtained
against  us  or  our  officers  and  directors  or  entertain  original  actions
predicated on the civil  liability  provisions  of the United States  federal or
state  securities  laws.  As a result,  it may be  difficult  for you to enforce
judgments  obtained in United States courts against our directors,  officers and
non-U.S.  experts  or to bring an action  against  our  directors,  officers  or
non-U.S.  experts  outside of the United  States that is based on United  States
federal or state securities law.

We may  not be  exempt  from  U.S.  taxation  on our  U.S.  source  shipping
income,  which  would  reduce  our net income and cash flow by the amount of
the applicable tax.

     If we are not eligible for exemption from tax under Section 883 of the U.S.
Internal  Revenue  Code,  we will be subject to a four  percent  tax on our U.S.
source shipping income,  which is comprised of 50 percent of our shipping income
attributable  to the  transport of cargoes to or from United  States  ports.  We
believe  that if we were not  eligible  for  exemption,  under  Section 883, our
potential tax liability for the three calendar  years 1999,  2000 and 2001 would
have been $174,987,  $29,458 and $487,000,  respectively.  Although we currently
believe  we are  exempt  from tax  under  Section  883 and  intend  to take this
position on our U.S. tax return,  reproposed  regulations  under Section 883, if
they become final as proposed,  may not permit us to continue to claim exemption
from tax under Section 883.


                                       11
<PAGE>

Many  of  our  seafaring  employees  are  covered  by  industry-wide  collective
bargaining  agreements  and the  failure  of  industry  groups  to  renew  those
agreements may disrupt our operations and adversely affect our earnings.

     We employ  approximately 600 seafarers,  of which a significant portion are
subject  to  industry-wide  collective  bargaining  agreements  that  set  basic
standards.  We cannot  assure  you that  these  agreements  will  prevent  labor
interruptions. Any labor interruptions could disrupt our operations and harm our
financial performance.

If we are treated as a passive foreign  investment  company,  a U.S. investor in
our common shares would be subject to disadvantageous rules under U.S. tax laws.

     If we are treated as a passive foreign investment company in any year, U.S.
holders of our shares would be subject to  unfavorable  U.S.  federal income tax
treatment.  We do not believe that we were a passive foreign  investment company
in 2001 or will be in any  future  year.  However,  passive  foreign  investment
company  classification is a factual determination made annually and thus may be
subject  to change if the  portion  of our income  derived  from  other  passive
sources, including the spot trading of LNG for our own account, were to increase
substantially.  Moreover,  the Internal  Revenue  Services may disagree with our
position that time  charters do not give rise to passive  income for purposes of
the  passive  foreign  investment  company  rules.   Accordingly,   there  is  a
possibility that we could be treated as a passive foreign investment company for
2001 or for any  future  year.  Please  see  Item 10,  "Additional  Information;
Taxation - U.S.  Taxation  of U.S.  Holders"  for a  description  of the passive
foreign investment company rules.

Terrorist  attacks,  such as the attacks on the United  States on September  11,
2001, and other acts of violence or war may affect the financial markets and our
business, results of operations and financial condition.

     As a result of the  September  11, 2001  terrorist  attacks and  subsequent
events, there has been considerable  uncertainty in the world financial markets.
The full effect of these  events,  as well as concerns  about  future  terrorist
attacks,  on the financial  markets is not yet known,  but could include,  among
other  things,   increased   volatility  in  the  price  of  securities.   These
uncertainties  could  also  adversely  affect our  ability to obtain  additional
financing on terms acceptable to us or at all.

     Future  terrorist  attacks may also  negatively  affect our  operations and
financial  condition and directly  impact our vessels or our  customers.  Future
terrorist attacks could result in increased  volatility of the financial markets
in the United  States and globally and could result in an economic  recession in
the United States or the world. Any of these  occurrences  could have a material
adverse impact on our operating results, revenue, and costs.

Risks Related to the LNG Shipping Industry

Over time, charter rates for LNG carriers may fluctuate substantially.  If rates
happen to be lower at a time when we are  seeking  a charter  for a vessel,  our
earnings will suffer.

     Charter rates for LNG carriers  fluctuate  over time as a result of changes
in the  supply-demand  balance  relating  to  current  and  future  LNG  carrier
capacity. This supply-demand relationship largely depends on a number of factors
outside our control.  The LNG market is closely  connected to world  natural gas
prices and energy markets,  which we cannot  predict.  A substantial or extended
decline in natural gas prices  could  adversely  affect our charter  business as
well as our business opportunities.  Our ability from time to time to charter or
re-charter  any vessel at  attractive  rates will depend on, among other things,
then prevailing economic conditions in the LNG industry.

The LNG  transportation  industry is  competitive  and if we do not  continue to
compete successfully, our earnings could be adversely affected.

     Although we  currently  generate  substantially  all of our  revenue  under
long-term contracts, the LNG transportation industry is competitive,  especially
with  respect  to  the  negotiation  of  long-term  charters.  Furthermore,  new
competitors with greater  resources could enter this industry and operate larger
fleets through consolidations, acquisitions, or the purchase of new vessels, and
may be able to offer lower  charter rates and more modern  fleets.  If we do not
continue to compete  successfully,  our earnings  could be  adversely  affected.
Competition may also prevent us from achieving our goal of profitably  expanding
into other areas of the LNG industry.

Shipping companies generally must conduct operations in many parts of the world,
and accordingly their vessels are exposed to international risks which could
reduce revenue or increase expenses.


                                       12
<PAGE>

     Shipping companies,  including those that own LNG carriers,  conduct global
operations.  Changing  economic,  regulatory  and  political  conditions in some
countries,  including political and military  conflicts,  have from time to time
resulted in attacks on vessels, mining of waterways, piracy, terrorism and other
efforts to disrupt shipping. The terrorist attacks against targets in the United
States on September 11, 2001 and the military  response by the United States may
increase the  likelihood  of acts of  terrorism  worldwide.  Acts of  terrorism,
regional  hostilities  or other  political  instability  could  affect LNG trade
patterns and reduce our revenue or increase our expenses.  Further,  we could be
forced to incur  additional and unexpected costs in order to comply with changes
in the laws or  regulations of the nations in which our vessels  operate.  These
additional costs could have a material adverse impact on our operating  results,
revenue, and costs.

Our insurance coverage may not suffice in the case of an accident or incident.

     The  operation  of any  ocean-going  vessel  carries  an  inherent  risk of
catastrophic  marine  disaster  and  property  loss  caused by  adverse  weather
conditions,   mechanical   failures,   human   error,   hostilities   and  other
circumstances or events. The transportation of LNG is subject to the risk of LNG
leakage and business  interruptions  due to political  circumstances  in foreign
countries,  hostilities  and labor  strikes.  Events such as these may result in
lost revenues and increased costs for us.

     We carry insurance to protect against the  accident-related  risks involved
in the conduct of our business and environmental damage and pollution insurance.
However,  we cannot assure investors that we have adequately  insured  ourselves
against all risks,  that any particular claim will be paid out of such insurance
or that we will be able to procure adequate  insurance  coverage at commercially
reasonable  rates  or  at  all  in  the  future.  More  stringent  environmental
regulations at times in the past have resulted in increased  costs for insurance
against the risks of environmental  damage or pollution.  Our insurance policies
contain  deductibles  for  which  we  will be  responsible.  They  also  contain
limitations and exclusions that,  although we believe them to be standard in the
shipping industry, may increase our costs or lower our profits. Moreover, if the
mutual  insurance  protection and indemnity  association  that provides our tort
insurance  coverage  were to suffer large  unanticipated  claims  related to the
vessel owners,  including us, that it covers, we could face additional insurance
costs.

If any of our LNG carriers discharged fuel oil into the environment, we might
incur significant liability that would increase our expenses.

     As with  all  vessels  using  fuel  oil for  their  engines,  international
environmental  conventions,  laws  and  regulations,  including  United  States'
federal laws,  apply to our LNG  carriers.  If any of the vessels that we own or
operate were to discharge  fuel oil into the  environment,  we could face claims
under these  conventions,  laws and regulations.  We must also carry evidence of
financial responsibility for our vessels under these regulations.  United States
law also permits  individual  states to impose their own liability  regimes with
regard to oil  pollution  incidents  occurring  within their  boundaries,  and a
number of states have enacted legislation  providing for unlimited liability for
oil spills.

Any future changes to the laws and regulations governing LNG carrier vessels
could increase our expenses to remain in compliance.

     The laws of the nations where our vessels operate as well as  international
treaties and conventions regulate the production, storage, and transportation of
LNG.  While we  believe  that we  comply  with  current  International  Maritime
Organization,  or IMO, regulations, any future noncompliance could subject us to
increased  liability,  lead to  decreases in  available  insurance  coverage for
affected  vessels and result in the denial of access to, or  detention  in, some
ports.  Furthermore,  in order to continue  complying  in the future with United
States  federal and state laws and  regulations  as then in force,  or with then
current  regulations  adopted by the IMO, and with any other future regulations,
we may be forced to incur  additional  costs  relating  to such  matters  as LNG
carrier construction,  maintenance and inspection  requirements,  development of
contingency plans for potential leakages and insurance coverage.

Risks Related to our Common Shares

Our  Chairman  effectively  controls us and may have the ability to  effectively
control the outcome of significant corporate actions.

     John Fredriksen, our chairman, and his affiliated entities beneficially own
50.01 percent of our outstanding  common shares. As a result, Mr. Fredriksen and
his affiliated  entities have the ability to effectively  control the outcome of
matters on which our shareholders  are entitled to vote,  including the election
of all directors and other significant corporate actions.


                                       13
<PAGE>

Our annual historical financial information may not accurately reflect what our
results of operations, financial position and cash flows would have been had we
been a separate, stand-alone entity during the periods presented.

     All of the annual historical financial information that we have included in
this registration  statement has been carved out from the consolidated financial
statements and information of Osprey. We were not a separate, stand-alone entity
for the annual periods  presented and therefore this financial  information  may
not accurately  reflect what our results of operations,  financial  position and
cash flows would have been had we been a separate, stand-alone entity during the
periods  presented.  In  addition,  the  annual  historical  information  is not
necessarily indicative of what our results of operations,  financial position or
cash flows will be in the future.

Because we are a Bermuda corporation, you may have less recourse against us or
our directors than shareholders of a U.S. company have against the directors of
that U.S Company.

     Because we are a Bermuda company the rights of holders of our common shares
will be governed by Bermuda law and our memorandum of association  and bye-laws.
The rights of  shareholders  under  Bermuda  law may  differ  from the rights of
shareholders in other  jurisdictions.  Among these  differences is a Bermuda law
provision  that permits a company to exempt a director  from  liability  for any
negligence,  default,  or  breach  of a  fiduciary  duty  except  for  liability
resulting  directly  from that  director's  fraud or  dishonesty.  Our  bye-laws
provide  that no director or officer  shall be liable to us or our  shareholders
unless the director's or officer's liability results from that person's fraud or
dishonesty.  Our  bye-laws  also  require us to  indemnify a director or officer
against any losses  incurred by that  director or officer  resulting  from their
negligence or breach of duty except where such losses are the result of fraud or
dishonesty.  In addition,  under Bermuda law the directors of a Bermuda  company
owe their duties to that company, not to the shareholders.  Bermuda law does not
generally  permit  shareholders  of a Bermuda  company  to bring an action for a
wrongdoing  against the company,  but rather the company itself is generally the
proper  plaintiff  in an  action  against  the  directors  for a breach of their
fiduciary duties.  These provisions of Bermuda law and our bye-laws,  as well as
other  provisions not discussed  here, may differ from the law of  jurisdictions
with  which  investors  may be more  familiar  and may  substantially  limit  or
prohibit shareholders ability to bring suit against our directors.


ITEM 4.  Information On The Company

History and Development of the Company

     We are a holding  company  formed on May 10, 2001 and we currently  own and
operate a fleet of six liquefied natural gas, or LNG,  carriers.  We are engaged
in the acquisition,  ownership, operation and chartering of LNG carriers through
our subsidiaries.  We own five of our vessels through wholly-owned  subsidiaries
and we have a 60 percent  interest  in the owning  company of the sixth  vessel.
This sixth  vessel,  the Golar Mazo,  was  delivered  to us in January 2000 as a
newbuilding. Additionally, we have contracts to build four LNG carriers. Our six
LNG carriers are all currently  employed under long-term charter  contracts.  We
have also entered into a long-term charter for one of our newbuildings.

     We are  incorporated  under the laws of the Islands of Bermuda and maintain
our principal  executive  headquarters  at  Par-la-Ville  Place, 14 Par-la-Ville
Road, Hamilton, Bermuda. Our principal ship-management offices are located at 30
Marsh Wall, London, United Kingdom.

     Our  business  was  originally  founded in 1946 as  Gotaas-Larsen  Shipping
Corporation.  Gotaas-Larsen  entered the LNG  shipping  business in 1970 and was
acquired by Osprey  Maritime  Limited,  then a Singapore  listed publicly traded
company,  in 1997. In August 2000, World Shipholding Ltd., a company  indirectly
controlled  by  John  Fredriksen,   our  chairman,   president  and  controlling
shareholder,  commenced an acquisition  of Osprey.  World  Shipholding  gained a
controlling  interest  of more than 50  percent of Osprey in  November  2000 and
increased  this interest to over 90 percent in January 2001.  World  Shipholding
completed its  acquisition  in May 2001.  Osprey was delisted from the Singapore
Stock Exchange in May of 2001.

     On May 21, 2001,  we acquired the LNG shipping  interests of Osprey,  which
included  one  newbuilding  contract  and an option  for a  further  newbuilding
contract.  We also entered into a purchase agreement with Seatankers  Management
Company Ltd., a company indirectly controlled by our chairman,  John Fredriksen,
to purchase its one  newbuilding  contract for an LNG carrier and its options to
build three new LNG  carriers.  Two of the  newbuilding  options have since been
exercised and two have expired.


                                       14
<PAGE>

Business Overview

The Natural Gas Industry

     Natural gas has been over the last two decades,  and is expected to be, one
of the world's  fastest  growing energy sources over the next 20 years.  Already
responsible  for 25 percent of the  world's  energy  supply,  the  International
Energy Agency, or IEA, projects that demand for natural gas will rise by 2.7 per
cent per annum over the next two decades. According to the IEA, new power plants
are expected to provide the majority of this incremental demand.

     The rate of growth of natural gas consumption has been almost twice that of
oil consumption during the last decade. The primary factors  contributing to the
growth of natural gas demand include:

     o    Costs:  Technological advances and economies of scale have resulted in
          reduced  prospecting,  processing and transportation costs for natural
          gas, thereby lowering capital expenditures.

     o    Environmental:  Natural gas is a clean-burning  fuel. It produces less
          carbon  dioxide and other  pollutants and particles per unit of energy
          production  than  coal,  fuel oil and other  common  hydrocarbon  fuel
          sources.

     o    Demand from Power Generation: According to the IEA, natural gas is the
          fastest  growing  fuel source for  electricity  generation  worldwide.
          While  coal  is  currently  the  predominant  fuel  source  for  power
          generation,  accounting for nearly 33 percent of total consumption for
          that  purpose,  natural gas use is expected to grow from 19 percent of
          power fuel consumption in 1999 to 26 percent by 2020.

     o    Market  Deregulation:  Deregulation  of the  gas  and  electric  power
          industry in the United  States,  Europe and Japan,  along with a trend
          towards  further  privatization  and  liberalization  of  natural  gas
          markets,  has resulted in new  entrants  and an  increased  market for
          natural gas.

     o    Significant  Natural Gas Reserves:  Approximately  half of the world's
          remaining hydrocarbon reserves are natural gas.

     Europe,  the  former  Soviet  Union and the  United  States  accounted  for
approximately  74 percent of total world  consumption of natural gas in 2000. In
these areas,  there is a highly developed pipeline grid and natural gas usage is
diversified among the different sectors described below. In 2000, Asia accounted
for 12 percent of the world natural gas consumption with Japan being the largest
consumer.

      The primary applications for natural gas include the following:

     o    Power  Generation:  Natural  gas  is  increasingly  used  to  generate
          electricity.  In the United States, the consumption of natural gas for
          this purpose  increased 11 percent per year on a compound annual basis
          from 1996 to 2000. In 2000, the power generation sector constituted 25
          percent of total natural gas  consumption in Western Europe and 14 per
          cent of the total natural gas  consumption  in the United  States.  In
          South  Korea and Japan,  where most of the  natural gas is imported by
          sea,  power   generation   accounted  for  33  percent  of  total  gas
          consumption in 2000.

     o    Industrial:  Industrial  consumers include  manufacturers,  businesses
          involved in  extraction or refining of minerals,  agriculture  and the
          construction  industry. In the industrial sector,  natural gas is used
          for  plant  operations,  cogeneration  of  electric  power,  and as an
          industrial   feedstock  for  producing   products  such  as  methanol,
          hydrogen,  dimethyl ether,  and other organic  chemical  products.  In
          2000,  the industrial  sector  constituted 46 percent of total natural
          gas consumption in the United States,  28 percent of total natural gas
          consumption in Western Europe, 19 percent in South Korea, but only two
          percent of total natural gas consumption in Japan.

     o    Residential:  Natural gas consumed in the  residential  sector is used
          mainly  for  heating,  air  conditioning  and  cooking.  In 2000,  the
          residential  sector  constituted  24  percent  of  total  natural  gas
          consumption  in the United  States and 29 percent of total natural gas
          consumption in Western Europe.


                                       15
<PAGE>

     o    Commercial:  In the commercial sector,  natural gas is used mainly for
          heating   and   air   conditioning.   Commercial   consumers   include
          non-manufacturing  establishments  such as office buildings,  shopping
          centers,  hotels,  paper and pulp  processing  plants,  fisheries  and
          governmental agencies. In 2000, the commercial sector accounted for 16
          percent of total natural gas  consumption  in the United  States,  but
          only eight percent of total natural gas consumption in Western Europe.

     Minor volumes of natural gas in its  compressed  form,  known as compressed
natural  gas,  or CNG,  are also used for  transportation,  mainly for buses and
larger vehicles such as trucks.

The LNG Industry

Overview

     Of the natural gas consumed  worldwide in 2000, 5.7 percent was supplied as
LNG.  LNG  is  liquefied  natural  gas,  produced  by  cooling  natural  gas  to
-163(degree)C  (-256(Degree) Fahrenheit),  which is just below the boiling point
of LNG's main  constituent,  methane.  LNG is  produced in  liquefaction  plants
situated  around  the globe  near gas  deposits.  In its  liquefied  state,  LNG
occupies  approximately  1/600th the volume of its gaseous  state.  Liquefaction
makes it possible to  transport  natural  gas  efficiently  and safely by sea in
specialized  vessels  known as LNG  carriers.  LNG is stored at  slightly  above
atmospheric pressure in cryogenic tanks. LNG is converted back to natural gas in
regasification plants by raising its temperature.

LNG Transmission Process

               Step 1               Step 2                    Step 3

            Liquefaction           Shipping                Regasification
            ------------           --------                --------------

                               [GRAPHIC OMITTED]

Source: BP

     The first LNG project was  developed in the  mid-1960s and in the mid-1970s
LNG  began  to play a larger  role as  energy  companies  developed  remote  gas
reserves that could not be served by pipelines in a cost-efficient  manner.  The
LNG industry has historically been characterized by the following:

     o    Expectation  of Security  and  Diversification  of Supply:  East Asian
          countries,  led by Japan, searching for a non-OPEC,  non-oil source of
          energy,  have been the dominant consumers of LNG. The LNG import trade
          has grown strongly in markets with few domestic hydrocarbon resources.

     o    High Project Cost:  Most projects have been highly capital  intensive,
          with the success of projects tied to exploiting remote gas fields that
          could sustain production over periods as long as 30 years.

     o    Long-Term Contracts: The high capital expenditures associated with LNG
          projects have necessitated long-term contracts. Typically, pricing has
          been  tied to the  price of oil and  contracts  have  been  for  large
          volumes on a take or pay basis. Pre-selling all planned production and
          plant  capacity  has been  used to  finance  projects.  The  long-term
          charter of LNG carriers to carry the LNG has been an integral  part of
          any project.

     o    Concentrated Production:  The Middle East and Southeast Asia, together
          with  Algeria,  have  historically   accounted  for  the  overwhelming
          majority of LNG production.


                                       16
<PAGE>

Historical and Prospective Growth in Demand for LNG

     Over the last two decades,  LNG consumption  has shown sustained  growth of
8.1  percent per year - far higher  than the 1.1  percent  annual  growth in the
consumption of oil.  Fearnleys  Consultants A.S, or Fearnleys,  projects overall
LNG trade to grow at a rate of  approximately  six  percent  per annum  from now
until 2010. By 2010, LNG trade is expected to equal 179 million tonnes,  up from
approximately 100 million tonnes in 2000. The Information  Administration of the
United States  Department of Energy  forecasts annual growth of eight percent in
LNG imports into the United States through 2020. There is no guarantee that this
will happen.

     In recent years,  the global LNG industry has been in transition,  changing
from the old model of long-term  contracts with dedicated  ships attached to the
specific trade routes and gas pricing tied to the price of different hydrocarbon
fuels such as oil and coal,  to a more  flexible  market  model for gas contract
volumes, contract periods, gas prices and ship allocation.  While this new model
is still in its infancy, some of the key factors influencing its growth are:

     o    Deregulation  of Power and Gas  Industries in Asia,  North America and
          Europe: With trends toward  deregulation and further  privatization in
          Asia and  Europe,  many  utilities  are  reluctant  to rely  solely on
          long-term   take  or  pay  contracts  with  fixed  volumes  and  price
          structures.

     o    Improved  Competitiveness:  During the last decade,  LNG's  commercial
          competitiveness  has  improved  dramatically.  Costs  associated  with
          natural  gas  field   development   have  fallen  and  LNG  production
          facilities have become cheaper, larger and more efficient. The cost of
          shipping has also declined due to  significantly  reduced costs of LNG
          carrier construction and the prolonged lives of LNG carriers.

     o    Projects with Paid Down  Infrastructure:  After being in operation for
          two to three  decades,  several  LNG  projects  have  satisfied  their
          project  finance.  The owners of these  projects are now able to offer
          more flexibility in considering contract terms.

     o    Access  to  Remote  Gas  Reserves:  New  areas of  exploration  due to
          advances  in  exploration  production  technology  have  yielded  more
          potential natural gas production projects.

As a result of these  factors and other  industry  developments,  the  following
trends are driving the global LNG market:

     o    Strong Growth in Demand: Due to improved  competitiveness,  demand for
          natural gas as a preferred source of energy,  has been growing in both
          Asia and in the counties  bordering the Atlantic Basin, which includes
          the Atlantic Ocean and adjacent  bodies of water bordered by North and
          South  America  to the west and the west coast of Europe and Africa to
          the east.

     o    Surplus LNG from Projects: In many cases, LNG liquefaction plants have
          the  ability to produce  more LNG than the  volumes  required  under a
          project's long-term contract.  During build-up periods for contractual
          volumes, there are also often potential excess volumes for export. The
          growth of liquefaction capacity makes more LNG available for potential
          short-term contracts or spot trading.

     o    Gas Flaring and LNG Production:  Capture of flared gas from oil fields
          associated  with oil  production  constitutes  a new source of natural
          gas. In many  producing  regions,  the gas  associated  with oil field
          operations  has been either  reinjected  into the reservoir or flared.
          Environmental regulations have increasingly prohibited the practice of
          flaring.

     o    Emergence  of New  Contract  Structure:  Increasingly,  LNG  trade  is
          expected to be contracted for the short-term,  in smaller volumes with
          built-in flexibility to move deliveries to third parties.

     o    Improved Gas Power Plant  Efficiency:  The power generation sector has
          recently  increased its  consumption of natural gas as a result of the
          development  of combined  cycle gas  turbines.  These  turbines  are a
          competitive  means of generating  electricity and are considered to be
          more  environmentally  sound than those methods used in the production
          of electricity using coal and fuel oil.


                                       17
<PAGE>

     o    Growth in Atlantic Basin LNG Trade: While the region is also served by
          pipelines,  the Atlantic Basin,  in particular,  may see increased LNG
          trade due to recent  growth in exports of LNG from newly  commissioned
          production facilities in Trinidad & Tobago and Nigeria. Atlantic Basin
          countries present a wide range of potential markets, including several
          European countries and the United States.

     o    Interest in New Infrastructure: The overall market growth has resulted
          in increased  interest in both onshore and offshore LNG production and
          receiving capacities.

Production and Consumption of LNG

   Production

     There are three major  regional  areas that  supply  LNG.  These are first,
Southeast Asia, including Australia,  Malaysia, Brunei and Indonesia, second the
Middle East,  including  Qatar,  Oman and United Arab Emirates  with  facilities
planned in Iran and Yemen, and third,  the Atlantic Basin  countries,  including
Algeria,  Libya,  Nigeria and Trinidad with facilities planned in Egypt, Angola,
Venezuela and Norway.  There is also an LNG export facility in the United States
(Alaska) that primarily supplies Japan. New production facilities are planned in
Iran, Egypt, Angola,  Nigeria,  Venezuela and Norway.  Qatar, Oman, Trinidad and
Nigeria have all began large scale LNG production in recent years.

     Total  exports  and  imports of LNG were just above 100  million  tonnes in
2000.  This amount is projected by  Fearnleys to increase to  approximately  179
million tonnes by 2010. The twelve exporting  countries  represented  above have
sixteen liquefaction  facilities that, combined,  can produce  approximately 125
million tonnes of LNG per year.

      The largest exporters are listed below based on data for 2000 contained in
the BP Statistical Review of World Energy, June 2001.

     o  Indonesia              26.1 million tonnes of LNG or 26.1% of exports
     o  Algeria                19.2 million tonnes of LNG or 19.2% of exports
     o  Malaysia               15.3 million tonnes of LNG or 15.3% of exports
     o  Qatar                  10.2 million tonnes of LNG or 10.2% of exports
     o  Australia               7.4 million tonnes of LNG or  7.4% of exports

     Other LNG  producing  countries and areas include  Brunei,  Oman,  Nigeria,
United Arab Emirates,  Trinidad & Tobago,  Libya and Alaska.  Based on published
reports, a number of existing LNG exporting plants are either being expanded, or
are  planning   expansion.   These   include   plants  in   Australia,   Brunei,
Indonesia-Bontang,  Malaysia,  Nigeria,  Oman,  Trinidad  &  Tobago  and two LNG
projects in Qatar.

   Consumption

     The two major areas that  dominate  worldwide  consumption  of LNG are East
Asia, including Japan, South Korea and Taiwan, and Europe,  specifically France,
Spain, Italy, Belgium and Turkey. East Asia currently accounts for approximately
71 percent of the global LNG market while Europe accounts for  approximately  23
percent.  The United States presently accounts for approximately five percent of
the global LNG  market,  but has  experienced  a growth in LNG imports in recent
years.

     There are currently 11 LNG importing countries with 38 importing terminals.
Two of these countries - Greece and Puerto Rico - commenced accepting deliveries
in 2000. The largest LNG importers in 2000 were as follows:

     o  Japan             52.9 million tonnes of LNG or 52.9% of total imports
     o  South Korea       14.4 million tonnes of LNG or 14.4% of total imports
     o  France             8.2 million tonnes of LNG or  8.2% of total imports
     o  Spain              6.2 million tonnes of LNG or  6.2% of total imports
     o  United States      4.6 million tonnes of LNG or  4.6% of total imports

     Japan and South  Korea are  currently  the two  largest  importers  of LNG,
accounting for approximately 67 percent of the  world total LNG imports in 2000.
Almost all  natural  gas  consumption  in Japan and South  Korea is based on LNG
imports.  According to published reports,  work is in progress to build up to 15
additional LNG import facilities in China,  India, the Bahamas,  Brazil,  Italy,
Japan, Mexico, Spain, Portugal, Taiwan and Turkey, among others.

     In January 2000, the Chinese government  formally approved a plan to import
LNG into Guangdong,  near Hong Kong,  with a targeted  start-up date of 2005. In
India,  an LNG  terminal at Dabhol is  currently  being  completed,  and in 2000
contracts  were entered  into for the  construction  of LNG import  terminals in
Dahej and Cochin.


                                       18
<PAGE>

     The cost of  constructing  LNG import  facilities has  decreased.  This has
enabled small or low volume markets such as Puerto Rico, the Dominican  Republic
and Greece to receive imports on a cost-effective basis.

     Imports of LNG into the United States in 2000  increased by 70 percent from
1999 to around 4.6 million  tonnes.  During 2000, two LNG import  terminals were
operated  in the  United  States,  one in Lake  Charles,  Louisiana,  and one in
Boston,  Massachusetts.  Two terminals,  one at Elba Island,  Georgia and one at
Cove Point,  Maryland are being  reactivated,  primarily  due to  increased  LNG
import demand in the United States.  The Elba Island  terminal was opened by the
end of 2001.  Cove Point has a  scheduled  reopening  during the second  half of
2002.  This will  approximately  double United States LNG import capacity by the
end of 2002.  Expansion  plans exist for the Lake Charles,  Elba Island and Cove
Point facilities.

     The  largest LNG trade route in recent  years has been  Indonesia  to Japan
while the  second  largest  has been  Malaysia  to Japan.  The  world's  largest
seaborne LNG trades are shown in the graph below.

LNG Trades

                    Worlds Largest LNG Trade Routes 1998-2000

                               [BAR CHART OMITTED]

Golar Mazo:  Charter through 2017; options through 2027.
Golar Spirit: Charter through 2006; options through 2008.
Khannur:  Charter through 2009; options through 2019.
Gimi:  Charter through 2011; options through 2021.
Hilli:  Charter through 2012; options through 2022.
Golar Freeze:  Charter through 2008.
Newbuild 2215:  Charter from 2003 through 2023; options through 2033.

                                                                  Million Tonnes
                                                                        per Year
                                                                  --------------
Total Trade 1998                                                            83.3
Total Trade 1999                                                            91.5
Total Trade 2000                                                           100.0

      Source: BP Statistical Review of World Energy, June 2001

     Emerging Spot Market and  Short-Term  Trades.  In 2000,  there were 112 LNG
trade routes, an increase of 62 percent from 1995.  According to Fearnleys,  the
main reason for this rapid  increase has been the advent of spot and  short-term
trading  activity in LNG. The spot market  utilizes  surplus export capacity and
shipping on routes other than, or not necessarily the same as, those for which a
facility  was  originally  dedicated.  Spot  activity  refers to single cargo or
non-project  related  series of  cargoes  over a pre-set  period  generally  not
exceeding  one  year.  Short-term  trading  activity  for the  purposes  of this
discussion refers to contracts of up to four years. During the 1990s, the volume
of spot and  short-term  trading  activity rose from  virtually  zero in 1990 to
approximately  eight  percent of total world trade in LNG in 1999,  according to
Fearnleys.

     A combination  of the following key factors may favor the  development of a
spot market, particularly in the Atlantic Basin:

     o    excess LNG production above long-term  contracted volumes;

     o    increased  receiving  capacity by reopening  and  expansions of United
          States import  facilities;

     o    new and increased receiving capacity in Europe;

     o    spare LNG shipping capacity;

     o    deregulation and liberalization of natural gas markets and prices; and

     o    liquidity in the derivatives market for natural gas.

     In order  to  utilize  market  opportunities,  unsold  LNG  volumes,  spare
shipping  and terminal  capacity,  industry  participants  may enter the spot or
short-term LNG market to:

     o    take  advantage  of  arbitrage  opportunities  between LNG markets and
          regions; and

     o    manage variations in demand due to seasonal fluctuations and increased
          regasification during peak demand periods.


                                       19
<PAGE>

Pipelines versus LNG

     Natural gas pipelines are the main  alternative to seaborne  transportation
of LNG. According to Fearnleys,  transporting  natural gas as LNG is generally a
more economical form of natural gas  transportation as compared to pipelines for
distances  over 2,000 miles.  Pipelines are often the most  economical  means of
transporting  natural gas over short  distances,  assuming  an easy  pipe-laying
route.  However,  a number of  economic  and  non-economic  factors  affect  the
decision whether to import gas through a pipeline. These include:

     o    the nature of the terrain along the supply route;

     o    the political  stability of the countries or regions through which the
          pipeline passes;

     o    access to land for the pipeline; and

     o    regulatory obstacles.

     LNG, by  contrast,  may be shipped  directly to the port that is nearest to
the point of consumption.  Since LNG is easily storable,  LNG may also serve for
"peakshaving",  or  increasing  regasification  during peak  demand  periods for
natural  gas or as extra  supplies  if there is an  interruption  in the  normal
supply  to the  local  energy  market.  Further,  shipping  LNG by sea  provides
considerably   greater   flexibility  than  transporting   natural  gas  through
pipelines, which are fixed-route structures.

LNG Transportation

     LNG  delivery  depends  on  availability  of  LNG  carriers.   While  these
specialized and high cost vessels are generally  chartered  long-term to satisfy
the transportation  needs of a specific LNG trade route, the emerging short-term
and spot trading market for LNG should require separate carrier capacity for its
needs.

Demand for LNG Shipping

     Demand for LNG  carriers is commonly  measured by the volume of LNG carried
multiplied  by the  distance  traveled  between  LNG  producers  and  importers,
expressed in cubic meter-nautical miles or cbm-miles.  In 2000, shipments of LNG
measured in cbm-miles increased  approximately 20 percent from 1999, and shipped
LNG volumes increased by nine percent.  As a result,  demand for LNG carriers in
2000 increased at a rate that exceeded the increase in shipped volumes.

     The graph below compares the development of seaborne trade of LNG by volume
with cbm-miles of LNG carried since 1990.

                         Seaborne LNG Trade Development

                               [BAR CHART OMITTED]

            Source: BP, Fearnleys,  Petroleum Economist

     As the graph shows,  cbm-miles as an indicator of demand for shipping  have
grown more than LNG volumes  over the past few years,  indicating  that  average
shipping distance in nautical miles is increasing.

The LNG Fleet

     Supply of LNG Carriers.  As of November 1, 2001, the world fleet  consisted
of 127 LNG carriers  with a total  capacity of 14.3 million cbm. The average age
of the fleet was 14.9 years.  There were known orders for 47 new LNG carriers to
be constructed for delivery from the balance of 2001 through the end of 2005. In
addition,  seven  newbuilding  orders  were  placed  that were  subject to final
approval.  Of these seven orders,  three were for the Snohvit  project in Norway
and four were for the Nigerian LNG expansion project. As of April 2002 the world
fleet consisted of 128 LNG carriers with a total capacity of approximately  14.5
million cbm.  Historical  and  projected LNG fleet  development  is shown in the
graph below.

                             LNG Fleet Development
                                 Start of Year

                               [BAR CHART OMITTED]

*    Data for the years 2002  through  2005 are based on  scheduled  newbuilding
     deliveries and assume no scrapping/losses.

Source: Fearnleys

     Most LNG carrier  newbuildings  follow  standard  ship designs with a cargo
capacity generally between  120,000-140,000 cubic meters. There are also several
smaller LNG ships, often built for dedicated trades.  According to Fearnleys, 96
out of the existing 128 LNG carriers,  including all 47 LNG carriers known to be
on  order,  are in the  120,000-140,000  cbm size  bracket.  Four  main  factors
determine this design:

     o    port restrictions;

     o    cargo containment system design;

     o    economies of scale achieved by building larger ships; and

     o    vessel speed.


                                       20
<PAGE>

     LNG carriers have a longer service life than  conventional  tankers or bulk
carriers,  with a possible economic life of approximately 40 years.  Therefore a
significant  number of LNG  carriers  that  were  built in the  mid-1970s  still
actively trade. In recent contract renewals,  LNG vessels have been placed under
time charters with terms  surpassing  those  vessels' 40th  anniversaries.  As a
result, limited scrapping of LNG carriers has occurred.

     Ownership  Structure.  There are relatively few independent  ship owners in
the LNG business as compared with other merchant shipping sectors. The major LNG
project  exporters or importers  control most of the LNG fleet.  Independent LNG
shipowners,  in addition to Golar,  include  Bergesen D.Y. and Leif Hoegh & Co.,
Mitsui O.S.K. Lines in association with, amongst others, Nippon Yusen Kaisha,
K-Line and Exmar N.V.

     LNG Shipyard  Capacity.  The estimated  building time for an LNG carrier is
30-34  months.  Berths  suitable  for  building LNG carriers can also be used to
build large crude or dry bulk carriers,  cruise ships,  large container  vessels
and large offshore units.  Demand for such ships tends to influence a shipyard's
LNG  newbuilding  capacity and LNG newbuilding  prices.  The following yards are
licensed to build LNG carriers:

     o    Korea: Daewoo Heavy Industries, Hyundai Heavy Industries, Hanjin Heavy
          Industries & Construction Co., Ltd, Samsung Heavy Industries Co. Ltd.

     o    Japan:  NKK  Corp.,  Mitsui  Engineering  &  Shipbuilding  Co.,  Ltd.,
          Mitsubishi  Heavy  Industries,  Kawasaki Heavy  Industries  Co., Ltd.,
          Ishikawajima-Harima Heavy Industries Co., Ltd.

     o    Europe:  Kvaerner Masa Yard,  Chantiers de  L'Atlantique,  HDW,  IZAR,
          Fincantieri

     o    United States: Newport News, Avondale

     Only IZAR,  the four Korean yards and three  Japanese yards have had recent
experience with LNG shipbuilding.  The United States yards have not competed for
international newbuilding orders in recent years.

     LNG Vessel Cargo Containment  Systems.  LNG carriers  principally use three
LNG vessel containment system designs:

     o    two membrane designs (Technigaz and Gaztransport)

     o    a spherical design (Moss-Rosenberg)

     Of the current world fleet, approximately 60 percent use the Moss-Rosenberg
spherical design while 40 percent use one of the two membrane designs.  Of South
Korea's four LNG  shipbuilding  yards,  three build  vessels  using the membrane
designs.  Both the membrane and  spherical  designs have proven to be capable of
transporting LNG over a long period of time with limited wear and tear.

     Current Orderbook.  Based on current yard  availability,  the delivery date
for  a  new  LNG  vessel  ordered  today  is  likely  to be  in  2005.  Any  new
project/trade with LNG vessel demand before 2005 may have to rely on third party
tonnage until potential new orders can be delivered.

     LNG  Newbuilding  Trends.  LNG carriers  continue to be built for long-term
contracts  of 20-25  years  duration  tied to new export and import  facilities.
Major oil and gas  companies  such as Royal Dutch  Shell,  BG and BP, which have
interests in several export and import terminals, have ordered new LNG carriers.
Based on publicly available reports, these ordered LNG carriers are not yet tied
to any specific projects or long-term LNG sale and purchase agreements,  but are
expected to  supplement  these  companies'  existing LNG  activities  around the
world.  The cost to build LNG tankers has  fluctuated  from $280  million in the
early 1990s to approximately $160-175 million at the end of 2001.

     Barriers to Entry in LNG Shipping.  The principal  barriers to entry to the
LNG  shipping  business  include the high cost of LNG vessels,  charterers'  and
financiers'  requirements  such as  experience  in the operation of gas vessels,
history  of  quality  operations,  financial  strength  and the need for  highly
qualified personnel. The LNG shipping business is a small and highly specialized
shipping  segment  compared to other bulk shipping  segments and is dominated by
oil  majors  and LNG  project  owners  and  operators.  Since  LNG  shipping  is
relatively  capital  intensive,   sufficient  funding  and  credit  ratings  are
important commercial  elements.  It is also costly and demanding for yards to be
accepted and receive a license to build the different designs.


                                       21
<PAGE>

Our Business Strategy

     Our  strategic  objective  is to use our  position  among  independent  LNG
operators to become a leader in vertically  integrated LNG services.  In pursuit
of this objective,  we plan to expand and diversify our LNG shipping operations,
capitalize  on our  shipping  assets and  specialized  industry  knowledge,  and
exploit available  arbitrage  opportunities  afforded by price differentials for
natural gas worldwide. Depending on market conditions, we will consider entering
LNG trading  activities and vertically  integrating into further  attractive LNG
activities such as liquefaction and regasification. We set forth below our three
principal   strategies  and  what  we  believe  to  be  the  attractive   market
opportunities related to them.

     Maximize earnings from our LNG shipping business. We benefit from long-term
contracts  that provide stable cash flows and the  opportunities  for attractive
margins. To further enhance the earnings from our LNG shipping business, we plan
to:

     o    Capitalize  on  attractive  charter  contracts.  We have  entered into
          construction   agreements  for  four  new  LNG  carriers.   The  first
          newbuilding  that  will be  delivered  to us has  been  employed  on a
          long-term charter to a British Gas subsidiary,  which will commence on
          delivery. We are considering various employment  opportunities for the
          remaining three newbuildings that may include medium-term or long-term
          charter contracts,  trading in the developing spot LNG carrier charter
          market, that is, carrying LNG under short-term  contracts of up to one
          year or on a per voyage basis, and entering LNG trading.

     o    Expand our fleet to increase revenues and earnings.  We may expand our
          fleet  through new orders or by acquiring  existing LNG carriers  from
          third parties. Such acquisitions can give us additional flexibility to
          avail  ourselves of  opportunities  either in the  long-term  contract
          market or the emerging spot market.

     o    Continue building scale to increase operating efficiencies and enhance
          margins. We are working to identify areas in which we can reduce costs
          and  increase  productivity.  Three of our current  vessels are sister
          ships and the newbuildings that we have ordered will consist of a pair
          of sister ships.  This allows us to reduce  operating costs per vessel
          by sharing spare parts,  inventories,  equipment,  and avoiding excess
          administrative  costs. As we expand our fleet, we also believe we will
          be able to reduce incremental costs per vessel and increase margins.

     Embark on LNG trading  activities.  If market conditions are favorable,  we
will  consider  expanding  our LNG  shipping  operations  by using our  industry
knowledge to begin  trading LNG as a principal.  We believe that trading LNG can
enhance our returns.  We may seek long-term supply contracts for the delivery of
LNG at a fixed price because we believe that these  contracts  would  strengthen
our  ability to take  advantage  of LNG  trading  opportunities  resulting  from
pricing  disparities in an LNG spot market.  We may also pursue trading  through
alliances  with large,  well-established  LNG  industry  participants  that have
access to LNG  resources  and LNG  markets.  We would  expect  such a  strategic
partner to contribute its unused LNG production and liquefaction capacity or its
excess regasification  capacity and related access to LNG consumers.  In return,
we would use an  uncommitted  vessel to carry the related LNG. We are  currently
discussing  such  alliances  with a  number  of  well-established  LNG  industry
participants. We may also embark on such trading activities independently. We do
not currently intend to trade LNG or natural gas derivatives.

     Vertically  integrate into upstream and downstream LNG  activities.  We are
considering pursuing  opportunities to leverage our expanded shipping assets and
our LNG industry  knowledge to integrate  vertically into the  liquefaction  and
regasification  of LNG. We believe this can enhance our overall margins while at
the same time  diversifying  our  sources of income from LNG. In pursuit of this
strategy,  we will consider  investing in both  established  LNG  operations and
technologies  as  well  as  newly  developing  technologies,  such  as  offshore
liquefaction and regasification operations.

     All of these strategies require the consideration and approval of our board
of directors and we cannot guarantee  investors that we will pursue any of them.
If  approved,  capital  projects of this nature  typically  require  substantial
investment over several years.


                                       22
<PAGE>

Competitive Strengths

     We  believe  that our  features  listed  below  distinguish  us from  other
participants in the LNG transportation industry.

     o    Our market  position and LNG shipping  experience.  We believe that we
          are the only company  focusing  exclusively on the LNG  transportation
          industry,  and that we have  established  our  position  as a  leading
          independent  owner and operator of LNG  carriers.  We plan to build on
          this position with our four  commissioned  newbuildings.  The loading,
          carriage  and  delivery  of LNG  require  special  expertise.  We have
          accumulated this expertise through more than 25 years of operating LNG
          carriers. Our vessels and crews have loaded cargoes from virtually all
          of the  world's LNG export  terminals  and have  delivered  cargoes to
          every  major LNG import  facility in the world.  We believe  that this
          experience  and the  quality  of our  vessels  make  us an  attractive
          service provider to both current and potential customers.

     o    Our  fleet  and   newbuildings.   We   operate  a   high-quality   and
          well-maintained  fleet and have been successful at keeping unscheduled
          offhire  to a  minimum  while  our  vessels  are on  charter.  We have
          embarked on a six-year,  $29.5 million refurbishment and modernization
          program  for our  four  vessels  built  during  the  1970s.  Upon  the
          completion of this program,  we believe that our existing vessels will
          be able to  serve  through  their  40th  anniversaries.  We have  also
          contracted for the  construction  of four new LNG carriers,  giving us
          more  available  vessels  over the next  three  years  than any  other
          independent  LNG  carrier.  Two of these  vessels  are  scheduled  for
          delivery in 2003 and two are  scheduled  for delivery in 2004.  Due in
          part to the  limited  number  of  shipyards  qualified  to  build  LNG
          carriers,  we believe that these  contracts and options may provide us
          with a competitive advantage by allowing us to deploy new LNG carriers
          sooner than our competitors.

     o    Customer and industry relationships. We have strong long-term customer
          relationships with many of the industry's largest customers, including
          British Gas, Pertamina,  the state-owned gas company of Indonesia, and
          the  National  Gas  Shipping   Company  of  Abu  Dhabi.  Our  in-house
          management  has  experience  with  major  oil  and gas  producers.  In
          addition, we believe that our relationship, through our chairman, with
          one of the world's  largest groups of shipping  interests,  gives us a
          competitive  advantage in our  relationships  with shipyards and other
          suppliers.

     o    Our  management's   success  in  rapidly  identifying  and  exploiting
          business  opportunities.   Our  senior  management  has  a  record  of
          assembling teams who can rapidly exploit market  opportunities as they
          arise.  We believe  that our  exclusive  focus on the LNG industry has
          positioned us well to take advantage of the new  competitive  dynamics
          of a sector in transition.

Customers

     We currently have customer  relationships  with three large participants in
the LNG industry,  although most of our revenues are derived from two customers.
Our  customers  are Methane  Services  Limited,  a  subsidiary  of British  Gas,
Pertamina,  the state-owned  oil and gas company of Indonesia,  and the National
Gas Shipping  Company,  which provides LNG shipping  services to the state-owned
Abu Dhabi National Oil Company.

     Pertamina,  which charters two LNG carriers from us, began exporting LNG in
1977  and  operates  two  export  terminals:  one in Arun,  Indonesia,  which it
operates in  partnership  with Mobil Oil  Indonesia,  Inc.,  a division of Exxon
Mobil Corp., and another in Bontang, Indonesia, which it operates in partnership
with Total S.A., Unocal Corporation and Virginia  International Company. We have
had charters with  Pertamina  since 1989. Our revenues from Pertamina were $26.1
million in 1999,  $59.5 million in 2000 and $62.8 million in 2001. This reflects
the  commencement  of the Golar Mazo charter in 2000 and constitutes 32 percent,
53  percent  and 55  percent  of our  revenues  for those  years,  respectively.
Pertamina's  customers  include Korea Gas Company,  the  state-owned  LNG import
company  of the  Republic  of Korea,  and the  Chinese  Petroleum  Company,  the
Taiwanese state oil and gas company.

     Methane  Services  Limited,  a wholly owned  subsidiary of British Gas, has
chartered LNG carriers from us and our predecessors since 2000. Our revenue from
British Gas was $7.2 million in 2000 and $45.8 million in 2001, constituting six
percent  and 40 percent of our  revenues  for those years  respectively.  As the
result of  renegotiation  of the  British  Gas  charters  and  assuming  minimal
unscheduled  offhire,  our revenue  from  British Gas is expected to increase to
approximately  $70  million in 2002.  British  Gas is  involved  in natural  gas
exploration and production and international downstream businesses.  Through its
interest in the export  project in  Trinidad & Tobago,  British Gas is a leading
producer of LNG among countries on the Atlantic Basin.  British Gas owns two LNG
carriers  that it  currently  charters to a third  party while it charters  four
vessels from us.


                                       23
<PAGE>

     The  National  Gas  Shipping  Company  has  contracted  with us to  provide
management services for four LNG carriers that it owns. Since 1994, the National
Gas Shipping  Company,  a subsidiary of the Abu Dhabi National Oil Company,  has
provided  shipping  services  to the state  owned  Abu  Dhabi  Gas  Liquefaction
Company.  The vessels that we manage for the  National Gas Shipping  Company are
currently employed delivering LNG pursuant to long-term supply contracts between
the Abu Dhabi Gas  Liquefaction  Company and the Tokyo Electric Power Company of
Japan.

Competition

     While virtually all of the existing world LNG carrier fleet is committed to
long-term  charters,  there is  competition  for  employment  of  vessels  whose
charters are expiring and vessels that are under  construction.  Competition for
long-term LNG charters is based primarily on price, vessel  availability,  size,
age and  condition of the vessel,  relationships  with LNG carrier users and the
quality,  LNG experience and  reputation of the operator.  In addition,  vessels
coming off charter and newly constructed vessels may operate in the emerging LNG
carrier spot market that covers short-term  charters of one year or less as well
as voyage charters.

     While we believe  that we are the only  independent  LNG carrier  owner and
operator that focuses solely on LNG, other independent  shipping  companies also
own and operate LNG  carriers  and have new vessels  under  construction.  These
companies  include  Bergesen  DY ASA  (Norway)  and Exmar  S.A.  (Belgium).  Two
Japanese shipowning groups, Mitsui O.S.K. Lines and Nippon Yusen Kaisha, provide
LNG shipping services exclusively to Japanese LNG companies.

     In addition to  independent  LNG  operators,  some of the major oil and gas
producers,  including  Royal  Dutch/Shell,  BP Amoco,  and  British  Gas own LNG
carriers and are reported to have  contracted  for the  construction  of new LNG
carriers.

     As discussed  above we are  considering  strategic  opportunities  in other
areas of the LNG industry. To the extent we do expand into new businesses, there
can be no assurance that we will be able to compete successfully in those areas.
Our new  businesses may involve  competitive  factors which differ from those in
the carriage of LNG and may include  participants  that have  greater  financial
strength and capital resources than us.

LNG Shipping Operations

     We currently  own five LNG carriers and have a 60 percent  share in another
through a joint venture with the Chinese  Petroleum  Corporation,  the Taiwanese
state oil and gas company.  Each of our vessels is registered in the Republic of
Liberia.  Two of these  vessels  serve routes  between  Indonesia and Taiwan and
South  Korea,  while  four  are  involved  in the  transportation  of  LNG  from
facilities  in the Middle  East and  Algeria  to ports in the United  States and
Europe.


                                       24
<PAGE>

Our Current Fleet

     The  following  table lists the LNG carriers  that we currently own or have
under construction and that are committed under charters:

                   Year of   Capacity,                      Current Charter
Vessel Name       Delivery    cbm.           Charterer        Expiration
-----------       --------   --------        ---------      ---------------

Golar Mazo(1)        2000     135,000        Pertamina                 2017
Golar Spirit         1981     128,000        Pertamina                 2006
Khannur              1977     125,000      British Gas                 2009
Golar Freeze         1977     125,000      British Gas                 2008
Gimi                 1976     125,000      British Gas                 2011
Hilli                1975     125,000      British Gas                 2012
Hull No.2215         2003     138,000      British Gas                 2023

------------

(1)  We own a 60 percent interest in the Golar Mazo through a joint venture with
     the  remaining  40 percent  owned by  Chinese  Petroleum  Corporation.  The
     charter rate listed for the Golar Mazo is on a wholly-owned basis.

     The  charters  for two of our  vessels,  the Golar  Mazo and  Golar  Spirit
provide for annual amounts of charter hire, payable in monthly installments. The
charters  for our other  vessels all  provide  for daily rates of hire,  payable
monthly in advance.

     Our fleet  represents  approximately  4.5 percent of the worldwide fleet by
number, and at 758,000 cbm represents approximately 5.7 percent of worldwide LNG
vessel capacity by volume.

Our Charters

     All of our current  LNG  carriers  are on  long-term  time  charters to LNG
producers and importers.  These charters  provide us with stable income and cash
flows.  In addition to their  potential for earning  revenues over the course of
their useful lives,  we believe that our LNG carriers may also have  significant
residual value when they are released from service.

     Pertamina  Charters.  Two of our  vessels,  the  Golar  Mazo and the  Golar
Spirit,  are  chartered by  Pertamina,  the  state-owned  oil and gas company of
Indonesia.  The Golar  Mazo,  which we jointly  own with the  Chinese  Petroleum
Corporation,  transports  LNG from  Indonesia  to  Taiwan  under a 17 year  time
charter  that  expires in 2017.  The Golar  Spirit is employed on a 17-year time
charter  that  expires in 2006.  Pertamina  has options to extend the Golar Mazo
charter for two  additional  periods of five years each, and to extend the Golar
Spirit charter for up to two years.

     Under the Pertamina  charters,  the operating costs of the vessel are borne
by Pertamina on a cost  pass-through  basis.  Pertamina  may suspend its payment
obligations  under the charter  agreement  for periods  when the vessels are not
able to  transport  cargo for various  reasons.  These  periods,  which are also
called  offhire  periods,  may  result  from,  among  other  causes,  mechanical
breakdown or other  accident,  the  inability of the crew to operate the vessel,
the arrest or other detention of the vessel as the result of a claim against us,
or the  cancellation  of the  vessel's  class  certification.  Payments  are not
suspended during scheduled maintenance.  The charters automatically terminate in
the event of the loss of a vessel.

     British Gas Charters.  Methane  Services  Limited,  a subsidiary of British
Gas, charters four of our vessels on long-term time charters. These vessels, the
Golar  Freeze,  Khannur,  Gimi,  and  Hilli,  each  transport  LNG  from  export
facilities  in the Middle East and Atlantic  Basin  nations to ports on the east
coast of the United  States and in Europe.  The trading  routes of these vessels
are determined by Methane Services Limited. BG Asia Pacific PTE Limited, another
subsidiary  of British Gas,  has executed a charter for one of our  newbuildings
that is currently under construction. This charter will commence when the vessel
is delivered,  which is expected to occur in March of 2003. The current  charter
for the Golar Freeze  expires in March 2003.  However in July 2002 agreement was
reached whereby British Gas will charter the Golar Freeze for a five year period
until March 2008.  The charter for the Khannur  expires in 2009, the charter for
the Gimi expires in 2011 and the charter for the Hilli expires in 2012.


                                       25
<PAGE>

Charter Renewal Options

     Pertamina  Charters.  Pertamina has the option to extend the charter of the
Golar Mazo and the Golar Spirit.  Pertamina may extend the charter of Golar Mazo
that expires in 2017,  for up to 10 years by exercising  the right to extend for
one or two additional five year periods. Pertamina must give two years notice of
any decision to extend.  The revenue during the period of charter extension will
be subject to adjustments  based on our actual operating costs during the period
of the extension.  For the Golar Spirit, Pertamina may extend the charter beyond
its current  expiration in 2006 for up to two years. As with the Golar Mazo, the
hire rate  during  any  extension  is subject to  adjustment  to reflect  actual
operating expenses during the term.

     British Gas Charters.  With the exception of the Golar Freeze charter, each
of the British Gas  charters,  including  the  charter for the  newbuilding,  is
subject to options on the part of British Gas to extend  those  charters for two
five-year  periods.  If British  Gas does not  exercise  its option to renew the
Hilli charter,  it may designate a redelivery  date between  January 1, 2011 and
December 31, 2012.  The terms of the Hilli charter  contained in the chart below
and the preceding table assumes that British Gas will chose a redelivery date of
December  31, 2012.  British Gas must notify us of whether it will  exercise its
option by June 30,  2003,  and, if the option is not  exercised,  to specify the
redelivery  date by June 30, 2004.  The hire rates for  Khannur,  Gimi and Hilli
will be  increased  from  January  1, 2010  onwards  and  thereafter  subject to
adjustments  based on  escalation  of three percent per annum of the  operating
costs of the vessel.

     The following chart summarizes the current charters and renewal options for
each of our vessels and newbuildings that have charter coverage arranged:

                               [BAR CHART OMITTED]

Newbuildings

     We have  executed  newbuilding  contracts  for  the  delivery  of four  LNG
carriers.

     The following table summarizes our newbuilding projects,  all of which have
capacities of approximately 138,000 cbm:

   Hull No.      Shipbuilder   Contract Price    Date Delivery Expected
   --------      -----------   --------------    ----------------------

   2215              Daewoo             $162M                March 2003
   1444              Hyundai          $165.6M             December 2003
   2220              Daewoo             $165M                March 2004
   1460              Hyundai          $166.3M             November 2004


                                       26
<PAGE>

     The selection of and investment in newbuildings is a key strategic decision
for us. We believe  that  years of  experience  in the  shipping  industry  have
equipped our senior  management with the experience to determine when to acquire
options for  newbuildings and when to order the construction of newbuildings and
the  scope  of  those  constructions.  Our  senior  management  has  established
relationships  with  several  shipyards,  and this has  enabled us to access the
currently limited shipyard slots to build LNG carriers.

Senior Management of Golar LNG Limited

     Our senior management makes strategic and commercial  decisions that relate
to our business,  and analyzes and recommends to our board of directors areas of
possible  expansion  into  other  areas  of the LNG  supply  chain.  Our  senior
management is responsible for:

     o    Vessel   charters.   Decisions   relating  to  our  current   business
          opportunities,  including the negotiation of charters for our existing
          fleet and for our newbuildings.

     o    Financing  decisions.   Decisions  regarding  our  capital  structure,
          overall debt and equity financing, use of financing alternatives,  the
          selection and negotiation of financing to fund the construction of our
          newbuildings  and the  consideration  of  financing  alternatives  for
          projects in other areas of the LNG supply chain that we may consider.

     o    Newbuilding   contracts.   Decisions   relating  to   investments   in
          newbuildings,  including  determining when these investments should be
          made  and the  negotiation  of  newbuilding  contracts  with  selected
          shipyards.

     o    Future business strategies. Decisions regarding our possible expansion
          into other areas of the LNG supply chain.

Golar Management Limited

     We provide  all of our own vessel  management  services  through our wholly
owned  subsidiary  Golar  Management,  which  has its  offices  in  London.  The
technical functions  exercised by Golar Management include operational  support,
vessel maintenance and technical support, crewing and accounting services. We do
not contract out to third parties any of our vessel management services. We have
a fleet manager and vessel  superintendents who regularly inspect the vessels in
our fleet.  Golar Management  provides the following  services to the vessels in
our fleet of LNG carriers:

     o    supervision of routine  maintenance  and repair of the vessel required
          to keep each vessel in good and  efficient  condition;  including  the
          preparation  of  comprehensive   drydocking   specifications  and  the
          supervision of each drydocking;

     o    oversight  of  compliance  with  applicable   regulations,   including
          licensing and certification requirements, and the required inspections
          of each  vessel to ensure  that it meets  the  standards  set forth by
          classification societies and applicable legal jurisdictions as well as
          our internal corporate  requirements and the standards required by our
          customers;


                                       27
<PAGE>

     o    engagement and provision of qualified crews (masters, officers, cadets
          and ratings) and attendance to all matters regarding discipline, wages
          and labor relations;

     o    arrangements  to supply the  necessary  stores and  equipment for each
          vessel; and

     o    continual  monitoring  of  fleet  performance  and the  initiation  of
          necessary  remedial  actions to ensure that  financial  and  operating
          targets are met.

Ship Management

     We are focused on maximizing revenue from each vessel. Through a process of
continual evaluation and maintenance, our management team has been able to limit
unscheduled  offhire due to  equipment  failure or repair while our vessels have
been  employed.  Our ability to minimize  unscheduled  offhire while our vessels
have been employed is in part a result of our policy of having our crews perform
most of the necessary  maintenance  on our vessels while  underway,  rather than
placing the vessels in drydocking  for longer  periods of time.  Since we do not
earn hire from a vessel while it is in drydock for unscheduled  repairs,  or for
scheduled  maintenance  that exceeds a specified number of days, we believe that
the expense of the  additional  crew  members is  outweighed  by the  additional
revenue that we receive.

     To further minimize  drydocking costs and ensure compliance with the latest
industry  standards,  we have embarked on a six-year,  $29.5 million  program to
refurbish  and  modernize  our  four  vessels  built in the  1970s.  As with the
regularly scheduled maintenance on our vessels, this program will be carried out
while our  vessels  are under way or when they are  already  scheduled  to be in
drydock. This program is not expected to require any additional offhire days for
our vessels. We expect that this modernization  program will allow us to operate
each of these vessels to their 40th anniversary.  In addition, this program will
allow our ships to access  additional  LNG loading and  receiving  terminals  by
upgrading  or  replacing  cargo  handling  and other  systems to meet the latest
requirements   established  by  some  LNG  facilities.   Although  we  have  not
experienced  any  material  operational  problems  with any of our  vessels,  we
believe  that the  capital  expenditure  of this  program  will  result in lower
maintenance  costs in the future.  We also  believe  this  program  will help us
maintain  our  proven  safety  record  and  ability  to meet  customer  delivery
deadlines.

Third Party Ship Management

     In addition to managing our own fleet,  we provide  management  services to
LNG carriers owned by selected third parties.  We currently  manage four vessels
for the National Gas Shipping  Company,  a subsidiary of the Abu Dhabi  National
Oil Company.  These vessels are  currently  engaged on the route between the Das
Island LNG  terminal in Abu Dhabi and  various  ports in Japan.  Our  management
agreements  with  National  Gas  Shipping  Company  terminate in 2006 but may be
canceled at any time by either party on 12 months prior notice.

     The table below summarizes the LNG carriers that we manage for the National
Gas Shipping Company:

                      Year                     Capacity in
   Vessel Name        Built             Type          cbm.          Flag
   -----------        -----             ----          ----          ----
   Mubaraz             1996   Moss-Rosenberg       137,500       Liberia
   Mraweh              1996   Moss-Rosenberg       137,500       Liberia
   Al Hamra            1997   Moss-Rosenberg       137,500       Liberia
   Umm Al Ashtan       1997   Moss-Rosenberg       137,500       Liberia

Employees

     We hire all of our officers and crew through our manning offices in Bilbao,
in Spain and Manila,  in the Philippines.  Each of our crew members  undergoes a
structured  training  process that we have developed to ensure that our crew and
officers will have the required specialized  knowledge and experience to operate
our vessels.  In addition to the  specialized  knowledge  required to handle LNG
cargoes,  LNG carrier  officers and crew must also have knowledge and experience
in operating vessels with steam turbine engines.  Because we use our own manning
agencies,  our officers and crews are employed  exclusively  on our vessels.  On
average,  we have employed our vessel  captains for 16 years,  while the average
tenure of our chief officers and chief engineers is more than 15 years.


                                       28
<PAGE>

     As of December 31, 2001, we employed  approximately 646 people,  consisting
of 46 shore-based personnel and 600 seagoing employees.  As of December 31, 1999
and 2000,  we employed  approximately  50  shore-based  and 597 and 605 seagoing
employees,  respectively.  Our  masters  and  officers  are mostly  Spanish  and
Scandinavian,  and our crews are  mostly  Filipino.  Our  shore-based  personnel
currently  include 29 employees in our Golar Management  office in London,  five
people  in our  manning  office in Bilbao  and 11 people in our  Manila  manning
office. Our Filipino employees are subject to collective bargaining  agreements,
which are  requirements  of the  Philippine  government.  These  agreements  set
industry-wide minimum standards, terms and conditions. We have not had any labor
disputes with our  employees  under the  collective  bargaining  agreements  and
consider our workplace relations to be good.

Properties

     We do not own any  interest in real  property.  We  sublease  approximately
8,000 square feet of office space in London for our ship management  operations.
In addition,  we have leasehold interests in two London offices that we formerly
occupied which we have assigned or sublet to unrelated  third parties.  We lease
approximately  835  square  feet of office  space in Manila  for our  Philippine
crewing operations, and approximately 540 square feet of office space in Bilbao,
Spain for our crewing operations.

Legal Proceedings

     There are not any legal  proceedings  or claims that we believe  will have,
individually or in the aggregate,  a material adverse effect on our company, our
financial condition, profitability, liquidity or our results of operations. From
time to time in the  future we or our  subsidiaries  may be  subject  to various
legal proceedings and claims in the ordinary course of business.

     In connection with the renewal of the British Gas charters, we have settled
claims arising from the negotiation of the initial charters.

Insurance

   General

     The operation of any vessel,  including LNG carriers,  has inherent  risks.
These risks include mechanical  failure,  personal injury,  collision,  property
loss, vessel or cargo loss or damage and business  interruption due to political
circumstances in foreign countries,  hostilities and labor strikes. In addition,
there is always an inherent possibility of marine disaster, including explosion,
spills and other environmental  mishaps, and the liabilities arising from owning
and operating vessels in international  trade. While we believe that our present
insurance coverage is adequate,  not all risks can be insured,  and there can be
no  guarantee  that any specific  claim will be paid,  or that we will always be
able to obtain adequate  insurance coverage at reasonable rates. These and other
risks  discussed under Item 3, "Key  Information;  Risk Factors" could result in
liability  to us and could  cause loss of  revenue,  increased  costs or loss of
reputation.


                                       29
<PAGE>

   Hull and Machinery Insurance

     We have obtained hull and  machinery  insurance on all our vessels  against
marine and war risks, which include the risks of damage to our vessels,  salvage
or towing costs,  and also insure against actual or  constructive  total loss of
any of our vessels.  Our vessels are each covered with  deductibles  of $150,000
per  vessel per  incident,  except in the event of a total  loss,  in which case
there is no deductible. We have also arranged additional total loss coverage for
each vessel.  This coverage,  which is called hull interest and freight interest
coverage, provides us additional coverage for amounts not economically insurable
under our hull and  machinery  insurance  and responds in the event of the total
loss of a vessel.  The  following  chart lists the amount each of our vessels is
insured for in the event of a total loss:

   Vessel                                      Current Insured Value(US$)
   ------                                      --------------------------

   Golar Mazo (based on 100% ownership)                       300 million
   Golar Spirit                                               180 million
   Golar Freeze                                               114 million
   Hilli                                                      102 million
   Gimi                                                       102 million
   Khannur                                                    114 million
   Total:                                                     912 million

   Loss of Hire Income

     We have also obtained specific loss of hire insurance to protect us against
loss of income in the event one of our vessels  cannot be employed due to damage
that is covered under the terms of our hull and machinery  insurance.  Under our
loss of hire income  policies,  our insurer will pay us the daily rate agreed in
respect  of each  vessel  for each day,  in excess of 14 days,  that the  vessel
cannot  be  employed  as a result of  damage,  for a  maximum  of 240 days.  The
following  chart lists the  approximate  daily rate and the total amount that we
have insured for each vessel:

   Vessel                   Daily rate coverage,        Total coverage,
   ------                   effective January 1,   effective January 1,
                                      2002 (US$)             2002 (US$)
                                      ----------             ----------

   Golar Mazo (based on                  100,000           24.0 million
   100% ownership)
   Golar Spirit                           80,000           19.2 million
   Golar Freeze                           65,000           15.6 million
   Hilli                                  43,000           10.3 million
   Gimi                                   43,000           10.3 million
   Khannur                                43,000           10.3 million

   Protection and Indemnity Insurance

     Protection  and indemnity  insurance,  which covers our  third-party  legal
liabilities in connection with our shipping activities,  is provided by a mutual
protection and indemnity association, (or "P&I club"). This includes third-party
liability  and other  expenses  related to the injury or death of crew  members,
passengers  and other  third-party  persons,  loss or  damage  to cargo,  claims
arising  from  collisions  with other  vessels or from  contact  with jetties or
wharves and other  damage to other  third-party  property,  including  pollution
arising from oil or other substances,  and other related costs,  including wreck
removal.  Subject to the  capping  discussed  below,  our  coverage,  except for
pollution, is unlimited.


                                       30
<PAGE>

     Our current protection and indemnity insurance coverage for pollution is $1
billion  per vessel per  incident.  The  fourteen  P&I clubs that  comprise  the
International  Group of Protection and Indemnity Clubs insure  approximately  90
percent  of the  world's  commercial  tonnage  and have  entered  into a pooling
agreement to reinsure each association's  liabilities.  Each P&I club has capped
its exposure in this pooling  agreement so that the maximum claim covered by the
pool and its reinsurance  would be  approximately  $4.25 billion per accident or
occurrence.  We are a member of the "UK Club"  which is the  largest P&I club in
the  International  Group. As a member of the P&I club, we are subject to a call
for additional premiums based on the club's claims record, as well as the claims
record of all other members of the P&I clubs comprising the International Group.
However,  our P&I club has  reinsured  the risk of  additional  premium calls to
limit our additional  exposure to 134 percent of our current annual costs.  This
reinsurance  is subject to a cap,  and there is the risk that the full amount of
the additional call would not be covered by this reinsurance.

     The owners of the four vessels that we manage for the National Gas Shipping
Company  maintain all marine  insurances on those  vessels.  We are protected by
contractual  defenses and by the National  Gas  Shipping  Company's  contractual
obligation  to name us as a  co-insured  in the  policies it  maintains  for the
vessels  we  manage  for it.  In  addition,  we  carry  shipmanager's  liability
insurance  for each of the  vessels  we manage  for the  National  Gas  Shipping
Company.  Shipmanager's liability insurance protects us against losses caused by
our own negligence in connection  with the management of these vessels which the
owner of the vessel could recover from us under the  management  contract.  This
insurance has a limit of $20 million with a deductible of $50,000.

Environmental and other Regulations

     Governmental and international  agencies  extensively regulate the handling
and carriage of LNG. These  regulations  include  international  conventions and
national,  state and  local  laws and  regulations  in the  countries  where our
vessels  operate or where our  vessels  are  registered.  We cannot  predict the
ultimate  cost of  complying  with these  regulations,  or the impact that these
regulations  will  have on the  resale  value or  useful  lives of our  vessels.
Various  governmental  and  quasi-governmental  agencies  require  us to  obtain
permits, licenses and certificates for the operation of our vessels. Although we
believe that we are  substantially  in compliance with applicable  environmental
laws and regulations and have all permits,  licenses and  certificates  required
for our  operations,  future non-  compliance  or failure to maintain  necessary
permits or approvals could require us to incur  substantial costs or temporarily
suspend operation of one or more of our vessels.

     A variety of governmental  and private entities inspect our vessels on both
a scheduled and unscheduled basis. These entities, each of which may have unique
requirements  and each of which conducts  frequent vessel  inspections,  include
local  port  authorities,  such  as the  U.S.  Coast  Guard,  harbor  master  or
equivalent,  classification  societies, flag state, or the administration of the
country of registry, charterers, terminal operators and LNG producers.


                                       31
<PAGE>

   Regulation by the International Maritime Organization

     The International  Maritime  Organization,  or IMO, is a specialized agency
organized  by  the  United  Nations  that  provides  international   regulations
affecting the practices of those in shipping and  international  maritime trade.
The  requirements  contained in the  International  Management Code for the Safe
Operation of Ships and for Pollution Prevention, or ISM Code, promulgated by the
IMO,  affect our  operations.  The ISM Code requires the party with  operational
control  of a vessel to develop  an  extensive  safety  management  system  that
includes,  among  other  things,  the  adoption  of a safety  and  environmental
protection  policy setting forth  instructions  and procedures for operating its
vessels safely and also  describing  procedures  for responding to  emergencies.
Golar Management is certified as an approved ship manager under the ISM Code.

     The ISM Code  requires  that vessel  operators  obtain a safety  management
certificate,  issued by each flag  state,  for each vessel  they  operate.  This
certificate  evidences onboard compliance with code requirements.  No vessel can
obtain a certificate  unless its  shore-based  manager has also been awarded and
maintains  a Document  of  Compliance,  issued  under the ISM Code.  Each of the
vessels in our fleet has received a safety management certificate.

     Vessels that  transport  gas,  including LNG carriers,  are also subject to
regulation under the  International  Gas Carrier Code, or IGC,  published by the
IMO. The IGC provides a standard for the safe  carriage of LNG and certain other
liquid gases by  proscribing  the design and  construction  standards of vessels
involved  in such  carriage.  Compliance  with  the IGC must be  evidenced  by a
Certificate of Fitness for the Carriage of Liquefied  Gases of Bulk. Each of our
vessels  is in  compliance  with the IGC and each of our  newbuilding  contracts
requires that the vessel  receive  certification  that it is in compliance  with
applicable  regulations  before it is delivered.  Noncompliance  with the IGC or
other  applicable  IMO  regulations,  may  subject  a  shipowner  or a  bareboat
charterer to increased  liability,  may lead to decreases in available insurance
coverage  for  affected  vessels  and may  result in the denial of access to, or
detention  in,  some  ports.  Both the  U.S.  Coast  Guard  and  European  Union
authorities have indicated that vessels not in compliance with the ISM Code will
be prohibited from trading in their respective ports.

     The IMO also promulgates ongoing amendments to the international convention
for the Safety of Life at Sea 1974 and its protocol of 1988,  otherwise known as
SOLAS.  This provides rules for the  construction  of ships and  regulations for
their  operation  with respect to safety  issues.  It requires the  provision of
lifeboats  and other  life-saving  appliances,  requires  the use of the General
Maritime  Global  Distress  and Safety  System which is an  international  radio
equipment and watchkeeping  standard,  afloat and at shore stations, and relates
to the Treaty on the  Standards of Training and  Certification  of  Watchkeeping
Officers,  or STCW, also promulgated by IMO. Flag states which have ratified the
convention and the treaty generally employ the classification  societies,  which
have  incorporated  SOLAS and STCW  requirements  into  their  class  rules,  to
undertake surveys to confirm compliance.


                                       32
<PAGE>

   Environmental Regulation--OPA/CERCLA

     The U.S.  Oil  Pollution  Act of 1990,  or OPA,  established  an  extensive
regulatory and liability regime for environmental  protection and cleanup of oil
spills. OPA affects all owners and operators whose vessels trade with the United
States or its territories or possessions, or whose vessels operate in the waters
of the United  States,  which  include the U.S.  territorial  waters and the two
hundred  nautical  mile  exclusive  economic  zone  of the  United  States.  The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, or
CERCLA,  applies to the discharge of hazardous  substances whether on land or at
sea.  While OPA and CERCLA  would not apply to the  discharge  of LNG,  they may
affect us because we carry oil as fuel and lubricants  for our engines,  and the
discharge  of these  could  cause an  environmental  hazard.  Under OPA,  vessel
operators,   including   vessel  owners,   managers  and  bareboat  or  "demise"
charterers,  are "responsible  parties" who are all liable  regardless of fault,
individually  and as a group,  for all  containment and clean-up costs and other
damages arising from oil spills from their vessels.  These "responsible parties"
would not be liable if the spill  results  solely  from the act or omission of a
third  party,  an act of God or an act of war.  The  other  damages  aside  from
clean-up and containment costs are defined broadly to include:

     o    natural resource damages and related assessment costs;

     o    real and personal property damages;

     o    net loss of taxes, royalties, rents, profits or earnings capacity;

     o    net cost of public services necessitated by a spill response,  such as
          protection from fire, safety or health hazards; and

     o    loss of subistence use of natural resources.

     OPA limits the  liability  of  responsible  parties for vessels  other than
crude oil tankers to the  greater of $600 per gross ton or $500,000  per vessel.
These limits of liability do not apply, however, where the incident is caused by
violation  of  applicable  U.S.   federal  safety,   construction  or  operating
regulations,   or  by  the  responsible  party's  gross  negligence  or  willful
misconduct. These limits likewise do not apply if the responsible party fails or
refuses to report the incident or to cooperate and assist in connection with the
substance removal  activities.  This limit is subject to possible adjustment for
inflation.  OPA  specifically  permits  individual  states to  impose  their own
liability regimes with regard to oil pollution  incidents occurring within their
boundaries,  and some states have enacted  legislation  providing  for unlimited
liability for discharge of pollutants within their waters. In some cases, states
which  have  enacted  their own  legislation  have not yet  issued  implementing
regulations defining shipowners' responsibilities under these laws.

     CERCLA,  which also applies to owners and operators of vessels,  contains a
similar liability regime and provides for cleanup,  removal and natural resource
damages.  Liability under CERCLA is limited to the greater of $300 per gross ton
or $5 million.  As with OPA,  these  limits of  liability do not apply where the
incident is caused by violation of applicable U.S. federal safety,  construction
or operating  regulations,  or by the  responsible  party's gross  negligence or
willful  misconduct or if the  responsible  party fails or refuses to report the
incident or to cooperate  and assist in connection  with the  substance  removal
activities.  OPA and CERCLA each  preserve  the right to recover  damages  under
existing law,  including  maritime  tort law. We  anticipate  that we will be in
compliance  with OPA, CERCLA and all applicable  state  regulations in the ports
where our vessels will call.


                                       33
<PAGE>

     OPA requires owners and operators of vessels to establish and maintain with
the U.S. Coast Guard evidence of financial responsibility sufficient to meet the
limit of their  potential  strict  liability under OPA. The U.S. Coast Guard has
enacted regulations requiring evidence of financial responsibility in the amount
of $900 per gross ton for  vessels  other  than oil  tankers,  coupling  the OPA
limitation on liability of $600 per gross ton with the CERCLA liability limit of
$300 per gross ton. Under the regulations,  evidence of financial responsibility
may be demonstrated by insurance, surety bond, self-insurance or guaranty. Under
OPA  regulations,  an owner or  operator  of more than one vessel is required to
demonstrate  evidence of  financial  responsibility  for the entire  fleet in an
amount  equal only to the  financial  responsibility  requirement  of the vessel
having the greatest maximum liability under  OPA/CERCLA.  Each of our shipowning
subsidiaries  that has  vessels  trading in U.S.  waters has  applied  for,  and
obtained from the U.S. Coast Guard National  Pollution Funds Center,  three-year
certificates  of  financial  responsibility,  supported by  guarantees  which we
purchased from an insurance-based  provider.  We believe that we will be able to
continue  to obtain the  requisite  guarantees  and that we will  continue to be
granted  certificates of financial  responsibility from the U.S. Coast Guard for
each of our vessels that is required to have one.

   Environmental Regulation--Other

     Most  U.S.   states  that  border  a  navigable   waterway   have   enacted
environmental  pollution  laws that  impose  strict  liability  on a person  for
removal  costs and damages  resulting  from a discharge of oil or a release of a
hazardous substance. These laws may be more stringent than U.S. federal law. The
European Union has proposed  regulations,  which,  if adopted,  may regulate the
transmission,  distribution,  supply and  storage of natural gas and LNG at land
based facilities. It is not clear what form these regulations, if adopted, would
take.

   Inspection by Classification Societies

     Every seagoing vessel must be "classed" by a  classification  society.  The
classification  society certifies that the vessel is "in class," signifying that
the vessel has been built and  maintained  in  accordance  with the rules of the
classification  society and complies with  applicable  rules and  regulations of
that particular class of vessel as laid down by that society.

     For maintenance of the class certificate, regular and extraordinary surveys
of hull,  machinery,  including the electrical  plant and any special  equipment
classed,  are required to be performed by the classification  society, to ensure
continuing compliance.  Most vessels are drydocked every three to five years for
inspection of the underwater  parts and for repairs related to  inspections.  If
any defects are found, the classification surveyor will issue a "recommendation"
which must be rectified by the  shipowner  within  prescribed  time limits.  The
classification  society  also  undertakes  on request  of the flag  state  other
surveys and checks that are required by the regulations and requirements of that
flag state. These surveys are subject to agreements made in each individual case
and/or to the regulations of the country concerned.

     Most insurance underwriters make it a condition for insurance coverage that
a vessel be  certified  as "in  class" by a  classification  society  which is a
member of the International  Association of Classification Societies. All of our
vessels have been certified as being "in class".  The Golar Mazo and each of the
vessels that we manage for the National Gas Shipping  Corporation  are certified
by Lloyds  Register,  and our wholly  owned  vessels are each  certified  by Det
norske Veritas, both members of the International  Association of Classification
Societies.

   In-House Inspections

     We inspect all of our vessels on a regular basis, both at sea and while the
vessels are in port. Each vessel in our fleet is inspected on a semiannual basis
by our fleet safety officer and by our technical superintendent.  The results of
these  inspections,  which are conducted both in port and underway,  result in a
report containing  recommendations  for improvements to the overall condition of
the  vessel,  maintenance,  safety  and  crew  welfare.  Based  in part on these
evaluations,  we create and implement a program of continual maintenance for our
vessels  and  their  systems.   Our   maintenance   program,   like  our  vessel
modernization,  is performed while underway  whenever  possible.  Those projects
that do require the ship to be taken out of service are only performed  during a
vessel's scheduled offhire period.


                                       34
<PAGE>

Organizational Structure

     As is  customary  in the shipping  industry,  we own our  vessels,  and our
newbuildings   while   under   construction,   through   separate   wholly-owned
subsidiaries.  With  the  exception  of the  Golar  Mazo,  we own a 100 percent
interest in each of our vessel and newbuilding owning  subsidiaries.  We own the
Golar Mazo in a joint venture with the Chinese Petroleum Corporation in which we
own 60 percent and  Chinese  Petroleum  owns the  remaining  40 percent of the
vessel  owning  company.  Our vessel  management  services  and  vessel  manning
services are provided through separate, wholly-owned subsidiaries.

     The  following  chart  lists each of our  subsidiaries,  the  subsidiaries'
purpose and its country of organization.  Unless otherwise indicated, we own 100
percent of each subsidiary.

                                    Jurisdiction of
Subsidiary                          Incorporation             Purpose
----------                          -------------             -------

Golar Gas Holding Company Inc.      Republic of Liberia       Holding Company
Golar Maritime (Asia) Inc.          Republic of Liberia       Holding Company
Gotaas-Larsen Shipping              Republic of Liberia       Holding Company
Corporation
Oxbow Holdings Inc.                 British Virgin Islands    Holding Company
Golar Gas Cryogenics Inc.           Republic of Liberia       Vessel ownership
Golar Gimi Inc.                     Republic of Liberia       Vessel ownership
Golar Hilli Inc.                    Republic of Liberia       Vessel ownership
Golar Khannur Inc.                  Republic of Liberia       Vessel ownership
Golar Freeze Inc.                   Republic of Liberia       Vessel ownership
Faraway Maritime Shipping Inc.      Republic of Liberia       Vessel ownership
    (60% ownership)
Golar LNG 2215 Corporation          Republic of Liberia       Vessel ownership
Golar LNG 1444 Corporation          Republic of Liberia       Vessel ownership
Golar LNG 1460 Corporation          Republic of Liberia       Vessel ownership
Golar LNG 2220 Corporation          Republic of Liberia       Vessel ownership
Golar International Ltd.            Republic of Liberia       Vessel management
Golar Maritime Services Inc.        Philippines               Vessel management
Golar Maritime Services, S.A.       Spain                     Vessel management
Gotaas-Larsen International         Republic of Liberia       Vessel management
Ltd.
Golar Management Limited            Bermuda                   Management
Golar Maritime Limited              Bermuda                   Management
Aurora Management Inc.              Republic of Liberia       Management
     (90% ownership)
Golar Management(UK) Limited        United Kingdom            Dormant
Gloar Freeze (Bermuda) Limited      Bermuda                   Dormant
Golar Khannur (Bermuda) Limited     Bermuda                   Dormant
Golar Gimi (Bermuda) Limited        Bermuda                   Dormant
Golar Hilli (Bermuda) Limited       Bermuda                   Dormant
Golar Spirit (Bermuda) Limited      Bermuda                   Dormant


                                       35
<PAGE>

ITEM 5.  Operating and financial review and prospects

Overview and Background

     The  following  discussion  of  our  financial  condition  and  results  of
operations  should be read in conjunction with our financial  statements and the
related notes, and the other financial  information  included  elsewhere in this
document.  Our financial  statements  have been prepared in accordance with U.S.
GAAP. This discussion includes  forward-looking  statements based on assumptions
about our future business. Our actual results could differ materially from those
contained in the forward-looking statements.

     The  following  discussion  assumes  that our  business  was  operated as a
separate corporate entity prior to its inception.  Prior to May 10, 2001, we did
not exist as a corporate  entity,  and prior to May 31,  2001,  our business was
operated  as part of the  shipping  business  of  Osprey.  For the  years  ended
December 31, 2000 and 1999,  the combined  financial  statements  presented have
been carved out of the  consolidated  financial  statements  of Osprey.  For the
period from January 1, 2001 to May 31, 2001,  our financial  statement  activity
has also been carved out of the consolidated financial statements of Osprey, and
from that date to December  31, 2001,  all of our results were  reflected in the
stand-alone  consolidated financial statements of Golar as a separate entity. In
addition,  some costs have been reflected in the historical  combined  financial
statements  which are not  necessarily  indicative of the costs that Golar would
have  incurred  had it operated as an  independent,  stand-alone  entity for all
periods presented.

     In August 2000,  World  Shipholding  Ltd commenced an acquisition of Osprey
and gained a controlling  interest of more than 50 percent of Osprey in November
2000.  This  interest  increased  to over 90 percent  in January  2001 and World
Shipholding  completed  its  acquisition  in  May  2001.  This  acquisition  was
accounted for by World  Shipholding as a step-by-step  purchase  transaction and
the  purchase  price was  therefore  allocated  to the  assets  and  liabilities
acquired  based on their fair value as of each  acquisition  date,  with vessels
being valued on the basis of discounted expected future cash flows. In each step
of the  acquisition,  the fair value of the net  assets  acquired  exceeded  the
purchase price with resulting negative goodwill allocated to the recorded values
of the vessels.  These purchase price allocations were pushed down and reflected
in Osprey's financial statements from February 1, 2001.

     Effective May 31, 2001,  we acquired the LNG shipping  interests of Osprey,
which included one newbuilding  contract and an option for a further newbuilding
contract. We also entered into a purchase agreement with Seatankers, to purchase
its one newbuilding contract for a LNG carrier and its option to build three new
LNG carriers.

     In addition to controlling  Seatankers,  Mr. Fredriksen indirectly controls
50.01 percent of our shares  through World  Shipholding.  As required under U.S.
GAAP,  our  purchase of the LNG  operations  of Osprey and  Seatankers  has been
reflected in our financial  statements as  transactions  between  entities under
common  control.  We have recorded the LNG assets and liabilities we acquired at
the  amounts  previously  reflected  in  the  books  of  World  Shipholding  and
Seatankers  on what is known as a  "predecessor  basis".  Under the  predecessor
basis of accounting,  tangible and intangible  assets  acquired and  liabilities
assumed  are  recorded  in our books at the amount at which they would have been
recorded  on the  books of World  Shipholding  and  Seatankers.  The  difference
between  our  purchase  price  and this  predecessor  basis was  reflected  as a
reduction in equity in a capital reorganization.


                                       36
<PAGE>

Current Business

     Our activities are currently focused on the long-term chartering of our LNG
carriers and the  management  of four LNG  carriers  for a third party,  both of
which provide us with stable and predictable cash flows.

     Vessels may operate under  different  charter  arrangements  including time
charters  and bareboat  charters.  A time charter is a contract for the use of a
vessel for a specific  period of time at a specified  daily  rate.  Under a time
charter,  the charterer pays substantially all of the vessel voyage costs, which
consist  primarily  of fuel and  port  charges.  A  bareboat  charter  is also a
contract  for the use of a vessel for a specific  period of time at a  specified
daily rate but the charterer pays the vessel  operating  costs as well as voyage
costs.  Operating costs include crew wages,  vessel  supplies,  routine repairs,
maintenance,  lubricating oils and insurance. We define charters for a period of
less than one year as short-term,  charters for a period of between one and four
year as  medium-term  and  charters  for a  period  of more  than  four  year as
long-term.

     All of our LNG carriers are employed under  long-term time charters,  which
do not come up for renewal until 2006 and later. Consequently,  our revenues for
the period 1998 to 1999,  when several of our vessels  served  under  short-term
charters with intervals  during which they were seeking  employment,  may not be
representative  of our  results  for  2000,  2001 and  subsequent  periods.  The
following  table  sets out our  current  charters,  including  future  committed
charters, and their expirations:

                                         Current
                                         Charter        Charterers Renewal
Vessel Name     Annual Charter Hire     Expiration        Option Periods
-----------     -------------------     ----------        --------------

Golar Mazo      $31.0 million / year*      2017         5 years plus 5 years
Golar Spirit    $21.0 million / year       2006          1 year plus 1 year
Khannur         $15.6 million / year       2009         5 years plus 5 years
Golar Freeze    $23.7 million / year       2003                 None
Golar Freeze    $20.1 million / year       2008                 None
Gimi            $15.6 million / year       2009         5 years plus 5 years
Hilli           $15.6 million / year       2011         5 years plus 5 years
Hull No. 2215   $24.6 million / year**     2023         5 years plus 5 years

----------
*    On a wholly-owned basis
**   Commencing in 2003

     The  long-term  contracts  for the Golar  Spirit  and  Golar  Mazo are time
charters but the economic terms are analogous to bareboat contracts, under which
the  vessels  are paid a fixed rate of hire and the vessel  operating  costs are
borne by the  charterer on a cost pass through  basis.  The payment of operating
costs by the charterer are  recognized as additional  revenue over and above the
fixed  rate  noted in the table  above.  These  contracts  therefore  contain no
escalation clauses.


                                       37
<PAGE>

Predecessor Business

     The following  table sets out the  employment of the LNG carriers now owned
by us during the period 1998 to 2001.

  Vessel Name         1998                  1999                2000 and 2001
--------------------------------------------------------------------------------
Golar Mazo     Not applicable (a)    Not applicable (a)   Long-term time charter
                                                          to Pertamina commenced
                                                          on delivery in 2000

Golar Spirit   Long-term time        Long-term time       Long-term time charter
               charter to            charter to           to Pertamina
               Pertamina             Pertamina

Khannur        Short-term            Short-term           Short-term charters
               charters              charters             until start of
                                                          long-term time charter
                                                          with British Gas in
                                                          December 2000

Golar Freeze   Medium-term           Medium-term          Short-term charters
               charter               charter              until start of
                                                          long-term time charter
                                                          with British Gas in
                                                          November 2000

Gimi           Short-term            Short-term           Short-term charters
               charters              charters             until start of
                                                          long-term time charter
                                                          with British Gas in
                                                          May 2001

Hilli          Medium-term           Medium-term          Medium-term charter
               charter               charter              until start of
                                                          long-term time charter
                                                          with British Gas in
                                                          September 2000

----------

(a)  This vessel was delivered to us and began trading on January 15, 2000.

     At the time of Osprey's acquisition of Gotaas-Larsen,  the LNG carriers had
come  off  long-term  time  charters  and  two of the  vessels  were  in  lay-up
throughout  1997.  These two vessels began to trade in early 1998.  During 1998,
1999 and through 2000 prior to the start of the British Gas time  charters,  the
Golar Freeze and Hilli were continuously  employed under  medium-term  charters.
During the same period the Khannur and Gimi were operating under short-term time
charters.  For the latter two vessels,  this employment resulted in some periods
between  charters  when those  vessels  were  offhire  waiting for  charters and
therefore not earning  charter  hire. In the second half of 2000,  and the first
half of 2001,  these  four  vessels,  then owned by Osprey,  were  committed  to
long-term  time  charters  with a  subsidiary  of British Gas at rates that were
lower than prevailing  market rates. The employment under these charters results
in minimal  periods of  offhire,  generally  limited to  scheduled  offhire  for
drydocking.  We have subsequently renegotiated the charters paid by British Gas,
and have had the charters extended to the dates shown above.


                                       38
<PAGE>

     Current management took over the Osprey LNG business in February 2001, when
World Shipholding had acquired more than 90 percent of Osprey's shares.  Between
February and May 2001,  World  Shipholding  acquired almost all of the remaining
shares by continued open market purchases.

     Beginning in February 2001, the new management of Osprey  restructured  the
business. New management reduced costs by rationalizing the corporate structure,
reducing staff, and closing the Singapore office.  Management also took steps to
control and begin reducing  vessel  operating  costs in areas such as crew costs
and spare parts  inventory.  Cost reductions  should also result from purchasing
supplies  in  conjunction  with other  companies  indirectly  controlled  by our
chairman and principal shareholder, Mr. Fredriksen. Through effective management
responsiveness  to cost issues, we expect to be able to continue to increase our
cash flow from operations in future periods.

     Factors Affecting Our Results

     The principal  factors that have affected,  and are expected to continue to
affect, our core LNG shipping business are:

          o    The employment of our vessels and the number of unscheduled
               offhire days

          o    Non-utilization for vessels not subject to charters

          o    Vessel operating expenses

          o    Administrative expenses

          o    Depreciation expenses

          o    Net interest expense

     Operating  revenues are  primarily  generated by charter rates paid for our
short-term, medium-term and long-term charters and are therefore related to both
our ability to secure continuous employment for our vessels as well as the rates
that we secure for these  charters.  Four of our ships  currently  under charter
with a subsidiary of British Gas have derived a cashflow benefit from negotiated
rate  increases  that have taken  effect  from August 1, 2001 for one vessel and
from January 1, 2002 for the other three.  Because all of our existing ships are
now employed on long-term  charters,  we expect future revenues to be higher and
more stable than was the case in 1998 and 1999.

     The number of days that our vessels earn hire substantially  influences our
results.  We attempt to minimize  unscheduled offhire by conducting a program of
continual  maintenance for our vessels. The charter coverage we have for all our
vessels has resulted in a minimal  number of waiting  days in 2000 and 2001.  We
have also had a low  number  of  unscheduled  offhire  days and  expect  this to
continue.

     Our  vessels  may be out of  service,  that is,  offhire,  for  three  main
reasons:  scheduled drydocking or special survey or maintenance,  which we refer
to as scheduled offhire, days spent waiting for a charter,  which we refer to as
waiting  time  and  unscheduled  repairs  or  maintenance,  which we refer to as
unscheduled offhire.  Generally, for vessels that are under a time charter, hire
is paid for each day that a vessel is available for service. However, two of our
long-term  charters provide for an allowance of a specified number of days every
two years that our vessels may be in drydock,  and provide  that the vessel will
only be placed  offhire if the number of days in drydock every two years exceeds
that allowance.  The shipping industry uses average daily time charter earnings,
or TCE,  to  measure  revenues  per  vessel in  dollars  per day for  vessels on
charters.  We calculate TCE by taking time charter  revenues earned and dividing
by the number of days in the period less scheduled offhire.

     Our  exposure to credit  risk is limited as our  long-term  charterers  pay
monthly in advance. This trend is expected to continue as all of our vessels are
under  long-term  charters with  customers  with whom the Company has a positive
collection history.


                                       39
<PAGE>

     Vessel operating  expenses include direct vessel operating costs associated
with running a vessel and an allocation of  shore-based  overhead costs directly
related to vessel  management.  Vessel operating costs include crew wages, which
are  the  most  significant   component,   vessel  supplies,   routine  repairs,
maintenance,  lubricating  oils and  insurance.  Accordingly,  the level of this
operating  cost is  directly  related to the number of vessels we own.  Overhead
allocated  to  vessels  includes  certain  technical  and  operational  support,
information  technology,  legal, accounting and corporate costs that are related
to vessel operating  activity.  These costs are allocated based on internal cost
studies,  which management  believes are reasonable  estimates.  We believe that
there are  opportunities to further reduce these vessel operating costs and have
implemented a program to do so.

     Administrative   expenses  are  composed  of  general  corporate   overhead
including  primarily personnel costs,  corporate  services,  public filing fees,
property costs and expenses related to other similar functions.  Personnel costs
comprise  approximately  60 percent of our  administrative  expenses and include
salaries,  pension costs, fringe benefits, travel costs and social insurance. We
expect that the  streamlining  of our  operations  resulting  from our Singapore
office   closure  and  London  office   relocation   will  allow  us  to  reduce
administration  expenses in future periods.  In addition,  the  restructuring of
senior management  positions will further  contribute to reduced  administrative
expenses.

     Depreciation  expense,  or the periodic  cost charged to our income for the
reduction in usefulness and long-term value of our ships, is also related to the
number of vessels we own.  We  depreciate  the cost of our  vessels,  less their
estimated  residual value,  over their estimated  useful life on a straight-line
basis. We amortize our deferred drydocking costs over two to five years based on
each vessel's next anticipated drydocking. No charge is made for depreciation of
newbuildings  until they are  delivered.  We amortize our office  equipment  and
fittings over three to six years based on estimated economic useful life.

     Interest expense in the carved out combined financial statements relates to
a debt facility in Osprey that was specifically designated to LNG operations and
a facility  specific to the Golar Mazo.  Interest expense depends on the overall
levels of  borrowing  we incur and may  significantly  increase  when we acquire
ships or on the  delivery of  newbuildings.  During a  newbuilding  construction
period, interest expense incurred is capitalized in the cost of the newbuilding.
Interest  expense may also change with  prevailing  interest  rates although the
effect  of  these  changes  may be  reduced  by  interest  rate  swaps  or other
derivative instruments. We currently have a portion of our floating rate debt in
the amount of $189.4  million  swapped to fixed rate, and we may also enter into
interest  rate swap  arrangements  on our other debt if this is considered to be
advantageous  to us.  Interest  income  in the  carved  out  combined  financial
statements  includes an allocation of Osprey group interest  income.  The Osprey
group  operated a  centralized  treasury  system and did not have  separate bank
accounts for each of its  subsidiaries.  There were  separate  bank accounts for
Golar Mazo. For the remaining LNG activities, interest income has been allocated
in the carved out combined  financial  statements based on operating  cashflows,
net of debt service.

     Other  financial  items are composed of financing  fee  arrangement  costs,
amortization  of deferred  financing  costs,  market  valuation  adjustment  for
interest rate derivatives and foreign exchange  gain/loss.  The market valuation
adjustment for our interest rate  derivatives  may have a significant  impact on
our results of operations and financial position although it does not impact our
liquidity.  Foreign  exchange gains and losses are minimal as our activities are
primarily denominated in US dollars.

     Since  most of these key items are  directly  related  to the number of LNG
carriers we own, the  acquisition or divestment of additional  vessels and entry
into additional  newbuilding  contracts would cause corresponding changes in our
results.

     Although  inflation  has  had a  moderate  impact  on  operating  expenses,
interest costs, drydocking expenses and corporate overheads, management does not
expect inflation to have a significant impact on direct costs in the current and
foreseeable economic environment.


                                       40
<PAGE>

     A number of factors could substantially affect the results of operations of
our core long-term charter LNG shipping business as well as the future expansion
of any spot  market  business.  These  factors  include the pricing and level of
demand for natural gas and specifically LNG. Other uncertainties that could also
substantially  affect  these  results  include  changes in the number of new LNG
importing  countries and regions and  availability  of surplus LNG from projects
around the world,  as well as structural  LNG market  changes  allowing  greater
flexibility and enhanced competition with other energy sources.

     Possible Future LNG Industry Business Activities

     Depending on market conditions, we may diversify our operations. Our senior
management is currently considering spot chartering of LNG carriers, trading LNG
for our own account and vertically integrated infrastructure investments.

     The LNG spot  market  has  only  recently  developed  and it is at an early
stage.  Rates payable in that market may be uncertain  and volatile.  The supply
and demand  balance for LNG  carriers is also  uncertain.  These  factors  could
influence  any  decision  to enter  into the LNG spot  market or the  results of
operations from any spot market activities.

     Factors  which  could  substantially  affect our entry into the LNG trading
market and our results  from any such  trading  activities  include the level of
demand for LNG,  price  disparities  for LNG in various parts of the world,  the
availability of spot charters and  regasification  capacity in certain importing
countries and regions.

     All future  possible LNG activities are also dependant on our  management's
decisions  regarding the utilization of our assets. In the longer term,  results
of  operations  may also be affected by  strategic  decisions by  management  as
opportunities  arise  to  make  investments  in  LNG  logistics   infrastructure
facilities to secure access to markets as well as to take advantage of potential
industry consolidation.

     In February 2002, we announced our  participation in a joint venture headed
by Marathon Oil Company to construct and operate a major LNG import  facility on
Mexico's Baja  Peninsula.  Other  participants in the project include Grupo GGS,
S.A.  de  C.V.,  a  Mexican  company  involved  in the  development  of  various
infrastructure  projects,   including  oil  and  natural  gas  projects.  It  is
anticipated that the project will commence  operations  during the first quarter
of 2006.  Upon  its  completion,  the  project  would  consist  of a LNG  marine
terminal,  regasification  facility,  natural gas power  generation plant and as
well as  infrastructure  to export  natural  gas and  electricity  to the United
States, and for distribution within Mexico. The project may employ up to ten LNG
carriers. We expect that our investment in the project would be financed through
both internal and external resources. This project is still in its early stages,
and its completion  depends on several factors,  including  obtaining  necessary
project financing,  regulatory approvals, and market conditions. The size of our
ultimate investment in this project has not yet been determined.

     In June 2002 we announced  that we had signed a heads of agreement  (letter
of intent) with the Italian offshore and contracting  company Saipem SPA for the
joint marketing and development of Floating Regasification  Terminals, or FRT's,
for the  Italian gas market.  The concept is based on the  conversion  of a Moss
type LNG carrier (`Moss type' is in reference to the type and shape of the cargo
tanks), either existing or newly built. The activities will be managed through a
dedicated joint venture,  where Saipem will handle the engineering and technical
aspects of the FRT's.  We will  contribute to the joint  venture by  identifying
suitable LNG carriers as well as providing maritime expertise. The ultimate size
of our investment has yet to be determined.

Critical Accounting Policies

     The  preparation of the Company's  financial  statements in accordance with
accounting  principles  generally  accepted in the United  States  requires that
management  make  estimates and  assumptions  affecting the reported  amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the  reporting  period.  The  following is a discussion  of the
accounting  policies  applied by the Company  that are  considered  to involve a
higher  degree of judgment in their  application.  See Note 2. to the  Company's
audited  Consolidated  and  Combined  Financial  Statements  and  Notes  thereto
included  herein  for  details  of  all  of the  Company's  material  accounting
policies.


                                       41
<PAGE>

Carve out of the Financial Statements of Osprey

     For the year ended  December  31,  2001 and the six  months  ended June 30,
2001,  the five months to May 31,  2001,  have been carved out of the  financial
statements of Osprey and are presented on a combined basis. For the seven months
from June 1, 2001 to December  31, 2001 and the six months  ended June 30, 2002,
the  financial  statements  of Golar as a  separate  entity are  presented  on a
consolidated  basis. For the years ended December 31, 2000 and 1999 the combined
financial  statements  presented  herein have been  carved out of the  financial
statements of Osprey.

     Osprey is a shipping  company with  activities that include oil tankers and
product carriers as well as LNG carriers.  Where Osprey's  assets,  liabilities,
revenues and expenses relate to the LNG business, these have been identified and
carved out for inclusion in these financial  statements.  Where Osprey's assets,
liabilities,  revenues and expenses  relate to one specific line of business but
not the LNG  business,  these have been  identified  and not  included  in these
financial  statements.  The  preparation of the carved out financial  statements
requires  allocation of certain assets and liabilities and revenues and expenses
where  these items are not  identifiable  as related to one  specific  activity.
Management  has deemed the related  allocations  are  reasonable  to present the
financial position,  results of operations,  and cash flows of the Company.  The
financial position,  results of operations and cash flows of the Company are not
necessarily  indicative  of those that would have been  achieved had the Company
operated  autonomously  for all years  presented  as the  Company  may have made
different  operational  and  investment  decisions as a Company  independent  of
Osprey.

Vessels and Depreciation

     The cost of the Company's  vessels is depreciated on a straight-line  basis
over the vessels'  remaining  economic  useful lives.  Management  estimates the
useful  life of the  Company's  vessels to be 40 years and this is a common life
expectancy  applied in the LNG  shipping  industry.  If the  estimated  economic
useful life is incorrect, an impairment loss could result in future periods. The
vessels held and used by the Company are reviewed for impairment whenever events
or  changes  in  circumstances  indicate  that the  carrying  amount  may not be
recoverable.  In assessing the  recoverability of the vessels' carrying amounts,
the Company must make assumptions regarding estimated future cash flows. Factors
we consider  important which could effect  recoverability and trigger impairment
include significant  underperformance relative to expected operating results and
significant negative industry or economic trends.
<PAGE>
Results of Operations

     Our results for the year ended  December  31, 2001  compared  with the year
ended December 31, 2000 and for the six months ended June 30, 2002 compared with
the six months ended June 30, 2001 are affected by several key factors:

     o    the pushdown of purchase  accounting  adjustments on January 31, 2001,
          resulting from the acquisition of Osprey by World Shipholding, thereby
          recording  in our books a  significant  reduction  in vessel  carrying
          values;

     o    the  application of the  predecessor  basis of accounting  with effect
          from May 31, 2001 resulting  from our  acquisition of the LNG interest
          of Osprey and Seatankers;

     o    the issue of new equity and refinancing of our principal loan facility
          with effect from May 31, 2001 in connection  with the  acquisition  by
          Golar of the LNG business of Osprey;

     o    restructuring  costs incurred in connection with the reorganization of
          our operations, in particular the closure of Osprey's Singapore office
          and associated employment severance costs; and

     o    the adoption of Statement of Financial  Accounting  Standards No. 133,
          "Accounting for Derivatives and Hedging Activities".


                                       42
<PAGE>

The impact of these factors is discussed in more detail below.

     Six months ended June 30, 2002  compared with the six months ended June 30,
2001

     Operating Revenues.  Total operating revenues increased twenty percent from
$53.8  million in the six months  ended  June 30,  2001 to $64.5  million in the
comparable period of 2002. This increase resulted  primarily from higher charter
rates  associated  with  long-term  charters and a decrease in offhire days. The
fleet  earned an average  daily time  charter rate of $58,900 and $51,000 in the
six months  ended June 30, 2002 and 2001,  respectively.  The  increase in rates
from 2001 to 2002 was due to increased  rates in respect of the Hilli,  Gimi and
Khannur,  effective  January 1, 2002 and a rate increase in respect of the Golar
Freeze  effective August 1, 2001. In the six months ended June 30, 2002 and 2001
total days  offhire were 22.5 and 95,  respectively.  The decrease is due to the
fact that three  vessels  underwent  drydocking  during 2001 whilst there was no
loss of income associated with the drydocking of one vessel in 2002.

     Vessel Operating  Expenses.  Vessel operating expenses increased 19 percent
from $11.4  million in the 2001 period to $13.6  million in the six months ended
June 30,  2002.  This was  principally  attributable  to  increased  crew costs,
pension costs and insurance  costs.  Crew costs account for  approximately  $0.9
million of the increase due to a  combination a higher level of surplus crew and
costs  associated  with  crew  reorganization.  Pension  costs in 2002 were $0.6
million  higher as  determined  by our  actuarial  valuations.  Insurance  costs
increased  approximately  $0.3 million due to the payment of two deductibles for
vessel  operating  repairs  and a  general  increase  in the  market  rates  for
insurance.  In the six months  ended June 30, 2002 and 2001,  the average  daily
operating costs of our vessels were $12,500 and $10,500, respectively.  Included
in these amounts are $1,027 per day and $937 per day,  respectively of overheads
allocable  to  vessel  operating  expenses.  These  are  onshore  costs  such as
technical and  operational  staff  support,  information  technology  and legal,
accounting and corporate costs  attributable to vessel  operations.  These costs
are  allocated  based on internal cost studies,  which  management  believes are
reasonable estimates.

     Administrative Expenses.  Administrative expenses were $2.7 million in each
of the six months ended June 30, 2002 and 2001. In the six months ended June 30,
2002  compared  with the six months ended June 30, 2001, a reduction in employee
and property related  administration  expenses was offset by an increase in cost
relating to the planned public offering in the United States.

     Restructuring costs.  Restructuring costs of $1.9 million in the six months
ended June 30, 2001 consist primarily of employment  severance costs incurred in
connection with the restructuring of Osprey's Singapore operations following the
acquisition  by World  Shipholding.  This  reflects  costs  associated  with the
Singapore  office  closure  and  the  related  personnel  whose  employment  was
terminated. These costs were not repeated in 2002.

     Earnings before interest,  tax,  depreciation and amortization,  or EBITDA.
EBITDA  increased 28 percent from $37.8 million in the six months ended June 30,
2001 to $48.2 million in the comparable  period of 2002,  principally due to the
increase in operating revenues.

     Depreciation and  Amortization.  Depreciation  and  amortization  decreased
three  percent from $16.2 million in the six months ended June 30, 2001 to $15.7
million in the comparable  period of 2002. This decrease is due to the reduction
in carrying values of the vessels of approximately  $109.8 million that resulted
from World  Shipholding's  purchase of Osprey and was reflected in our financial
statements  beginning  February 1, 2001. As discussed in Note 1 to the financial
statements,  the fair values of Osprey's assets and liabilities as determined by
independent  appraisal,  based on  discounted  future  cashflows,  exceeded  the
purchase  price paid by World  Shipholding.  This  difference was reflected as a
reduction in the carrying value of our vessels.


                                       43
<PAGE>

     Net Financial  Expenses.  Interest income was $0.6 million and $2.2 million
for the six months ended June 30, 2002 and 2001, respectively.  Interest expense
was $12.0  million and $17.6  million for the six months ended June 30, 2002 and
2001, respectively.  This decrease of 32 percent reflects a combination of lower
average interest rates and the  restructuring of the Company's debt in the first
half of 2001. In May 2001, the Company  refinanced its existing facility for the
five wholly-owned  vessels and obtained  significantly  improved margins.  Other
financial items decreased to $5.9 million for the six months ended June 30, 2002
from $6.9  million in the six months  ended  June 30,  2001.  For the six months
ended June 30, 2002 and June 30, 2001,  other  financial  items include a charge
for the mark to market  valuation of derivative  instruments of $5.2 million and
$3.3  million,   respectively.  In  addition,  we  incurred  financing  fees  of
approximately  $3.3 million in the six months ended June 30, 2001 in  connection
with the  accelerated  amortization  of the deferred  fees on the existing  loan
facility due to its refinancing.

     Minority  Interest and Income Taxes.  Minority  interest consists of the 40
percent interest in the Golar Mazo, for both periods. Income taxes, which relate
to the taxation of the United  Kingdom  branch  operations  of a subsidiary  and
certain interest income, were insignificant in both periods.

     Net  Income  (Loss).  As a result of the  foregoing,  net  income was $15.1
million in the six months  ended June 30,  2002  compared  to a net loss of $2.5
million in the six months ended June 30, 2001.

     Year ended  December 31, 2001,  compared  with the year ended  December 31,
2000

     Operating  Revenues.  Total operating  revenues  increased one percent from
$113.0 million in 2000 to $114.2 million in 2001.  This resulted  primarily from
higher  average  charter rates and an increase in the number of days trading for
the Golar Mazo,  offset by an  increase in  scheduled  offhire  days.  The fleet
earned an average  daily time  charter  rate of $53,600  and $50,900 in 2001 and
2000,  respectively.  Total operating  revenues were reduced due to an increased
number of offhire days associated with the scheduled drydocking of three vessels
in 2001.  In the years ended  December 31, 2001 and 2000 total days offhire were
130 and 79, respectively.

     Vessel Operating  Expenses.  Vessel operating expenses increased 17 percent
from  $21.0  million  in 2000 to $24.5  million  in 2001.  This was  principally
attributable to increased crew costs,  pension costs and insurance  costs.  Crew
costs  account  for  approximately  $1.1  million  of  the  increase  due  to  a
combination of pay increases,  changes to shift patterns that increased  manning
levels and a slightly  higher level of surplus crew.  Pension costs in 2001 were
$1.6 million higher as determined by our actuarial  valuations.  Insurance costs
increased  approximately  $0.6 million due to the payment of a deductible for an
insured vessel  operating  repair and a general increase in the market rates for
insurance.  In the years ended  December  31, 2001 and 2000,  the average  daily
operating costs of our vessels were $11,200 and $9,600,  respectively.  Included
in these  amounts are $928 per day and $872 per day,  respectively  of overheads
allocable  to  vessel  operating  expenses.  These  are  onshore  costs  such as
technical and  operational  staff  support,  information  technology  and legal,
accounting and corporate costs  attributable to vessel  operations.  These costs
are  allocated  based on internal cost studies,  which  management  believes are
reasonable  estimates.  We expect to reduce our future vessel operating expenses
by  leveraging  the  purchasing  power  of  related  companies,   by  increasing
utilization   of  our  crew  pool,  and  through  the  gradual  change  of  crew
nationalities  to lower  cost,  but equally  qualified  crews,  consistent  with
industry  practice.  In  addition,  we plan to leverage  overhead  functions  by
increasing fleet size without  corresponding  incremental  increases in overhead
spending.

     Administrative  Expenses.  Administrative  expenses increased seven percent
from $7.7 million in 2000 to $8.2 million in 2001,  principally  due to a charge
of $2.4 million of expenses  relating to a planned public offering in the United
States.  Offsetting  this amount was reduced  property  costs and the absence of
costs  associated  with  financing  activities  which  took  place in  2000.  We
relocated  our London office  facilities  during  September  2000 and closed our
Singapore office during May 2001, which reduced property costs from $1.2 million
for the year ended December 31, 2000 to $0.8 million for the year ended December
31, 2001.

     We anticipate  lower recurring  administrative  expenses in the future as a
result of the  elimination  of the  Singapore  head office  cost and  associated
compensation costs of Singapore  personnel whose functions have been transferred
to existing offices in London and Bermuda.

     Restructuring costs.  Restructuring costs of $1.9 million in the year ended
December 31, 2001 consist  primarily of employment  severance  costs incurred in
connection with the restructuring of Osprey's Singapore operations following the
acquisition by Word  Shipholding.  As noted above,  we anticipate  certain costs
savings for  administrative  expenses going forward as a result of the reduction
in senior management costs as well as reduced property expenses.

     EBITDA.  EBITDA  decreased  six percent from $84.3 million in 2000 to $79.6
million in 2001, principally due to the increase in vessel operating expenses.


                                       44
<PAGE>

     Depreciation and Amortization.  Depreciation and amortization  decreased 13
percent from $36.5  million in 2000 to $31.6  million in 2001.  This decrease is
due to the reduction in carrying values of the vessels of  approximately  $109.8
million  that  resulted  from  World  Shipholding's  purchase  of Osprey and was
reflected in our financial statements beginning February 1, 2001.

     Net Financial  Expenses.  Interest income was $3.3 million and $2.1 million
for the years ended  December  31, 2001 and 2000,  respectively.  This  increase
reflects a higher  average  cash  balance for the Golar Mazo in the 2001 period.
Interest  expense  was $32.5  million  and  $44.5  million  for the years  ended
December 31, 2001 and 2000, respectively. This decrease of 27 percent reflects a
combination  of lower  average  interest  rates and an increase  in  capitalized
interest from $196,000 in 2000 to $2,627,000 in 2001. In May 2001, we refinanced
the  facility  for the five  wholly-owned  vessels  and  obtained  significantly
improved margins.  Other financial items increased to $12.4 million for the year
ended  December 31, 2001 from $2.4 million in the year ended  December 31, 2000,
primarily  due to a mark to  market  charge  of  $8.2  million  relating  to the
application of a new accounting  pronouncement  for derivative  instruments.  In
addition,  during the first half of 2001,  we wrote off $2.3 million of deferred
finance fees as a result of refinancing a loan facility.

     Minority Interest and Income Taxes. Minority interest, consisting of the 40
percent interest in the Golar Mazo,  decreased from $3.4 million in 2000 to $1.6
million in 2001,  principally due to the impact of the mark to market charge for
derivative  instruments  of $6.3  million.  Income  taxes,  which  relate to the
taxation of the United  Kingdom  branch  operations of a subsidiary  and certain
interest income, were insignificant in both periods.

     Net Income (Loss).  As a result of the  foregoing,  we earned net income of
$4.4 million in 2001, increased from a net loss of $0.5 million in 2000.

     Year ended  December 31, 2000,  compared  with the year ended  December 31,
1999

     Our results for the year ended  December  31, 2000  compared  with the year
ended December 31, 1999 are affected primarily by the delivery of the Golar Mazo
on January 15, 2000.

     Operating  Revenues.  Total  operating  revenues  increased 38 percent from
$81.8 in 1999 to $113.0  million in 2000. The fleet earned an average daily time
charter rate of $50,900 and $43,300 in 2000 and 1999,  respectively.  On January
15, 2000 the vessel Golar Mazo was  delivered to us and  commenced its long-term
time charter on the same date. The Golar Mazo thereby  contributed $33.3 million
in 2000.  Golar Spirit was operated  throughout  1999 and 2000 on its  long-term
time charter which gave a contribution of $26.0 million in both years. Operating
revenues in 2000 were also  improved by the reduction in number of offhire days.
In the year ended  December 31, 2000,  total days offhire were 79 compared  with
152 in 1999 due to the  commencement  of British Gas long-term  charters in 2000
for our four LNG carriers, the Hilli, Gimi, Khannur and Golar Freeze. Offsetting
these positive  factors was a reduction in earnings as these four vessels during
1999 operated under either  short-term or medium-term time charters,  earning an
average rate of $40,100 per day.  Commencing  with the  long-term  time charters
with British Gas, earning for these four vessels were reduced to an average rate
of $36,100 per day in 2000.

     Vessel Operating  Expenses.  Vessel operating expenses increased 15 percent
from  $18.3  million  in 1999 to $21.0  million  in 2000.  $3.3  million of this
increase  is  attributable  to the  inclusion  of the Golar  Mazo in 2000.  This
increase  is  partly  offset  by  reduced  expenses  for the  rest of the  fleet
principally for stores, repairs and spare parts, due to operating  efficiencies.
The average  daily  operating  costs of our vessels was $9,600 in 2000  compared
with $10,000 in 1999. Included in these amounts in each of 2000 and 1999 is $872
per vessel per day of overheads allocable to vessel operating expenses.

     Administrative  Expenses.  Administrative  expenses decreased three percent
from $7.9  million in 1999 to $7.7  million  in 2000.  In 2000 we  benefited  by
moving to lower cost  premises but this was offset by higher salary costs due to
exceptional staff bonus payments.  The decrease from 1999 also reflects the fact
that in 1999 we incurred a $0.5 million  non-recurring  charge  associated  with
expected losses on certain sub-lease arrangements relating to office premises.


                                       45
<PAGE>

     Earnings before  Interest,  Tax,  Depreciation and  Amortization.  In 2000,
EBITDA  increased  52  percent  from  $55.6  million  in 1999 to $84.3  million,
primarily due to the impact of the additional  time charter  revenues  resulting
from the operation of the Golar Mazo.

     Depreciation and Amortization.  Depreciation and amortization  increased 24
percent from $29.5  million in 1999 to $36.5 million in 2000, as a result of the
inclusion of the Golar Mazo from January 2000.

     Net Financial  Expenses.  Interest income was $2.1 million in 2000 compared
with  $3.6  million  in  1999,  a  decrease  of 42  percent.  This  is  due to a
substantial  loan  repayment  that  affected  the net  operating  cash flows and
consequent allocation of interest income.  Interest expense was $44.5 million in
2000  compared  with $26.4  million in 1999,  an increase  of 69  percent.  This
increase is partially  attributable  to the drawdown on a loan facility of $88.2
million in January 2000 to assist in financing the delivery  installment  of the
Golar Mazo. The Company had total debt outstanding of $513.9 million at December
31, 2000  compared with $467.7  million at December 31, 1999. In 2000,  interest
expense  increased  due to the delivery of the Golar Mazo.  In the prior period,
interest expense of $7.5 million was capitalized in the construction cost of the
vessel.

     Minority  Interest and Income  Taxes.  In the year ended  December 31, 2000
minority interest was $3.4 million,  representing the 40 percent interest in the
owning  company of the Golar Mazo.  Prior to this  vessel's  delivery in January
2000, there was no operating  revenues and all predelivery  expenditure had been
capitalized in the cost of the vessel.  Income taxes relate to the taxation of a
United  Kingdom branch of a subsidiary  and tax on interest  income  received by
certain  other  subsidiaries  of the  Company  and  were  insignificant  in both
periods.

     Net Income (Loss). As a result of the foregoing, a net loss of $1.9 million
in 1999 decreased to a net loss of $0.5 million in 2000.

Liquidity and Capital Resources

     We operate in a capital intensive industry and our predecessor business has
historically   financed  its   purchase  of  LNG  carriers  and  other   capital
expenditures  through a combination of borrowings  from commercial  banks,  cash
generated from operations and equity capital. Our liquidity  requirements relate
to  servicing  our debt,  funding our  newbuilding  program,  funding the equity
portion of investments in vessels,  funding working capital and maintaining cash
reserves against fluctuations in operating cash flows.

     Revenues from our time charters and our  management  contracts are received
monthly  in  advance.  Inventory  requirements,  consisting  primarily  of fuel,
lubricating  oil and spare  parts,  are low due to the  majority  of these items
being paid for by the  charterer  under time  charters.  We believe  our current
resources are sufficient to meet our working capital requirements;  however, our
newbuilding  program,  currently  consisting of four committed  contracts,  will
result in  increased  financing  and  working  capital  requirements,  which are
described further below.  Payments for our newbuildings are made as construction
progresses in accordance with our contracts with shipyards.

     We have sufficient  facilities to meet our anticipated  funding needs until
August 2003.  As of October 2002  additional  facilities of $316 million will be
needed to meet commitments under the newbuilding  construction program in August
2003 and thereafter.  It is standard in the shipping industry to finance between
60 and 80 percent of the purchase price of vessels,  or construction cost in the
case of newbuildings, through traditional bank financing. In the case of vessels
that have term  charter  coverage,  the debt  finance  percentage  may  increase
significantly.  One of our newbuildings has been employed on a long-term charter
with British Gas and we have  obtained  financing for 100 percent of the cost of
the  vessel.  If we were to  obtain  60  percent  debt  financing  to cover  the
installments  due on our three  remaining  unfinanced  newbuildings,  this would
equate to additional  finance of approximately  $235 million of the $316 million
required.


                                       46
<PAGE>

     It is intended that the funding for our  commitments  under the newbuilding
construction  program  will  come  from a  combination  of debt  finance,  lease
arrangements for existing vessels and cash flow from operations.  Alternatively,
if market and economic conditions favor equity financing, we may raise equity to
fund a portion of the construction costs. We are in advanced negotiations with a
number of financial  institutions and others to provide sufficient facilities to
meet  these  construction  commitments  in full as they  fall  due.  Details  of
newbuilding commitments and proposed funding arrangements are detailed below.

     Our funding and treasury activities are conducted within corporate policies
to maximize investment returns while maintaining  appropriate  liquidity for our
requirements.  Cash and cash equivalents are held primarily in U.S. dollars.  We
have not made  use of  derivative  instruments  other  than for risk  management
purposes.

     The following table summarizes our cashflows from operating,  investing and
financing activities:

<TABLE>
<CAPTION>
(in millions of $)                   Six        Six        Year        Year        Year
                                  Months     Months       Ended       Ended       Ended
                                   Ended      Ended    December    December    December
                                 June 30    June 30     31 2001     31 2000     31 1999
                                    2002       2001
                                  ------     ------      ------      ------       -----
<S>                               <C>        <C>         <C>         <C>          <C>
Net cash provided by operating      32.1       12.9        42.0        29.5        18.8
activities

Net cash used in investing        (103.3)    (572.5)     (657.9)     (122.8)      (27.4)
activities

Net cash provided by financing      65.3      591.7       667.7        96.5         9.4
activities

Net increase (decrease) in          (5.9)      32.1        51.8         3.1         0.8
cash and cash equivalents

Cash and cash equivalents at        57.5        5.7         5.7         2.6         1.8
beginning of period

Cash and cash equivalents at        51.6       37.8        57.5         5.7         2.6
end of period
</TABLE>

     With our  incorporation  and  recapitalization  in May 2001, our short-term
liquid resources increased  modestly.  As of June 30, 2002 and December 31, 2001
the Company had  unrestricted  cash and cash  equivalents  of $51.6  million and
$57.5  million,  respectively.  In  addition,  at June 30, 2002 and December 31,
2001, we had restricted  cash of $13.2 million and $14.2  million,  respectively
that represents  balances retained on accounts in accordance with certain of our
loan  covenants.  These  amounts  are in  contrast  to cash and cash  equivalent
balances  at  December  31,  2000 and  1999 of $5.7  million  and $2.6  million,
respectively  with $13.1  million of funds at  December  31, 2000 also placed in
restricted cash deposits and short term interest bearing deposits.


                                       47
<PAGE>

     We generated cash from  operations of $32.1 million in the six months ended
June 30, 2002 compared  with $12.9 million  generated in the first six months of
2001. In 2001, we generated cash from operations of $42.0 million  compared with
$29.5 million in 2000. In 1999, we generated cash from operations of $18.8.

     Net cash used in investing activities in the six months ended June 30, 2002
totaled $103.3 million, of which $101.4 million related to newbuilding  purchase
installments.  Net cash used in investing  activities in the year ended December
31, 2001 totaled $657.9  million,  of which $572.5 million was in the six months
ended  June  30,  2001,  mainly  as a  result  of  $530.9  million  used  in the
acquisition  of the LNG interests of Osprey and  Seatankers  and $140.0  million
towards ship construction and  refurbishment.  This compares with $122.8 million
and $27.4 million used in these  activities in the years ended December 31, 2000
and 1999,  respectively.  In 2000, investing activities consisted primarily of a
payment  of  $94.0  million  for  the  final  purchase  installment  for the LNG
newbuilding,  the Golar Mazo,  as well as a cash  investment of $27.3 million in
short term interest bearing deposits.

     Net cash  provided by  financing  activities  was $65.3  million in the six
months ended June 30, 2002 compared with $591.7  million in the six months ended
June 30,  2001.  Financing in the six months ended June 30, 2002 came from a new
loan facility from Lloyds TSB Bank PLC of which $131.9  million was drawndown in
the period,  and $16.3 million from a related party.  Repayments of debt totaled
$73.0  million in the six month  period of which $52.6  million was to a related
party. Net cash provided by financing  activities was $667.7 million in the year
ended  December  31, 2001,  of which $591.7  million was in the six months ended
June 30, 2001,  compared  with $96.5  million and $9.4 million in the year ended
December 31, 2000 and 1999,  respectively.  Financing  in 2001 came  principally
from a new $325 million  floating  rate loan  facility  undertaken  to refinance
floating  rate  facilities,  and from net  proceeds of $275.8  million  from our
equity placement in Norway,  both of which occurred in May 2001. We were able to
obtain a  substantial  reduction  in interest  margins  over LIBOR  through this
refinancing that should provide us with greater  financial  flexibility and debt
capacity in the future.  In addition,  we received  $85.3 from a related  party,
Greenwich,  as discussed  below.  Repayments  of loan  facilities  totaled $15.2
million in 2001.  Financing activity in 2000 related principally to the drawdown
of long-term  debt for financing the final  delivery  installment  for the Golar
Mazo.

     In connection  with the  acquisition of its LNG operations in 1997,  Osprey
entered  into a secured  loan  facility  for an amount of $352.4  million;  this
facility  provided for floating  rate  interest of LIBOR plus 2.5 percent to 4.0
percent.  In May 2001,  following  the  formation of Golar in its current  legal
form,  in  connection  with the  acquisition  of the LNG interests of Osprey and
Seatankers,  we refinanced our five  wholly-owned LNG carriers and recapitalized
Golar. We acquired these interests for $530.9 million (net of cash acquired). In
May 2001, the $352.4 million  facility was repaid and the Company entered into a
new  secured  loan  facility  with a  banking  consortium  for an amount of $325
million,  the Golar LNG  facility.  This six year facility  bears  floating rate
interest  of LIBOR  plus 1.5  percent.  The loan is  repayable  in 22  quarterly
installments  and a final balloon payment of $147.5 million.  The long-term debt
is  secured  by a mortgage  on our five  wholly  owned  vessels,  Golar  Spirit,
Khannur,  Gimi, Hilli and Golar Freeze. In our financial statements for the year
ended  December  31, 2001,  the interest  expense to May 31, 2001 relates to the
carved out Osprey  facility while the expense for the remaining  seven months of
2001  relates  to the new $325  million  facility  and the loans  from a related
party,  Greenwich,  as discussed  further below.  The balance of the acquisition
price was financed from the net proceeds of $275.8 million we raised through the
equity  placement in Norway.  In June 2001, $32.5 million of the proceeds of the
share issue was used to finance the first delivery installment due on one of the
newbuilding contracts as discussed further below.

     On November 26, 1997 Osprey  entered into a loan facility of $214.5 million
secured by a mortgage on the vessel Golar Mazo. This facility,  which we assumed
from Osprey,  bears floating rate interest of LIBOR plus 0.865 percent. The loan
is repayable  in bi-annual  installments  that  commenced on June 28, 2001.  The
balance of the facility,  on a 100 percent  basis,  at December 31, 2001 totaled
$204.3  million.  In connection  with the Mazo  facility,  Osprey entered into a
collateral agreement with the banking consortium and a bank Trust Company.  This
agreement  requires  that  certain  cash  balances,  representing  interest  and
principal  payments for defined  future  periods,  be held by the Trust  Company
during the period of the loan.

     During the second half of 2001,  and the first half of 2002,  we  undertook
borrowing  arrangements with Greenwich  Holdings Limited,  a company  indirectly
controlled  by Mr.  Fredriksen,  to provide  initial  funding under three of our
newbuilding contracts discussed in further detail below.

     In August 2001, we obtained a loan of $32.6 million from Greenwich in order
to finance the first  installment due on newbuilding  hull number 2215. The loan
was for a period of one year and bore  floating  rate interest of LIBOR plus 2.5
percent.  Related to this,  a  subsidiary  of Golar  guaranteed  a loan of $32.6
million made to Greenwich by Nordea and Den norske Bank ASA,  both  Scandinavian
banks, and entered into an assignment and security agreement, in respect of its'
shipbuilding  contract,  with Den norske Bank as security  agent.  In  September
2001,  we obtained an additional  $20 million in loan finance from  Greenwich by
way of an addendum to the loan of $32.6 million in relation to hull number 2215,
in order to finance the second  installment  on this vessel.  The loan was for a
period of six months and bore  floating rate interest of LIBOR plus 2.5 percent.
These loans totaling $52.6 million have been repaid out of the new bank facility
discussed below.


                                       48
<PAGE>

     In August 2001, we obtained a loan of $32.7 million from Greenwich in order
to finance the first installments due on newbuilding hull numbers 1460 and 2220.
The loan is for a period of one year and bears  floating  rate interest of LIBOR
plus 2.5  percent.  In  connection  with this,  two  subsidiaries  of Golar have
guaranteed  a loan of $32.7  million  made to Greenwich by Nordea and Den norske
Bank ASA and they have both entered into an assignment and security agreement in
respect of their shipbuilding contracts with Den norske Bank as security agent.

     After these transactions, at December 31, 2001, we had total long-term debt
outstanding of $609.6  million,  compared with $513.9 million and $467.7 million
at December 31, 2000 and 1999, respectively.

The outstanding debt of $609.6 million as of December 31, 2001 was repayable as
follows:

     Year ending December 31,
     (in millions of $)
     2002                                                             126.3
     2003                                                              42.0
     2004                                                              43.1
     2005                                                              46.7
     2006                                                              55.4
     2007 and later                                                   296.1
     ----------------------------------------------------------------------
                                                                      609.6
     ======================================================================

     On December 31, 2001, we signed a loan  agreement  with Lloyds TSB Bank Plc
to finance 100 percent of the cost of one of our newbuildings, hull number 2215,
after we secured a 20 year charter for this vessel.  The agreement  allows us to
draw down a  maximum  of $180  million  to cover the  contract  price,  costs of
supervising the building process and interest costs of the draw down part of the
loan up to  delivery.  In March  2002 we drew  down  $99.2  million  on the loan
facility  signed  with  Lloyds  TSB Bank  Plc.  This  draw down was used for the
purpose of  financing  the third  installment  of $32.4  million on  newbuilding
number  2215 and,  in addition as  discussed  above,  $52.6  million was used to
re-pay loans from Greenwich in respect of the same vessel.  In June 2002 we drew
down a further  $32.7 to finance  the fourth  installment  of $32.4  million and
associated interest and commitment costs.

     In June 2002, we obtained  $16.3 million in loan finance from  Greenwich by
way of an addendum to an existing loan agreement in respect of newbuilding  hull
numbers  1460 and  2220 in  order  to  finance  the  second  installment  due on
newbuilding hull number 1444. In connection with this, a subsidiary of Golar has
guaranteed  a loan of $16.3  million  made to Greenwich by Nordea and Den norske
Bank ASA and has entered into an assignment and security agreement in respect of
its shipbuilding  contract with Den norske Bank as security agent. This addendum
also extended the  repayment  date of the original  loan,  $32.7  million,  from
August 2002 until  August 2003.  The $16.3  million loan is for a period of four
months and bears floating rate interest of LIBOR plus 2.625  percent.  This rate
also  applies to the  original  $32.7  million  loan from June  2002.  This rate
increases to LIBOR plus three  percent on any amounts  still  outstanding  as at
February 20, 2003.

     After these  transactions,  at June 30, 2002, we had total  long-term  debt
outstanding of $684.8 million which was repayable as follows:

     Year ending December 31,
     (in millions of $)
     2002 (six months to December 31, 2002)                            36.9
     2003                                                              77.1
     2004                                                              46.5
     2005                                                              50.1
     2006                                                              59.6
     2007 and later                                                   414.6
     ----------------------------------------------------------------------
                                                                      684.8
     ======================================================================


                                       49
<PAGE>

     In September 2002,  Greenwich confirmed the availability of an extension to
the $32.7  million  loan and the $16.3  million  loan in respect of hull numbers
1460, 2220 and 1444.  Both amounts can remain  outstanding,  if required,  until
December 2003.  Greenwich also confirmed the  availability  of an additional $15
million  facility  for the  payment  of  newbuilding  installments  should it be
required.

     In  October  2002,  we signed a loan  agreement  with some of the Golar LNG
facility  Lenders in respect of a facility in the amount of up to $60 million to
be  secured  on the  Company's  existing  five  wholly-owned  vessels  as second
priority charges.  The agreement allows us to draw down a maximum of $60 million
to assist in the financing of our newbuilding installment payments.

     In addition to mortgage security,  some of our debt is also  collateralized
through  pledges of shares by  guarantor  subsidiaries  of Golar.  Our  existing
financing agreements impose operation and financing restrictions on us which may
significantly  limit or  prohibit,  among  other  things,  our  ability to incur
additional indebtedness, create liens, sell capital shares of subsidiaries, make
certain  investments,  engage in mergers  and  acquisitions,  purchase  and sell
vessels, enter into time or consecutive voyage charters or pay dividends without
the consent of our lenders. In addition, our lenders may accelerate the maturity
of indebtedness under our financing agreements and foreclose upon the collateral
securing the  indebtedness  upon the  occurrence  of certain  events of default,
including  our  failure to comply  with any of the  covenants  contained  in our
financing  agreements.  We are  required  under  our $325  million  facility  to
maintain  available  cash of at least $25  million,  and to maintain an asset to
current liability ratio,  excluding current long-term debt, of not less than 1.5
to 1. As of the end of each fiscal  quarter up to the end of 2003,  the ratio of
our total  outstanding  debt,  reduced by our then  available  cash, to earnings
before interest, tax, depreciation and amortization on an annualized basis shall
not be more than 6.5 to 1. This  ratio is  reduced  to 6 to 1 in 2004 and 5 to 1
for all subsequent periods. We are required under our Mazo facility (in which we
have a sixty  percent  interest)  to maintain in an account  (the `debt  service
reserve'  account)  controlled  by the  trustee,  an amount  equal to six months
interest and principal debt repayment.  After the first five years from delivery
(January  2000) this is reduced to an amount  equal to five months  interest and
principal debt repayment. For the six months ended 28 June 2002 this amounted to
$12.7 million. We are additionally  required to place each month into a separate
account (the  `collateral'  account) also  controlled by the trustee,  an amount
equal to one month's  interest and principal debt repayment.  The funds built up
in the collateral account are used to pay the interest and principal due at each
six  monthly  repayment  date.  There is also a  requirement  to maintain a debt
service  coverage  ratio of 1.10:1,  which is calculated by dividing six month's
charter hire by six month's interest and principal debt repayment As of June 30,
2002,  December 31, 2001,  2000 and 1999,  we complied with all covenants of our
various debt agreements.

Newbuilding Contracts and Capital Commitments

     As of December 31, 2001,  we had  contracts to build four new LNG carriers.
Amounts payable under these contracts,  totaling  approximately  $658.9 million,
excluding  financing costs, are due in installments  over the period to December
2004,  with  approximately  $423.5 falling due after September 30, 2002. We also
have budgeted capital expenditure of approximately $25 million over the next six
years in connection with our vessels refurbishment program.


                                       50
<PAGE>

     As of October 2002, the Company had total loan  facilities of $304 million,
to finance its  newbuilding  program.  These consist of a $180 million  facility
from Lloyds TSB Bank Plc ($162  million is in respect of the  contract  cost and
the balance is for  associated  finance  costs and other sundry  items) of which
$129.6 million has been drawn down to finance  newbuilding  installments,  $64.0
million from a related party,  Greenwich,  of which $49.0 million has been drawn
down as discussed in Note 28 to the Company's financial statements,  and the $60
million facility from some of the Golar LNG Facility  lenders.  The Company will
then require  additional  financing of approximately $316 million to fund all of
its newbuilding construction commitments.

     The  commitments up to August 2003 will be funded from existing  facilities
and cash generated from operations.  Additional  facilities are required to meet
progress  payments  from  August  2003 and  further  progress  payments  arising
periodically thereafter until completion of the program in 2004.

     Our senior  management  evaluates  funding  alternatives  depending  on the
prevailing  market  conditions.  We  anticipate  that the  additional  financing
required to fund the completion of the remaining newbuilding  construction costs
will  come  from a  combination  of  additional  debt  financing  and cash  from
operations,  supplemented  by equity  proceeds as  circumstances  may warrant or
permit. It is standard in the shipping industry to finance between 60 and 80 per
cent of the construction cost of newbuildings through traditional bank financing
and in the  case of  vessels  that  have  charter  coverage,  the  debt  finance
percentage may increase significantly. We may finance up to 100 percent of these
newbuilding  costs  through  additional  tranches  of bank debt  secured  by the
respective  newbuildings.   We  would  make  such  borrowings  as  needed  while
construction  proceeds.  Alternatively,  if market and economic conditions favor
equity  financing at any such time,  we may use  somewhat  less debt and instead
raise  equity to fund a larger  portion  of these  costs.  Currently,  we have a
charter  contract  for  one of our  newbuildings  and we are  seeking  long-term
charters for two of our newbuildings.  We are considering  dedicating the fourth
newbuilding to the spot market. The charter coverage of a newbuilding may affect
our ability to finance its completion.

     As at September  30, 2002,  approximately  $235.5  million has been paid as
installments under the newbuilding contracts. The following table sets out as at
September 30, 2002 the estimated timing of the remaining  commitments  under our
present  newbuilding  contracts  over the next five years.  Actual dates for the
payment of installments may vary due to progress of the construction.

     These estimated  timings take into account the  rescheduling of installment
payments for two of our  newbuildings.  Both  shipyards have offered and we have
accepted revised payment terms in  consideration  of an amount  equivalent to an
interest charge of between six and eight percent  interest per annum. The effect
of these  amendments  to the  timing  of  payments  is to delay a total of $81.1
million from 2002 and 2003 until  payment of $32.5  million in December 2003 and
$48.6 million in March 2004.

                            Hull No.    Hull No.  Hull No.   Hull No.     Total
(in millions of $)            1444        2215      2220       1460
--------------------------------------------------------------------------------

2002 (three months)             16.3         --       16.2       16.5       49.0
2003                           100.6       32.4       32.4       33.0      198.4
2004                              --         --       84.0       92.1      176.1
2005                              --         --         --         --         --
2006 and later                    --         --         --         --         --
                              _______     ______    _______    _______    ______
Total                          116.9       32.4      132.6      141.6      423.5


                                       51
<PAGE>

Recently  Issued  Accounting  Standards and Securities  and Exchange  Commission
Rules

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivatives
and Hedging Activities" ("FAS 133"). SFAS 133 as amended by FAS 137 and FAS 138,
establishes  accounting and reporting  standards for derivative  instruments and
hedging activities. It requires an entity to recognize all derivatives as either
assets or liabilities on the balance sheet and measure those instruments at fair
value.  Changes in the fair value of  derivatives  are  recorded  each period in
current  earnings  or  other  comprehensive  income,   depending  on  whether  a
derivative is designated as part of a hedge  transaction and, if it is, the type
of hedge  transaction.  The Company adopted SFAS 133 on January 1, 2001 and upon
initial adoption  recognized the fair value of its derivatives as liabilities of
$2.8  million  and a charge  of $2.8  million  was  made to other  comprehensive
income.

     In June 2001,  the FASB  approved  SFAS No. 141,  "Accounting  for Business
Combinations"  which requires the application of the purchase  method  including
the  identification of the acquiring  enterprise for each transaction.  SFAS No.
141 applies to all business  combinations  initiated after June 30, 2001 and all
business  combinations  accounted for by the purchase  method that are completed
after June 30,  2001.  The  adoption of SFAS No. 141 by the Company did not have
any  impact on the  Company's  consolidated  results  of  operations,  financial
position or liquidity.

     In June  2001,  the  FASB  approved  SFAS  No.  142,  "Goodwill  and  Other
Intangible Assets" ("SFAS 142"). SFAS No. 142 applies to all acquired intangible
assets  whether  acquired  singularly,  as part  of a  group,  or in a  business
combination.  SFAS No.  142 will  supersede  APB  Opinion  No.  17,  "Intangible
Assets".  This statement is effective for fiscal years  beginning after December
15, 2001. The adoption of SFAS No. 142 by the Company did not have any impact on
the  Company's  consolidated  results  of  operations,   financial  position  or
liquidity.

     In  August  2001,  the FASB  issued  SFAS No.  143,  "Accounting  for Asset
Retirement  Obligations" ("SFAS 143"). SFAS No. 143 requires the fair value of a
legal liability related to an asset retirement to be recognized in the period in
which it is incurred.  The associated asset retirement costs must be capitalized
as part of the carrying amount of the related  long-lived asset and subsequently
amortized to expense.  Subsequent  changes in the liability will result from the
passage  of  time(interest  cost)  and  revision  to cash flow  estimates.  This
statement  is  effective  for fiscal years  beginning  after June 15, 2002.  The
effect on the Company of adopting SFAS 143 is under evaluation.

     In  October  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets"  ("SFAS 144").  The  objectives of
SFAS 144 are to address  significant  issues relating to the  implementation  of
FASB Statement No. 121,  "Accounting for the Impairment of Long-Lived Assets and
for  Long-Lived  Assets to Be Disposed  Of", and to develop a single  accounting
model based on the framework  established in SFAS 121, for long-lived  assets to
be disposed of by sale. The standard requires that long-lived assets that are to
be disposed of by sale be measured at the lower of book value or fair value less
cost to sell.  Additionally,  the  standard  expands  the scope of  discontinued
operations to include all  components of an entity with  operations  that can be
distinguished  from  the rest of the  entity  and  will be  eliminated  from the
ongoing  operations of the entity in a disposal  transaction.  This statement is
effective for fiscal years beginning after December 15, 2001, and generally, its
provisions are to be applied prospectively.  The adoption of SFAS No. 144 by the
Company  did not  have any  impact  on the  Company's  consolidated  results  of
operations, financial position or liquidity.


                                       52
<PAGE>

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections".  This Statement rescinds FASB Statement No. 4, Reporting Gains and
Losses from  Extinguishment  of Debt, and an amendment of that  Statement,  FASB
Statement  No.  64,   Extinguishments  of  Debt  Made  to  Satisfy  Sinking-Fund
Requirements. This Statement also rescinds FASB Statement No. 44, Accounting for
Intangible  Assets of Motor Carriers.  This Statement  amends FASB Statement No.
13,  Accounting for Leases,  to eliminate an inconsistency  between the required
accounting  for  sale-leaseback  transactions  and the required  accounting  for
certain  lease  modifications  that have  economic  effects  that are similar to
sale-leaseback   transactions.   This   Statement  also  amends  other  existing
authoritative  pronouncements  to make various  technical  corrections,  clarify
meanings,  or  describe  their  applicability  under  changed  conditions.  This
statement is  generally  for  transactions  occurring  after May 15,  2002.  The
adoption of SFAS No. 145 by the Company did not have any impact on the Company's
consolidated results of operations, financial position or liquidity.

     In July 2002,  the Financial  Accounting  Standards  Board issued SFAS 146,
"Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146").
The Statement  requires  companies to recognize  costs  associated  with exit or
disposal  activities  when  they  are  incurred  rather  than  at the  date of a
commitment to an exit or disposal plan.  SFAS 146 will be applied by the Company
prospectively to exit or disposal activities initiated after December 31, 2002.

See Item 11 for a discussion of quantitative and qualitative  disclosures  about
market risks.


                                       53
<PAGE>

ITEM 6. Directors, Senior Management and Employees

Directors and senior management

     Set forth below are the names,  ages and  positions  of our  directors  and
executive officers:

     Name                   Age      Position
     ----                   ---      --------
     John Fredriksen        58       Chairman of the Board, President and
                                     Director

     Tor Olav Troim         39       Deputy Chairman of the Board, Chief
                                     Executive Officer, Vice President and
                                     Director

     A. Shaun Morris        42       Director

     Timothy Counsell       44       Director

     Sveinung Stohle        43       Executive Vice President

     Graeme McDonald        45       Chairman of Golar Management and
                                     Technical Director

     Graham Griffiths       58       General Manager of the Fleet

     Kate Blankenship       37       Secretary, Chief Accounting Officer

     Graham Robjohns        37       Group Financial Controller

     Biographical  information  with  respect  to  each  of  our  directors  and
executive officers is set forth below.

     John  Fredriksen has served as the chairman of our board of directors,  our
president and a director  since our inception in May 2001. He has been the chief
executive officer,  chairman of the board, president and a director of Frontline
Ltd.  since 1997.  Frontline  Ltd. is a Bermuda  based tanker owner and operator
listed  on the  New  York  Stock  Exchange  and the  Oslo  Stock  Exchange.  Mr.
Fredriksen has served for over eight years as a director of  Seatankers,  a ship
operating company.

     Tor  Olav  Troim  has   served  as  our  chief   executive   officer,   our
vice-president  and a director  since our inception in May 2001. He has been the
vice  president and a director of Frontline  Ltd.  since 1996. He also served as
deputy  chairman of Frontline Ltd. in 1997.  Until April 2000, Mr. Troim was the
chief executive officer of Frontline Management,  a management company that is a
subsidiary of Frontline Ltd. Mr. Troim also serves as a consultant to Seatankers
and since May 2000,  has been a  director  and  vice-chairman  of  Knightsbridge
Tankers Limited, a Bermuda based, Nasdaq National Market listed tanker owner. He
is a director of Aktiv Inkasso ASA,  Northern Oil ASA, both Norwegian Oslo Stock
Exchange listed companies,  and Northern Offshore Ltd., a Bermuda company listed
on the Oslo Stock Exchange.  Prior to his service with  Frontline,  from January
1992,  Mr.  Troim  served  as  managing  director  and a member  of the board of
directors of DNO AS, a Norwegian oil company.

     A. Shaun Morris has served as a non-executive  director since our inception
in May 2001. He has also been a  non-executive  director of Frontline Ltd. since
November  1997.  He is currently a Partner at Appleby,  Spurling & Kempe and has
been with that firm since 1988.

     Timothy Counsell has served as a non-executive director since our inception
in May 2001.  He is a partner in the law firm of Appleby  Spurling & Kempe,  and
joined  the  firm  in  1990.  He is  currently  an  alternate  director  of Bona
Shipholding Ltd.

     Sveinung   Stohle  has  served  as  our  executive   vice   president  with
responsibility  for strategy and  commercial  activities  since August 2001.  He
formerly  served as general  manager for Nigeria  LNG's  marketing  and shipping
division  since 1997.  He has  extensive  LNG  experience  and had held  various
management  positions in upstream and downstream  affiliates of the TotalFinaElf
Group since 1984.

     Graeme McDonald is chairman of Golar Management and Technical Director.  He
was  previously  general  manager of the fleet,  a position he held with Osprey,
since 1998. He has worked in the shipping  industry  since 1973 and held various
positions with Royal Dutch Shell  companies,  including  manager of LNG shipping
services at Shell International Trading and Shipping Company Ltd. and manager of
LNG marine operations at Shell Japan Ltd.

     Graham J. Griffiths joined us in October 2001 and is general manager of the
fleet. He has over 30 years  experience in the shipping  industry,  including 20
years sea-going experience. Prior to joining us he was a technical manager for V
Ships  Singapore  and has held various  positions in V Ships since 1986.  He has
extensive  experience in  newbuilding  projects and day to day management of oil
tankers, chemical/product tankers, gas carriers and dry bulk vessels.


                                       54
<PAGE>

     Kate Blankenship has served as our secretary and chief  accounting  officer
since our inception in May 2001. She has been the chief  accounting  officer and
secretary of Frontline Ltd since 1994 and of  Knightsbridge  Tankers since 2000.
Prior to 1994,  she was a manager  with KPMG Peat  Marwick in Bermuda.  She is a
member of the Institute of Chartered Accountants in England and Wales.

     Graham  Robjohns has served as our group  financial  controller  since May,
2001. He was financial  controller  of Osprey  Maritime  (Europe) Ltd from March
2000 to May 2001. From 1992 to March 2000 he worked for Associated British Foods
Plc. and then Case  Technology Ltd (Case),  both  manufacturing  businesses,  in
various financial management positions and as a director of Case. Prior to 1992,
he worked  for  PricewaterhouseCoopers  (formally  Coopers &  Lybrand)  in their
corporation  tax  department.  He is a  member  of the  Institute  of  Chartered
Accountants in England and Wales.

Compensation

     We paid aggregate cash compensation to our directors and executive officers
as a group in the amount of $516,700 in 2001.  Our  directors do not receive any
benefits upon termination of their directorships.

Share ownership

     The  following  table sets forth  information  as of  September  30,  2002,
regarding  the total  amount of common  shares  owned by all of our officers and
directors on an individual basis:

     Name                   Position                               Shares
     ----                   --------                               ------

     John Fredriksen        Chairman of the Board,              28,012,000*
                              President and Director

     Kate Blankenship       Secretary, Chief Accounting              5,000
                             Officer

*    Mr.  Fredriksen does not own any of our shares  directly.  The shares shown
     next to Mr.  Fredriksen's  name are  held by  Osprey.  See  Item 7,  "Major
     Shareholders and Related Party  Transactions."  Mr.  Fredriksen  indirectly
     controls  Osprey.  World  Shipholding  Ltd.  holds  over 99  percent of the
     outstanding  stock of Osprey.  World  Shipholding  Ltd. is  wholly-owned by
     Greenwich, which is, in turn, indirectly controlled by Mr. Fredriksen.

Option Plan

     Our board of directors  adopted the Golar LNG Limited Employee Share Option
Plan  in  February  2002.  The  plan  authorizes  our  board  to  award,  at its
discretion,  options to purchase  our common  shares to  employees  of Golar LNG
Limited,  and any of its  subsidiaries,  who are contracted to work more than 20
hours per week and to any director of Golar LNG Limited or its  subsidiaries.  A
total of two million of our common shares have been reserved for issuance to our
qualifying employees.

     Under the terms of the plan,  our board may determine the exercise price of
the options,  provided  that the exercise  price per share is not lower than the
then  current  market  value.  No  option  may be  exercised  prior to the first
anniversary  of the grant of the  option  except  that the  option  will  become
immediately  exercisable if the option holder's  employment is terminated (other
than for cause) or in the event of the option holder's  death.  All options will
expire on the tenth anniversary of the option's grant or at such earlier date as
the board may from time to time  prescribe.  The Plan will  expire 10 years from
its date of adoption.

     In July 2001, our board approved the issuance of options to John Fredriksen
for the purchase of 200,000  common  shares at a price of $5.75,  and options to
Tor Olav Troim and Sveinung Stohle to purchase  100,000 common shares each at an
exercise price of $5.75.


                                       55
<PAGE>

ITEM 7. Major Shareholders and Related Party Transactions.

Major shareholders

     The  following  table sets forth  information  regarding the owners of more
than five percent of all common shares of which we are aware as of September 30,
2002. Our major shareholders have the same voting rights as all other holders of
our Common Shares.

                                                       Percentage of Outstanding
     Name                       Number of Shares             Common Shares
     ----                       ----------------             -------------

     Osprey Maritime
     Limited*                     28,012,000                    50.01

     Morgan Stanley &              6,162,770                    11.00
     Co. Inc. (as
     nominee)

     State Street Bank             2,809,300                     5.01
     and Trust Co.

* Our Common Shares held by Osprey Maritime Limited are indirectly controlled by
our Chairman, John Fredriksen, who indirectly controls Osprey.

     As at September 30, 2002, 3,641,400 of the Company's Common Shares are held
by seven holders of record in the United States.

Related party transactions

     There are no  provisions  in our  Memorandum  of  Association  or  Bye-Laws
regarding related party  transactions.  However,  our management's  policy is to
enter  into  related  party  transactions  solely  on  terms  that  are at least
equivalent to terms we would be able to obtain from unrelated third parties. The
Bermuda  Companies  Act  of  1981  provides  that  a  company,  or  one  of  its
subsidiaries,  may enter into a contract  with an officer of the company,  or an
entity in which an officer has a material interest,  if the officer notifies the
Directors  of its  interest in the  contract or proposed  contract.  The related
party transactions that we have entered into are discussed below.

     Osprey Maritime Limited.  Osprey is our largest  shareholder with 50.01 per
cent of our  outstanding  common  shares.  On May 21,  2001,  we entered  into a
purchase  agreement with Osprey in which we agreed to purchase five LNG carriers
and a 60 percent interest in a sixth LNG carrier,  one newbuilding  contract and
an option for an additional newbuilding contract.

     The purchase price paid for the LNG operations of Osprey was $525.9 million
based on an agreed gross value of the LNG carriers of $635.0  million,  plus the
amount of net book  value of all  other  non-shipping  assets  of the  companies
acquired.  The purchase price paid was net of an amount of $128.7 million, being
60 percent of the loan assumed  relating to the  financing of the Golar Mazo and
cash of $27.2 million. Additionally, the Company paid $2.5 million to Osprey for
the assignment of the newbuilding contract and options. Furthermore, immediately
prior to the sale, certain  inter-company  balances due to the companies forming
the LNG operations of Osprey from other Osprey companies totaling $450.3 million
were forgiven.


                                       56
<PAGE>

     We agreed  to  provide  services  to Osprey  for the  management  of two of
Osprey's  VLCCs.  In the seven months ended  December 2001,  management  fees of
$106,667  were charged to Osprey in relation to such services of which there was
no outstanding  balance at December 31, 2001. In addition,  at December 31, 2001
an amount of  $261,000  was due from  Osprey in  respect of costs  recharged  in
connection with the above services.

     We  believe  that the price we paid to Osprey  for its  interests,  and our
service  agreement  with the  company  was not more than the price we would have
paid to a third party in an arm's-length transaction and are under terms similar
to those that would be arranged with other parties.

     Historically the Company has been an integrated part of Osprey Maritime. As
such, the Singapore and London office  locations of Osprey have provided general
and corporate  management  services for both the Company as well as other Osprey
entities and operations.  As described in Note 2, management has allocated costs
related to these  operations  based on the number of  vessels  managed.  Amounts
allocated  to  the  Company  and  included  within  vessel  operating  expenses,
administrative expenses and depreciation expense were $3,227,000, $9,662,000 and
$9,449,000, for the years ended December 31, 2001, 2000 and 1999, respectively.

     Seatankers  Management Company.  Seatankers is indirectly controlled by our
chairman, John Fredriksen.  On May 28, 2001, the Company entered into a purchase
agreement  with  Seatankers to purchase its one  newbuilding  contract for a LNG
carrier  and  options to build three new LNG  carriers.  The  Company  paid $2.5
million  to  Seatankers  for the  assignment  of the  newbuilding  contract  and
options.  We believe that the price we paid to Seatankers for the assignment was
not more than the price we would have paid to a third  party in an  arm's-length
transaction.

     In the year ended December 31, 2001 and the six months ended June 30, 2002,
Seatankers has provided insurance administration services to the Company. In the
year ended December 31, 2001 and the six months ended June 30, 2002,  management
fees to Seatankers of $10,000 and $10,000,  respectively,  have been incurred by
Golar  and as at each of  December  31,  2001 and June 30,  2002,  an  amount of
$10,000 was due to Seatankers in respect of these fees incurred.

     Frontline  Management  (Bermuda).  Frontline  Management is a subsidiary of
Frontline Ltd., a publicly listed company,  and is indirectly  controlled by our
chairman,  John  Fredriksen.  With effect from June 1, 2001,  we entered into an
agreement with Frontline Management (Bermuda) Ltd. for administrative  services.
Under the management  agreement,  Frontline  Management  provides  budgetary and
accounting support services,  maintains our corporate records,  technical vessel
supervision   services,   ensures  our  compliance   with  applicable  laws  and
requirements and assists us with corporate finance matters.

     In the year ended  December  31,  2001,  and the six months  ended June 30,
2002,  we have incurred  management  fees to Frontline of $258,962 and $177,750,
respectively.  As at December 31, 2001 and June 30, 2002,  an amount of $547,966
and $92,000 was due to Frontline in respect of these  management  fees and costs
incurred.

     We believe that the  compensation  we pay to Frontline  Management  for its
administrative and management  services is not more than the price we would have
paid to third parties in an arm's-length transaction and are under terms similar
to those that would be arranged with other parties.

     Greenwich Holdings Limited ("Greenwich") - Newbuilding credit facilities

     Greenwich  is  indirectly  controlled  by our  chairman,  John  Fredriksen.
Greenwich   entered  into  two  loan  agreements  with  Nordea  (formerly  named
Christiania  Bank og  Kreditkasse  ASA) and Den norske  Bank ASA, as lenders and
Nordea,  as facility  agent and  security  agent,  pursuant to which the lenders
agreed to lend  Greenwich an aggregate  amount of  approximately  $85.3 million.
Pursuant to two separate promissory notes,  Greenwich has on-loaned the proceeds
of its credit facilities with Nordea and Den norske Bank ASA to us. The proceeds
of  these  loans  were  used  to  finance  installments  under  our  newbuilding
contracts. Of this amount $52.6 million in relation to hull number 2215 has been
repaid as discussed below. In addition a further $16.3 million has been advanced
to us as part of an  addendum  to the loan in respect of hull  numbers  2220 and
1460, again as discussed below.

     Hull No. 2215

     Pursuant to a loan  agreement  dated August 2, 2001 between  Greenwich,  as
borrower,  Nordea and Den norske Bank ASA,  as lenders and Nordea as agent,  the
lenders  agreed to lend to  Greenwich up to $32.6  million.  The loan is for the
purpose of  assisting  Greenwich  in  financing  the  payment by us of the first
installment  of $32.6  million  (20 percent of the  contract  price) due under a
shipbuilding  contract,  dated May 2, 2001, between Osprey, as buyer, and Daewoo
Shipbuilding  & Marine  Engineering  Co.,  Ltd.,  as builder,  providing for the
construction of one 138,000 cmb LNG carrier,  hull number 2215.  Osprey assigned
its interest in that shipbuilding contract to us. The loan accrued interest at a
rate equal to the sum of LIBOR plus 1.5  percent per annum and was to mature 364
days after the  drawdown  date of the loan,  which was  August 6, 2001.  We paid
directly to the lenders a non-refundable  arrangement fee of $169,000 in respect
of this loan.


                                       57
<PAGE>

     Pursuant to a promissory note dated August 7, 2001, Greenwich on-loaned the
proceeds of the loan to us at an interest  rate equal to LIBOR plus 2.5 percent.
This loan was to mature 360 days after the date of the  promissory  note.  Under
the loan  agreement  and the  guarantee  to the  lenders,  we  subordinated  our
obligation  to repay the loan made by  Greenwich  to us to our  obligations  and
those of Greenwich to the lenders. A subsidiary of Golar guaranteed the loan and
secured it with an assignment of the shipbuilding  contract,  the related refund
guarantee  issued by the  Korea  Export  and  Import  Bank,  and a pledge of our
shipowning  subsidiaries' bank accounts.  No consideration was paid by Greenwich
for the provision of the guarantee.

     On September 24, 2001,  Greenwich  borrowed an additional  $20 million from
Nordea and Den norske Bank ASA  pursuant to an  amendment  to the August 2, 2001
loan. This loan was under the same terms but for a period of six months. We paid
directly to the lenders a  non-refundable  arrangement fee of $78,000 in respect
of this loan.

     Pursuant  to an  addendum  to the  promissory  note  dated  August 7, 2001,
Greenwich  on-loaned the proceeds of the loan to us at an interest rate equal to
LIBOR plus 2.5  percent.  This loan was to mature 182 days after the date of the
promissory  note.  The proceeds of this loan from  Greenwich was used to pay the
second  installment  due under the  newbuilding  contract  for hull number 2215.
Under the loan  agreement  and the  guarantee  we have as for the  initial  loan
subordinated  our  obligation  to repay the loan made by  Greenwich to us to our
obligations and those of Greenwich to the lenders.  No consideration was paid by
Greenwich for the provision of the guarantee.

     In December 2001 the Company  signed a loan  agreement with Lloyds TSB Bank
Plc for the purpose of financing part of the building of newbuilding hull number
2215 for an amount up to $180  million to include  ship yard costs,  capitalized
interest and building  supervision  charges. In March 2002 the Company drew down
$66.8 million on this loan facility and $52.6 million was used to re-pay the two
loans from Greenwich.

     Hulls No. 1460, 2220 and 1444

     Pursuant to a loan agreement dated August 20, 2001, between  Greenwich,  as
borrower, Nordea and Den norske Bank ASA, as lenders and Den norske Bank ASA, as
facility agent and security agent,  the lenders have agreed to lend to Greenwich
up to $32.7  million.  This loan was for the purpose of  assisting  Greenwich in
financing the payment by us of the first  installment of each of two newbuilding
contracts,  representing  10 percent of the total contract price of each vessel.
The initial  installment under the first contract,  dated July 31, 2001, between
our wholly owned subsidiary Golar LNG 2220 Corporation and Daewoo Shipbuilding &
Marine Engineering Co., Ltd., as builder,  providing for the construction of one
138,000 cmb LNG carrier  hull number 2220,  was in the amount of $16.2  million.
The initial  installment under the second contract dated July 24, 2001,  between
our  wholly  owned  subsidiary  Golar LNG 1460  Corporation  and  Hyundai  Heavy
Industries Co. Ltd., as builder,  providing for the  construction of one 140,000
cmb LNG carrier hull number 1460, was in the amount of $16.5  million.  The loan
accrues  interest at a rate equal to the sum of LIBOR plus 1.5 percent per annum
and matures 364 days after the drawdown  date of the loan,  which was  September
25, 2001 and August 21, 2001,  respectively.  We paid  directly to the lenders a
non-refundable arrangement fee of $169,000 in respect of this loan.

                                       58
<PAGE>

     Pursuant to a promissory note dated August 21, 2001 in respect of Golar LNG
1460  Corporation  Greenwich  on-loaned  the  proceeds of the loan in the amount
$16.5  million to finance  the  initial  installment  due under our  newbuilding
contract.  The loan  accrues  interest at a rate equal to LIBOR plus 2.5 percent
and  matures  360 days  after the date of the  promissory  note.  Pursuant  to a
promissory  note  dated  September  25,  2001  in  respect  of  Golar  LNG  2220
Corporation Greenwich has on-loaned the proceeds of the loan in the amount $16.2
million to finance the initial  installment due under our newbuilding  contract.
The loan accrues  interest at a rate equal to LIBOR plus 2.5 percent and matures
360 days after the date of the  promissory  note. In connection  with this,  two
subsidiaries of Golar have guaranteed the loan and have secured the loan with an
assignment of the shipbuilding contracts and the related refund guarantee issued
by the Korea Export and Import Bank. No consideration  was paid by Greenwich for
the provision of the guarantee.

     Under  the  loan  agreement  and  the  guarantee  to the  lenders,  we have
subordinated  our  obligation  to repay the loan made by  Greenwich to us to our
obligations  and those of  Greenwich  to the  lenders.  As of December 31, 2001,
$291,000 of interest  due to Greenwich  in  connection  with the above loans was
outstanding.

     On June 11,  2002,  Greenwich  borrowed an  additional  $16.3  million from
Nordea and Den norske Bank ASA  pursuant to an  amendment to the August 20, 2001
loan.  This loan is for the purpose of  assisting  Greenwich  in  financing  the
payment by us of the second  installment  under a contract  dated May 10,  2001,
between our wholly owned subsidiary Golar LNG 1444 Corporation and Hyundai Heavy
Industries Co. Ltd., as builder,  providing for the  construction of one 137,000
cmb LNG carrier hull number 1444. Under this amendment to the loan agreement the
total  outstanding  loan accrues interest at a rate of equal to LIBOR plus 1.625
percent and from  February  20, 2003 at a rate equal to LIBOR plus 2.0  percent.
The amendment provides for the repayment date on the original $32.7 million loan
to be  extended to August 19, 2003 and for the  additional  $16.3  million to be
four months after draw down on June 11, 2002.  We paid directly to the lenders a
non-refundable arrangement fee of $323,000 in respect of this loan amendment.

     Pursuant to an  addendum  to the  promissory  note dated  August 21,  2001,
Greenwich  on-loaned the proceeds of the loan to us at an interest rate equal to
LIBOR plus 2.625 percent until  February 20, 2003 and thereafter at a rate equal
to LIBOR plus 3.0 percent. This loan was to mature four months after the date of
the promissory  note. In connection  with this, two  subsidiaries  of Golar have
guaranteed  the  loan and  have  secured  the  loan  with an  assignment  of the
shipbuilding  contracts  and the related  refund  guarantee  issued by the Korea
Export  and Import  Bank.  The  proceeds  of this loan from were used to pay the
second  installment  due under the  newbuilding  contract  for hull number 1444.
Under the loan  agreement  and the  guarantee  we have as for the  initial  loan
subordinated  our  obligation  to repay the loan made by  Greenwich to us to our
obligations and those of Greenwich to the lenders.  No consideration was paid by
Greenwich for the provision of the guarantee.

     In the six  months  ended  June  30,  2002 the  Company  paid  interest  of
$1,230,560 to Greenwich in respect of a loan finance received.  At June 30, 2002
$661,392 of the interest due to Greenwich was outstanding.


                                       59
<PAGE>

     In September 2002,  Greenwich confirmed the availability of an extension to
the loan  facility in respect of hull  numbers  1460,  2220 and 1444.  The total
amount drawn down under this facility of $49.0  million can remain  outstanding,
if required,  until December 2003.  Greenwich also confirmed the availability of
an additional $15 million  facility for the payment of newbuilding  installments
should it be required.

     Graeme McDonald

     Golar Management holds a promissory note executed by Mr. McDonald, Chairman
of Golar Management and Technical  Director,  on April 21, 1998, under which Mr.
McDonald  promises to pay to Golar Management the principal sum of (pound)20,900
in monthly  installments of (pound)317.55.  The note carries an interest rate of
three percent and an acceleration clause in the event Mr. McDonald's  employment
with us is terminated  for any reason or in the event of a default on payment by
Mr.  McDonald.  Payments  under the note commenced in May 1998 and the principal
balance as of December 31, 2001 was (pound)8,577 or approximately $12,400.


                                       60
<PAGE>

ITEM 8. Financial Information.

Consolidated Statements and Other Financial Information

     See Item 18.

Dividend Distribution Policy

     Any future  dividends  declared  will be at the  discretion of the board of
directors  and will  depend upon our  financial  condition,  earnings  and other
factors.  Our ability to declare  dividends  is also  regulated  by Bermuda law,
which  prohibits us from paying  dividends if, at the time of  distribution,  we
will not be able to pay our  liabilities  as they  fall due or the  value of our
assets is less than the sum of our  liabilities,  issued share capital and share
premium.

     In addition,  since we are a holding  company with no material assets other
than the shares of our subsidiaries through which we conduct our operations, our
ability to pay dividends  will depend on our  subsidiaries'  distributing  to us
their earnings and cash flow. Some of our loan agreements  limit or prohibit our
subsidiaries'  ability to make  distributions  to us without  the consent of our
lenders.


                                       61
<PAGE>

ITEM 9. The Offer and Listing

Listing Details and Markets

     We intend to list our Common Shares on the Nasdaq National Market under the
symbol  "GLNG".  Our common shares have traded on the Oslo Stock  Exchange since
July 12, 2001 under the symbol "GOL".  The  following  table sets forth the high
and low trading price in Norwegian Kroner for each month since July,  2001,* and
the average daily trading volume for each month:

                                             Our Common Shares
                            ---------------------------------------------------
                                        Price Per Share              Average
                            -------------------------------------     Daily
                                                                     Trading
Monthly                       High          Low        Period End     Volume
                            --------      --------     ----------   -----------
                            (in NOK)      (in NOK)      (in NOK)    (thousands)

2002
September                    44.00         35.50         42.00         22.31
August                       48.00         39.00         45.00         24.52
July                         47.00         38.00         46.00         58.32
June                         53.00         43.50         46.00         91.20
May                          55.00         50.00         51.00         68.60
April                        58.50         52.00         55.00        117.27
March                        62.00         52.50         58.50        208.84
February                     53.00         47.00         51.00        112.96
January                      52.00         43.00         49.00        146.74

2001
December                     47.00         44.50         47.00         91.18
November                     50.00         43.50         47.00        222.04
October                      45.00         37.00         42.00        106.60
September                    60.00         42.00         44.50         80.01
August                       63.00         54.00         57.00        117.94
July (since July 12)         65.00         56.00         60.00        141.47

     * On September 30, 2002, the exchange rate between the Norwegian Kroner and
the U.S. dollar was 7.4681NOK to one U.S. Dollar.

Markets

     Our common shares are currently trading on the Oslo Stock Exchange. We have
submitted  an  application  to list our  Common  Shares on the  Nasdaq  National
Market, however, we cannot assure you that our application will be granted.


                                       62
<PAGE>

ITEM 10. Additional Information

     This section  summarizes  our share capital and the material  provisions of
our Memorandum of Association and Bye-Laws,  including  rights of holders of our
shares. The description is only a summary and does not describe  everything that
our Articles of Association  and Bye-Laws  contain.  Copies of our Memorandum of
Association  and  Bye-Laws  are  filed  with  the  SEC  as an  exhibit  to  this
Registration Statement.

Share capital

     We have one class of shares,  our common  shares,  par value one dollar per
share.  There are a total of 100,000,000  authorized shares, of which 56,012,000
are issued and outstanding.

     We issued 12,000 common shares,  par value $1.00 per share to Osprey on May
10, 2001. On May 21, 2001,  we filed a  certificate  of deposit of memorandum of
increase of share capital, raising the number of our authorized common shares to
100 million.  On May 21, 2001, we issued  56,000,000 of our authorized shares in
connection with a Norwegian  placement in which we raised $280 million.  As part
of this Norwegian placement,  Osprey purchased 28 million common shares.  Osprey
paid the purchase  price for these shares of $140 million  entirely  through the
transfer of its LNG  operations to us effective May 31, 2001.  All of our common
shares are currently held through the Norwegian Central  Securities  Depository,
which is  referred to as the VPS  System.  The VPS System is Norway's  paperless
centralized  securities registry. As of May 21, 2002, we had 335 shareholders of
record.

     We reserved  2,000,000  shares of our  authorized  but unissued  shares for
stock options awards to directors and certain key personnel.  In July, 2001, the
board awarded options to purchase  200,000 common shares at an exercise price of
$5.75 per share to our  chairman,  John  Fredriksen,  and  options  to  purchase
100,000  common  shares  at an  exercise  price of $5.75  per  share to our vice
president and director,  Tor Olav Tr0im,  and to our executive  vice  president,
Sveinung Stohle.

Memorandum of Association and Bye-Laws

     Our Memorandum of Association and Bye-laws.  The object of our business, as
stated in Section  six of our  Memorandum  of  Association,  is to engage in any
lawful act or activity for which  companies may be organized under The Companies
Act, 1981 of Bermuda,  or the Companies  Act,  other than to issue  insurance or
re-insurance,  to act as a technical advisor to any other enterprise or business
or to carry on the business of a mutual fund. Our Memorandum of Association  and
Bye-laws  do  not  impose  any  limitations  on  the  ownership  rights  of  our
shareholders.

     Under our Bye-laws,  annual shareholder meetings will be held in accordance
with the Companies  Act at a time and place  selected by our board of directors.
The  quorum  at  any  annual  or  general  meeting  is  equal  to  one  or  more
shareholders,  either present in person or represented by proxy,  holding in the
aggregate shares carrying 33 1/3 percent of the exercisable  voting rights.  The
meetings  may be held at any  place,  in or outside  of  Bermuda,  that is not a
jurisdiction  which  applies a controlled  foreign  company tax  legislation  or
similar regime. Special meetings may be called at the discretion of the board of
directors and at the request of  shareholders  holding at least one-tenth of all
outstanding shares entitled to vote at a meeting.  Annual  shareholder  meetings
and special  meetings  must be called by not less than seven days' prior written
notice specifying the place, day and time of the meeting. The board of directors
may fix any date as the record date for determining those shareholders  eligible
to receive notice of and to vote at the meeting.

     Directors. Our directors are elected by a majority of the votes cast by the
shareholders in general meeting. The quorum necessary for the transaction of the
business  of the board of  directors  may be fixed by the  board  but  unless so
fixed,  equals  those  individuals  constituting  a  majority  of the  board  of
directors who are present in person or by proxy.  Executive  directors  serve at
the discretion of the board of directors.

     The minimum  number of directors  comprising  the Board of Directors at any
time shall be two. The Board currently comprises four directors. The minimum and
maximum  number of  directors  comprising  the Board  from time to time shall be
determined by way of an ordinary  resolution of the shareholders of the Company.
The shareholders may, at general meeting by ordinary resolution,  determine that
one or more vacancies in the board of directors be deemed casual vacancies.  The
board of directors,  so long as a quorum remains in office, shall have the power
to fill such casual  vacancies.  Each  director  will hold office until the next
annual  general  meeting or until his  successor is  appointed  or elected.  The
shareholders  may call a Special  General  Meeting for the purpose of removing a
director, provided notice is served upon the concerned director 14 days prior to
the  meeting  and he is  entitled  to be heard.  Any  vacancy  created by such a
removal  may be filled at the meeting by the  election of another  person by the
shareholders or in the absence of such election, by the board.

                                       63
<PAGE>

     Subject to the  provisions  of the  Companies  Act, a director of a company
may, notwithstanding his office, be a party to or be otherwise interested in any
transaction or arrangement with that company, and may act as director,  officer,
or employee of any party to a  transaction  in which the company is  interested.
Under our Bye-laws,  provided an interested  director declares the nature of his
or her interest  immediately  thereafter at a meeting of the board of directors,
or by writing to the  directors  as  required by the  Companies  Act, a director
shall not by reason of his office be held  accountable  for any benefit  derived
from any  outside  office or  employment.  The vote of an  interested  director,
provided he or she has complied with the provisions of the Companies Act and our
Bye-laws with regard to disclosure of his or her interest,  shall be counted for
purposes of determining the existence of a quorum.

     Dividends.  Holders of common  shares are entitled to receive  dividend and
distribution payments, pro rata based on the number of common shares held, when,
as and if declared by the board of directors, in its sole discretion. Any future
dividends  declared will be at the discretion of the board of directors and will
depend upon our financial condition, earnings and other factors.

     As a Bermuda  exempted  company,  we are subject to Bermuda law relating to
the payment of dividends. We have been advised by our Bermuda counsel,  Appleby,
Spurling & Kempe, that we may not pay any dividends if, at the time the dividend
is declared or at the time the dividend is paid,  there are  reasonable  grounds
for believing that, after giving effect to that payment;

     o    we will not be able to pay our liabilities as they fall due; or

     o    the  realizable  value of our  assets,  is less than an amount that is
          equal to the sum of our

          (a)  liabilities,

          (b)  issued share  capital,  which equals the product of the par value
               of each  common  share  and the  number  of  common  shares  then
               outstanding, and

          (c)  share premium, which equals the aggregate amount of consideration
               paid to us for such common shares in excess of their par value.

     In addition,  since we are a holding company with no material  assets,  and
conduct our operations through subsidiaries, our ability to pay any dividends to
shareholders will depend on our subsidiaries'  distributing to us their earnings
and cash flow.  Some of our loan  agreements  currently  limit or  prohibit  our
subsidiaries' ability to make distributions to us.


                                       64
<PAGE>

Material contracts

     Golar LNG Facility for LNG Asset Acquisitions

     On May 31, 2001, our  wholly-owned  subsidiary,  Golar Gas Holding Company,
entered into a loan agreement for $325 million with Nordea, Den norske Bank ASA,
Citibank,  N.A. and Fortis Bank  (Nederland)  N.V., under which Nordea serves as
administrative  agent and security agent. The proceeds of this loan were used to
finance part of our acquisition of the LNG operations of Osprey and Seatankers.

     The  loan  accrues  floating  interest  at a rate  per  annum  equal to the
aggregate of LIBOR,  which is the London Inter Bank Offered  Rate,  plus 1.5 per
cent  per  annum.  The  loan  has a term of six  years  and is  repayable  in 22
quarterly  installments and a final balloon payment of $147.5 million.  The loan
may be prepaid in whole or in part without premium or penalty, except for losses
and other reasonable costs and expenses incurred as a result of our prepayment.

     In  addition to a first  preferred  ship  mortgage on each of our  vessels,
except the Golar Mazo,  to the  lenders,  the loan is secured by a pledge of the
capital stock of our shipowning subsidiaries,  and an assignment of our vessels'
earnings,  insurance,  and  the  vessels'  charters  to the  lenders.  The  loan
agreement and related  documents also contain a number of restrictive  covenants
that,  subject to specified  exceptions,  limit the ability of Golar Gas Holding
Company and our shipowning subsidiaries' to among other things:

          o    merge  into  or  consolidate  with  another  entity  or  sell  or
               otherwise dispose of all or substantially all of their assets;

          o    make or pay equity distributions;

          o    incur additional indebtedness;

          o    incur  or  make  any  capital  expenditure,  other  than  capital
               expenditures for vessel upgrades required by our charterers;

          o    materially  amend,  or  terminate,  any  of our  current  charter
               contracts or management agreements; and

          o    enter  into  any  business   other  than  owning  the  shipowning
               companies,  in the case of Golar Gas Holding Company,  and owning
               and  operating  the  ships,   in  the  case  of  the   shipowning
               subsidiaries.

     The  agreement  also  contains an event of default if, among other  things,
John Fredriksen and his affiliated  entities cease to be the beneficial or legal
owner of at least 25 percent of our common shares.

Hull No. 2215 Loan

     On  December  31,  2001,  our  wholly  owned  subsidiary,  Golar  LNG  2215
Corporation  entered into a loan agreement for $180 million with Lloyds TSB Bank
Plc. The proceeds of this loan are to be used to finance 100 percent of the cost
of one of our  newbuilding,  hull number  2215.  In March of 2002,  we drew down
$99.2 million on the facility for the purpose of financing the third installment
on our new building contract and to repay amounts borrowed from Greenwich to pay
for the first two  installments  on this  newbuild.  In June 2002 we drew down a
further $32.7 million for the purpose of financing  the fourth  installment  and
associated interest and commitment costs. The loan currently accrues interest at
the rate of LIBOR  plus  1.45  percent  until  delivery  and 1.15  percent  from
delivery.  The  loan is  repayable  in  144-monthly  installments,  with a final
balloon  payment of  approximately  $118  million.  The loan is secured by first
preferred  ship  mortgage on hull number 2215,  as well as an  assignment of the
vessel's earnings, insurance and charter rights.


                                       65
<PAGE>

Second Priority Loan Facility

     On  October  11,  2002,  our wholly  owned  subsidiary,  Golar Gas  Holding
Company, Inc. entered into a loan agreement for an amount up to $60 million with
certain of the lenders  under the Golar LNG  Facility,  being  Nordea Bank Norge
ASA, Den norske Bank ASA and Fortis Bank  (Nederland)  N.V. The proceeds of this
loan are to be used to assist in the financing of our newbuilding installments.

     The  loan  accrues  floating  interest  at a rate  per  annum  equal to the
aggregate of LIBOR,  which is the London Inter Bank Offered  Rate,  plus 2.0 per
cent per annum,  increasing by 0.25 percent per annum on 30 November 2004 and 30
November  2005.  The loan  has a term of four  years  and  eight  months  and is
repayable  in 15 quarterly  installments  of $4 million  commencing  in November
2003.  The loan may be prepaid in whole or in part  without  premium or penalty,
except for losses and other reasonable  costs and expenses  incurred as a result
of our prepayment.

     In addition to a second  preferred  ship  mortgage on each of our  vessels,
except the Golar Mazo, to the lenders,  the loan is secured by a second priority
pledge  of the  capital  stock of our  shipowning  subsidiaries,  and an  second
priority  assignment  of our  vessels'  earnings,  insurance,  and the  vessels'
charters to the lenders. The loan agreement and related documents also contain a
number of restrictive  covenants that are consistent with those in the Golar LNG
Facility.

Taxation

     The following  discussion  is a summary of the material tax  considerations
relevant  to us and an  investment  decision  by a U.S.  holder  and a  non-U.S.
holder,  as defined below,  with respect to our common shares.  This  discussion
does not purport to deal with the tax  consequences  of owning  common shares to
all categories of investors, some of which, such as dealers in securities,  U.S.
holders  who own 10  percent or more of our voting  shares and  investors  whose
functional  currency is not the U.S.  dollar,  may be subject to special  rules.
U.S.  holders  and  non-U.S.  holders  should  consult  their  own tax  advisors
concerning  the  overall  tax  consequences  arising  in  their  own  particular
situation under U.S.  federal,  state,  local or foreign law of the ownership of
common shares.

Bermuda Tax Considerations

     The following are the material  Bermuda tax  consequences of our activities
to us and to shareholders  owning common shares. We are incorporated in Bermuda.
Under current Bermuda law, we are not subject to tax on income or capital gains,
and no Bermuda  withholding tax will be imposed upon payments of dividends by us
to our  shareholders.  No Bermuda tax is imposed on shareholders with respect to
the sale or exchange of common  shares.  Furthermore,  we have received from the
Minister of Finance of Bermuda under the Exempted Undertaking Tax Protection Act
of 1966, as amended,  an  undertaking  that, if Bermuda  enacts any  legislation
imposing any tax computed on profits or income or computed on any capital asset,
gain or appreciation, or any tax in the nature of an estate, duty or inheritance
tax,  the  imposition  of such tax will  not be  applicable  to us or any of our
operations or to our common shares  obligations until March 2016. As an exempted
company,  we are liable to pay to the Bermuda government an annual  registration
fee calculated on a sliding-scale  basis by reference to our assessable capital,
that is, our authorized capital plus any share premium.

U.S. Federal Income Tax Considerations

     The following are the material U.S.  federal income tax  consequences to us
and to U.S. holders and non-U.S.  holders,  as defined below,  regarding (1) our
operations  and the operations of our vessel  holding  subsidiaries  and (2) the
acquisition,  ownership  and  disposition  of our common  shares.  The following
discussion of U.S.  federal income tax matters is based on the Internal  Revenue
Code of 1986,  as amended,  or the "Code",  judicial  decisions,  administrative
pronouncements,   and   existing  and  proposed   regulations   (or   reproposed
regulations)  issued by the U.S.  Department of the  Treasury,  all of which are
subject to change, possibly with retroactive effect. In addition, the discussion
is based,  in part, on the  description  of our business as described  above and
assumes that we conduct our business as so described.


                                       66
<PAGE>

United States Taxation of Our Company

     Taxation of Operating Income: In General

     We anticipate  that  substantially  all of our gross income will be derived
from the use and  operation of vessels in  international  commerce and that this
income will principally  consist of freights from the transportation of cargoes,
hire or lease  from time or voyage  charters  and the  performance  of  services
directly related thereto, which we refer to as "shipping income".  Unless exempt
from U.S.  taxation  under  Section 883 of the Code,  we will be subject to U.S.
federal  income  taxation,  in the  manner  discussed  below,  to the extent our
shipping income is derived from sources within the United States.

     Shipping income that is attributable to transportation that begins or ends,
but that does not both begin and end, in the United States will be considered to
be 50 percent  derived from sources  within the United States.  Shipping  income
attributable  to  transportation  that both begins and ends in the United States
will be  considered  to be 100 percent  derived from  sources  within the United
States. We do not engage in  transportation  that gives rise to 100 percent U.S.
source income.

     Shipping income attributable to transportation exclusively between non-U.S.
ports will be  considered  to be 100 percent  derived from  sources  outside the
United States.  Shipping  income derived from sources  outside the United States
will not be subject to U.S. federal income tax.

     Based  upon  our  anticipated  shipping  operations,  our  vessels  will be
operated in various parts of the world, including to or from U.S. ports. For the
three calendar years 1999, 2000, and 2001 the U.S. source income that we derived
from  our  vessels  trading  to  U.S.  ports  was  $4,374,678,   $736,470,   and
$12,200,000,  respectively,  and the potential U.S. federal income tax liability
resulting from this income,  in the absence of our  qualification  for exemption
from taxation under Section 883, as described  below,  would have been $174,987,
$29,458, and $487,000, respectively.

Application of Code Section 883

     Under Section 883 of the Code, we will be exempt from U.S.  taxation on our
U.S. source shipping income, if both of the following conditions are met:

     o    we are  organized  in a qualified  foreign  country  which is one that
          grants an equivalent  exemption from tax to corporations  organized in
          the  United  States  in  respect  of the  shipping  income  for  which
          exemption  is  being  claimed  under  Section  883  ("the  country  of
          organization requirement"); and

     o    more than 50  percent  of the value of our stock is  treated as owned,
          directly or indirectly,  by individuals (qualified  shareholders") who
          are  "residents"  of  qualified   foreign  countries  (the  "ownership
          requirement").

     The U.S.  Treasury  Department has  recognized (i) Bermuda,  our country of
incorporation,   and  (ii)  the  country  of   incorporation   of  each  of  our
subsidiaries,  as a qualified foreign country. Accordingly, we expect to satisfy
the country of organization requirement.

     In respect of the  ownership  requirement,  Section 883  provides a special
publicly-traded  rule which  exempts us from  having to  satisfy  the  ownership
requirement if our shares are  considered to be "primarily and regularly  traded
on an established  securities  market"  located in our country of  organization,
Bermuda, in another qualified foreign country or in the United States,  which we
refer to as the "publicly-traded test".


                                       67
<PAGE>

     Proposed regulations  interpreting Section 883 were promulgated by the U.S.
Treasury  Department  on  February  8, 2000.  These  proposed  regulations  were
withdrawn and replaced in their entirety by reproposed regulations  interpreting
Section 883 promulgated by the U.S.  Treasury  Department on August 1, 2002. The
reproposed regulations will apply to taxable years beginning thirty days or more
after the date the reproposed  regulations are published as final regulations in
the Federal  Register.  As a result,  such regulations will not be effective for
the current  calendar year 2002. A public hearing on the reproposed  regulations
has been  scheduled by the U.S.  Treasury  Department  for November 12, 2002. At
this time, it is unclear when the reproposed  regulations  will be finalized and
whether they will be finalized in their present form.

     The reproposed  regulations  provide,  in pertinent  part,  that stock of a
foreign   corporation  will  be  considered  to  be  "primarily  traded"  on  an
established securities market if the number of shares that are traded during any
taxable year on that market exceeds the number of shares traded during that year
on any other established securities market.

     At present,  the sole class of shares that is issued and outstanding is our
common shares, and our common shares are listed only on the Oslo Stock Exchange,
which is an established  securities market in Norway. Norway has been recognized
by the U.S. Treasury Department as a qualified foreign country.  Upon completion
of this listing of our common shares, we expect that our common shares will also
be listed on the Nasdaq  National  Market,  which is an  established  securities
market in the United States.  For the taxable year ending December 31, 2001, the
aggregate  number of common  shares  that is traded on the Oslo  Stock  Exchange
exceeded  the  aggregate  number  of  shares  traded  on any  other  established
securities market.

     The  reproposed  regulations  further  provide that stock will generally be
considered to be "regularly traded" on a securities market if:

     o    stock  representing  more than 50 percent of the issuer's  outstanding
          shares, by voting power and value, is listed on such market,  known as
          the 50 percent listing threshold;

     o    stock is traded on such market,  other than in de minimis  quantities,
          on at least 60 days during the taxable  year,  or 1/6 of the days in a
          short taxable year, known as the trading frequency threshold; and

     o    the  aggregate  number of shares of stock  traded on such market is at
          least ten percent of the average number of shares  outstanding  during
          such year, or as appropriately adjusted in the case of a short taxable
          year, known as the trading volume threshold.

     We  currently  satisfy the 50 percent  listing  threshold in respect of our
common shares listed on the Oslo Stock  Exchange and we will also satisfy the 50
percent  listing  threshold in respect of our common shares listed on the Nasdaq
National Market upon completion of this listing.

     Our  shares are  currently  traded on the Oslo  Stock  Exchange  on a level
sufficient to satisfy the trading frequency and trading volume  thresholds.  The
reproposed  regulations  provide that the trading  frequency  threshold  and the
trading  volume  threshold  will be  deemed  satisfied  if stock is traded on an
established  securities  market in the United  States and the stock is regularly
quoted  by  dealers  making a  market  in the  stock  ("U.S.  securities  market
exception").  We expect that our common  shares will be regularly  quoted on the
Nasdaq  National  Market by one or more dealers that make a market in our common
shares and therefore will qualify for the U.S. securities market exception.

     Notwithstanding  the foregoing,  the  reproposed  regulations  provide,  in
pertinent part,  that stock will not be considered to be regularly  traded on an
established  securities  market for any taxable year in which 50 percent or more
of the outstanding  shares of that stock, by vote and value,  are owned,  within
the  meaning of the  regulations,  on any year by persons  who each own five per
cent or more of the value of the outstanding  shares of that stock, known as the
five  percent  override  rule.  The five percent  override  rule will not apply,
however,  if we can establish that qualified  shareholders own sufficient shares
of our stock to preclude  non-qualified  shareholders  from owning 50 percent or
more of the total  value of our  stock  for more  than  half the  number of days
during the taxable year ("five percent override exception").


                                       68
<PAGE>

     Based on our existing  shareholdings,  we would presently be subject to the
five percent  override  rule and in the absence of our being able to qualify for
the five  percent  override  exception,  we would not  qualify  for the  special
publicly-traded   rule  exempting  us  from  having  to  satisfy  the  ownership
requirement.  We believe  that our  ability to satisfy  either the five  percent
override  exception  or  the  ownership   requirement  in  accordance  with  the
reproposed  regulations as currently  drafted,  in particular  those  provisions
applicable to determining an individual  taxpayer's residence or tax home, could
be open to question.

     Until the  reproposed  regulations  are  promulgated in final form and come
into  force,  however,  we intend to take the  position  on our U.S.  tax return
filings that we satisfy the publicly traded  requirements of the statute as well
as the ownership  requirement and, therefore,  we are entitled to exemption from
U.S. federal income tax under Section 883 in respect of our U.S.-source shipping
income.

Taxation in Absence of Internal Revenue Code Section 883 Exemption

     Four percent Gross Basis Tax Regime

     To the extent the benefits of Section 883 are  unavailable  with respect to
any item of U.S. source income,  our U.S.-source  shipping income, to the extent
not considered to be "effectively connected" with the conduct of a U.S. trade or
business as discussed  below,  would be subject to a four percent tax imposed by
Code Section 887 on a gross basis,  without benefit of deductions.  As discussed
above, we expect that  substantially  less than half of our shipping income will
involve the  transportation  of cargoes to or from United  States  ports.  In no
event  would  the  maximum  effective  rate of U.S.  federal  income  tax on our
shipping income exceed two percent.

     Net Basis and Branch Tax Regime

     To the extent the benefits of the Section 883 exemption are unavailable and
our U.S. source shipping income is considered to be "effectively connected" with
the  conduct  of a  U.S.  trade  or  business,  as  described  below,  any  such
"effectively   connected"  U.S.  source  shipping  income,   net  of  applicable
deductions,  would be subject to the U.S. federal corporate income tax currently
imposed at rates of up to 35 percent.  In addition,  we may be subject to the 30
percent  "branch-level"  taxes (or such lesser tax as provided by an  applicable
income tax treaty) on earnings  effectively  connected  with the conduct of such
trade or business, as determined after allowance for certain adjustments, and on
certain  interest paid or deemed paid  attributable to the conduct of their U.S.
trade or business.

     Our U.S. source shipping income will be considered  "effectively connected"
with the conduct of a U.S. trade or business only if:

     o    we have,  or are  considered to have, a fixed place of business in the
          United States involved in the earning of shipping income; and

     o    substantially  all of our U.S.  source shipping income is attributable
          to  regularly  scheduled  transportation,  such as the  operation of a
          vessel that follows a published  schedule  with  repeated  sailings at
          regular  intervals  between the same points for voyages  that begin or
          end in the United States.

     We do not intend to have,  or permit  circumstances  that  would  result in
having,  any of our  vessels  operating  to the  United  States  on a  regularly
scheduled  basis or an office or other  fixed  place of  business  in the United
States involved in the earning of shipping income. Based on the foregoing and on
the expected mode of our shipping  operations,  we believe that none of our U.S.
source  shipping  income will be  "effectively  connected" with the conduct of a
U.S. trade or business.

     Gain on Sale of Vessels

     To the extent any of our vessels  makes more than an  occasional  voyage to
U.S. ports, we may be considered to be engaged in the conduct of a U.S. trade or
business.  As a result, except to the extent the gain on the sale of a vessel is
incidental to our shipping income,  any U.S. source gain on the sale of a vessel
may be partly or wholly  subject  to U.S.  federal  income  tax as  "effectively
connected" income  (determined under rules different from those discussed above)
under the net basis and branch tax regime described above. However, we intend to
structure  sales of our vessels in such a manner,  including  effecting the sale
and  delivery of vessels  outside of the United  States,  as to not give rise to
U.S. source gain.


                                       69
<PAGE>

U.S. Taxation of U.S. Holders

     The term U.S. holder means a beneficial  owner of our common shares that is
a U.S. citizen or resident,  U.S.  corporation or other U.S. entity taxable as a
corporation,  an estate,  the income of which is subject to U.S.  federal income
taxation regardless of its source, or a trust if a court within the U.S. is able
to exercise primary jurisdiction over the administration of the trust and one or
more U.S. persons have the authority to control all substantial decisions of the
trust and owns our common shares as a capital asset,  generally,  for investment
purposes.

     If a partnership  holds our common  shares,  the tax treatment of a partner
will generally  depend upon the status of the partner and upon the activities of
the  partnership.  If you are a partner  in a  partnership  holding  our  common
shares, you should consult your tax advisor.

Distributions

     Any  distributions  made by us with respect to our common  shares to a U.S.
holder will generally constitute  dividends,  taxable as ordinary income, to the
extent of our current or accumulated  earnings and profits,  as determined under
U.S. federal income tax principles.  Distributions in excess of our earnings and
profits will be treated first as a  non-taxable  return of capital to the extent
of the U.S. holder's tax basis in his common shares on a dollar for dollar basis
and  thereafter as capital  gain.  Because we are not a U.S.  corporation,  U.S.
holders that are corporations will not be entitled to claim a dividends received
deduction with respect to any distributions they receive from us. Dividends paid
with respect to our common shares will generally be treated as "passive  income"
or, in the case of certain types of U.S. holders,  "financial  services income",
for purposes of  computing  allowable  foreign tax credits for U.S.  foreign tax
credit purposes.

Sale, Exchange or other Disposition of Our Common Shares

     Subject to the discussion below under "Passive Foreign Investment Company,"
a U.S.  holder  generally  will  recognize  taxable  gain or  loss  upon a sale,
exchange or other  disposition  of our common  shares in an amount  equal to the
difference  between  the  amount  realized  by the U.S.  holder  from such sale,
exchange  or other  disposition  and the U.S.  holder's  tax basis in the common
shares.  Such gain or loss will be treated as long-term  capital gain or loss if
the U.S.  holder's  holding  period is greater  than one year at the time of the
sale, exchange or other disposition. Such capital gain or loss will generally be
treated as  U.S.-source  income or loss,  as  applicable,  for U.S.  foreign tax
credit purposes.  A U.S. holder's ability to deduct capital losses is subject to
certain limitations.

Anti-Deferral Regimes

     Notwithstanding  the above rules regarding  distributions and dispositions,
special  rules may  apply to some U.S.  holders  (or to the  direct or  indirect
beneficial owners of some non-U.S. holders) if one or more anti-deferral regimes
discussed  below are  applicable.  The rules regarding each of these regimes are
complex,  and U.S. holders should consult their tax advisers with respect to the
applicability and impact of these regimes to their ownership of our shares.

     Passive Foreign Investment Company We will be a "passive foreign investment
company" if either:

     o    75 percent or more of our gross income  (including the gross income of
          any subsidiary of which we own, directly or indirectly,  25 percent or
          more of the value of its stock) in a taxable  year is passive  income;
          or

     o    at least  50  percent  of our  assets  (including  the  assets  of any
          subsidiary)  in a taxable year  (averaged  over the year and generally
          determined  based  upon  value)  are held for the  production  of,  or
          produce, passive income.

     To date, our  subsidiaries and we have derived most of our income from time
and voyage  charters,  and we expect to continue to do so. This income should be
treated as  services  income,  which is not passive  income for passive  foreign
investment  company  purposes.  However,  passive  income would include  amounts
derived by reason of the temporary investment of funds raised in an offering and
amounts derived through spot trading of LNG for our own account.


                                       70
<PAGE>

     On the basis of the above,  we believe that we are not  currently a passive
foreign  investment company and do not expect to be a passive foreign investment
company in the foreseeable future.  However,  because there are uncertainties in
the  application  of the passive  foreign  investment  company rules  (including
whether the Internal Revenue Service disagrees with the conclusion that time and
voyage  charters do not give rise to passive  income for purposes of the passive
foreign investment company income test), and because it is an annual test, there
can be no assurance that we will not become a passive foreign investment company
in any year.

     If we  become a passive  foreign  investment  company  (and  regardless  of
whether we remain a passive foreign investment company), each U.S. holder who is
treated as owning our  shares  during any period in which we are so  classified,
for purposes of the passive foreign  investment company rules would be liable to
pay tax, at the then  highest  prevailing  income tax rates on ordinary  income,
plus interest,  upon certain excess  distributions  and upon  disposition of our
shares  including,  under certain  circumstances,  a disposition  pursuant to an
otherwise  tax  free  reorganization,  as if the  distribution  or gain had been
recognized  ratably over the U.S.  holder's entire holding period of our shares.
An excess  distribution  generally  includes  dividends  or other  distributions
received from a passive foreign investment company in any taxable year of a U.S.
holder to the extent that the amount of those distributions  exceeds 125 percent
of the average  distributions  made by the passive  foreign  investment  company
during a specified base period. The tax at ordinary rates and interest would not
be imposed if the U.S.  holder  makes a  mark-to-market  election,  as discussed
below.  Further,  a U.S.  holder that acquires our shares from a decedent (other
than certain  non-resident  aliens) whose holding period for the shares includes
time when we were a  passive  foreign  investment  company  would be denied  the
normally  available  step-up of income  tax basis for the shares to fair  market
value at the date of death and  instead  would  have a tax basis  limited to the
lower of fair market value of the shares or decedent's tax basis.

     In some circumstances, a U.S. holder may avoid the unfavorable consequences
of the passive foreign  investment  company rules by making a qualified electing
fund election with respect to us. A qualified electing fund election effectively
would require an electing U.S. holder to include in income its pro rata share of
our ordinary earnings and net capital gain. However, a U.S. holder cannot make a
qualified  electing  fund  election  with  respect  to us unless we comply  with
certain  reporting  requirements  and we do not intend to provide  the  required
information. If we become a passive foreign investment company and, provided our
shares are regularly traded on a "qualified exchange",  a U.S. holder may make a
mark-to-market election. A "qualified exchange" includes a foreign exchange that
is  regulated by a  governmental  authority in which the exchange is located and
with respect to which certain other  requirements  are met. The Internal Revenue
Service has not yet identified  specific foreign  exchanges that are "qualified"
for this purpose. The Nasdaq National Market, on which our common shares will be
traded, is a qualified exchange for U.S. federal income tax purposes.  Under the
election,  any excess of the fair market value of the shares at the close of any
tax year over the U.S.  holder's adjusted basis in the shares is included in the
U.S. holder's income as ordinary income. In addition, the excess, if any, of the
U.S.  holder's  adjusted basis at the close of any taxable year over fair market
value is deductible in an amount equal to the lesser of the amount of the excess
or the net  mark-to-market  gains on the shares that the U.S. holder included in
income in previous years. If a U.S. holder makes a mark-to-market election after
the beginning of its holding period, the U.S. holder does not avoid the interest
charge rule  discussed  above with respect to the  inclusion of ordinary  income
attributable to periods before the election.

     Foreign Personal Holding Company

     We will be a foreign personal  holding  company,  for United States federal
income tax purposes, if both:

     o    five or fewer  individuals who are United States citizens or residents
          own or are deemed to own (under  applicable  attribution  rules)  more
          than 50 percent of all classes of our stock  measured by voting power
          or value; and

     o    we  receive at least 60 percent  (50  percent in years  other than our
          first taxable year as a foreign personal holding company) of our gross
          income (regardless of source), as specifically adjusted,  from certain
          passive sources.

     If we are classified as a foreign personal  holding  company,  a portion of
our  "undistributed  foreign person holding company income" (as defined for U.S.
federal income tax purposes) would be imputed to all of our U.S. holders who are
shareholders  on the last taxable day of our taxable year,  or, if earlier,  the
last day on which we are  classifiable as a foreign  personal  holding  company.
That  portion of our income  would be  taxable  as a  dividend,  even if no cash
dividend is actually paid. U.S. holders who dispose of their shares prior to the
date set  forth  above  would not be  subject  to a tax under  these  rules.  In
addition,  an  individual  U.S.  holder who  acquires  our common  shares from a
decedent  would be denied the step-up of tax basis of such shares to fair market
value on the  decedent's  date of death which would  otherwise be available  and
instead  would have a tax basis equal to the lower of fair  market  value or the
decedent's basis. We believe that we are not a foreign personal holding company.
However,  no  assurance  can be given  that we will  not  qualify  as a  foreign
personal holding company in the future.


                                       71
<PAGE>

U.S. Taxation of "Non-U.S. Holders"

     A  beneficial  owner of our  common  shares  that is not a U.S.  holder  is
referred in this offering as a "non-U.S. holder."

Dividends on Our Common Shares

     Non-U.S.  holders  generally will not be subject to U.S. federal income tax
or  withholding  tax on dividends  made by us with respect to our common shares,
unless the  dividends  are  effectively  connected  with the  non-U.S.  holder's
conduct  of a trade or  business  in the U.S.  or where the  non-U.S.  holder is
entitled  to the  benefits  of an  income  tax  treaty  with  respect  to  those
dividends,   the  dividends  are  attributable  to  a  permanent   establishment
maintained by the non-U.S. holder in the U.S.

Sale, Exchange or Other Disposition of Our Common Shares

     Non-U.S.  holders  generally will not be subject to U.S. federal income tax
or  withholding  tax on any gain  realized  upon  the  sale,  exchange  or other
disposition of our common shares,  unless: (i) the gain is effectively connected
with the non-U.S.  holder's  conduct of a trade or business in the U.S. or where
the  non-U.S.  holder is entitled  to the  benefits of an income tax treaty with
respect to that gain,  that gain is  attributable  to a permanent  establishment
maintained by the non-U.S. holder in the U.S.; or (ii) the non-U.S. holder is an
individual  who is present in the U.S.  for 183 days or more  during the taxable
year of disposition and other conditions are met.

     If the  non-U.S.  holder is engaged in a U.S.  trade or  business  for U.S.
federal  income tax  purposes,  the income  from our  common  shares,  including
dividends  on the common  shares and the gain from the sale,  exchange  or other
disposition of the shares that is effectively connected with the conduct of that
trade or business,  will generally be subject to regular U.S. federal income tax
in the same manner as discussed in the previous section relating to the taxation
of U.S.  holders.  In addition,  if you are a corporate  non-U.S.  holder,  your
earnings and profits that are attributable to the effectively  connected income,
which are subject to certain adjustments, may be subject to an additional branch
profits tax at a rate of 30 percent,  or at a lower rate as may be specified by
an applicable income tax treaty.

Backup Withholding and Information Reporting

     In general, dividend payments, or other taxable distributions,  made within
the U.S.  to you will be  subject  to  information  reporting  requirements  and
"backup withholding" tax if you are a non-corporate U.S. holder and you:

     o    fail to provide an accurate taxpayer identification number;

     o    are notified by the Internal  Revenue  Service that you have failed to
          report all interest or dividends  required to be shown on your federal
          income tax returns; or

     o    in certain circumstances, fail to comply with applicable certification
          requirements.

     Non-U.S.  holders  may  be  required  to  establish  their  exemption  from
information  reporting and backup  withholding by certifying their status on IRS
Form W-8BEN.

     If you sell your common shares to or through a U.S.  office or broker,  the
payment  of the  proceeds  is  subject  to  both  U.S.  backup  withholding  and
information  reporting unless you certify that you are a non-U.S.  person, under
penalties of perjury, or you otherwise establish an exemption.  If you sell your
common  shares  through a  non-U.S.  office of a  non-U.S.  broker and the sales
proceeds are paid to you outside the U.S., then information reporting and backup
withholding generally will not apply to that payment.  However, U.S. information
reporting requirements,  but not backup withholding,  will apply to a payment of
sales  proceeds,  even if that  payment is made to you outside the U.S.,  if you
sell your  common  shares  through a non-U.S.  office of a broker that is a U.S.
person or has some other contacts with the U.S.

     You  generally  may obtain a refund of any amounts  withheld  under  backup
withholding rules that exceed your income tax liability by filing a refund claim
with the U.S. Internal Revenue Service,  provided that the required  information
is furnished to the Internal Revenue Service.


                                       72
<PAGE>

Documents on display

     When the SEC declares this  Registration  Statement  effective,  we will be
subject to the  informational  requirements  of the  Securities  Exchange Act of
1934, as amended. In accordance with these requirements we will file reports and
other  information  with the SEC. These materials,  including this  registration
statement  and the  accompanying  exhibits,  may be inspected  and copied at the
public  reference  facilities  maintained by the Commission at 450 Fifth Street,
N.W.,  Room 1024,  Washington,  D.C.  20549.  You may obtain  information on the
operation of the public reference room by calling 1 (800) SEC-0330,  and you may
obtain  copies at  prescribed  rates  from the Public  Reference  Section of the
Commission at its principal office in Washington,  D.C. 20549. The SEC maintains
a website  (http://www.sec.gov)  that contains  reports,  proxy and  information
statements and other information  regarding registrants that file electronically
with the SEC.

ITEM 11. Quantitative and Qualitative Disclosures about Market Risk

     We are exposed to various market risks,  including  primarily interest rate
and foreign currency exchange risk. We do not enter into derivative  instruments
for speculative or trading purposes.  In certain  situations,  we may enter into
derivative  instruments to achieve an economic hedge of the risk exposure.  With
the adoption of FAS 133,  certain  economic  hedge  relationships  may no longer
qualify  for hedge  accounting  due to the  extensive  documentation  and strict
criteria of the new standard.

     Interest rate risk. A significant  portion of our long-term debt is subject
to adverse movements in interest rates. Our interest rate risk management policy
permits economic hedge relationships in order to reduce the risk associated with
adverse  fluctuations in interest  rates. We use interest rate caps,  floors and
swaps to manage the exposure to adverse  movements in interest  rates.  Interest
rate swaps are used to convert floating rate debt obligations to a fixed rate in
order to achieve an overall  desired  position of fixed and floating  rate debt.
Interest rate caps and floors are used in  combination  to lock in an acceptable
range of floating rates. Credit exposures are monitored on a counterparty basis,
with all new transactions subject to senior management approval.

     As of June 30, 2002, December 31, 2001 and 2000, the notional amount of the
interest rate swaps  outstanding was $189.4  million,  $194.8 million and $350.8
million,  respectively. The notional amount of the interest rate caps and floors
outstanding as of June 30, 2002, December 31, 2001 and 2000 was $zero, $zero and
$29.2 million,  respectively.  The principal of the loans outstanding as of June
30, 2002,  December  31, 2001 and 2000 was $684.8  million,  $609.6  million and
$513.9 million,  respectively. The notional amounts disclosed as of December 31,
2000  represent  the  notional  amount  after  the  carve out and push down from
Osprey.  For  disclosures  of  the  fair  value  of  the  derivatives  and  debt
obligations  outstanding  as of December  31, 2001 and 2000,  see Note 21 to the
Financial Statements.

     Foreign currency risk. Periodically,  the Company may be exposed to foreign
currency  exchange  fluctuations  as  a  result  of  expenses  paid  by  certain
subsidiaries in currencies other than U.S. dollars (primarily Sterling, Filipino
Pesos and  Pesetas).  There is a risk  that  currency  fluctuations  will have a
negative  effect on the value of the Company's cash flows.  As of June 30, 2002,
December 31, 2001, 2000 and 1999, there was no significant exposure to a foreign
currency.  We have not  entered  into  derivative  contracts  to  minimize  this
transaction risk.


                                       73
<PAGE>

ITEM 12. Description of Securities other than equity securities

     Not Applicable.

ITEM 13. Dividend Arrearages and delinquencies

     Neither  we nor any of our  subsidiaries  have been  subject  to a material
default in the payment of principal,  interest,  a sinking fund or purchase fund
installment or any other material default that was not cured within 30 days.

ITEM 14. Material Modifications to the Rights of Security Holders and use
         of proceeds

     Not Applicable.

ITEM 15. Reserved

ITEM 16. Reserved

ITEM 17. Financial statements

     Not Applicable.

ITEM 18. Financial Statements

     We  specifically  incorporate  by  reference  in  response to this item the
report of the independent  auditors,  the consolidated  financial statements and
the  notes to the  consolidated  financial  statements  appearing  on pages  F-1
through F-40.


                                       74
<PAGE>

ITEM 19. Exhibits

Number   Description of Exhibit

1.1            Memorandum of  Association of Golar LNG Limited as adopted on May
               9, 2001

1.2            Bye-Laws of Golar LNG Limited as adopted on May 10, 2001

1.3            Certificate of Incorporation as adopted on May 11, 2001

1.4            Articles of Amendment of Memorandum of  Association  of Golar LNG
               Limited  as  adopted  by  our   shareholders   on  June  1,  2001
               (increasing the Company's authorized capital)

4.1            Loan Agreement, between Golar LNG 2215 Corporation and Lloyds TSB
               Bank, Plc, dated December 31, 2001.

4.2            Loan  Agreement,  between  Golar Gas Holding  Company,  Inc.  and
               Christiania  Bank og Kreditkasse,  Den norske Bank,  Citibank and
               Fortis Bank, dated May 31, 2001

4.3            Loan Agreement,  between Faraway  Maritime  Shipping  Company and
               Bank of Taiwan dated November 26, 1997

4.4            Purchase Agreement, between Golar LNG Limited and Osprey Maritime
               Limited, dated May 21, 2001

4.5            Sale and  Purchase  Agreement,  between  Golar  LNG  Limited  and
               Seatankers Management Co. Ltd., dated May 21, 2001

4.6            Golar LNG Limited Stock Option Plan

4.7            Service Agreement between Golar LNG Limited and Graeme McDonald

4.8            Management  Agreement  between  Golar LNG Limited  and  Frontline
               Management (Bermuda) Limited, dated February 21, 2002

4.9            Loan  Agreement,  between  Golar Gas Holding  Company,  Inc.  and
               Nordea  Bank  Norge ASA as agent and Nordea  Bank Norge ASA,  Den
               norske Bank ASA and Fortis Bank  (Nederland)  N.V., dated October
               11, 2002

8.1            Golar LNG Limited Subsidiaries

10.1           Consent of Fearnley Consultants A/S

10.2           Consent of Petroleum  Economist to its use as a source in Item 4,
               Information on the Company - The LNG Industry

10.3           Consent of the International Energy Agency to its use as a source
               in Item 4, Information on the Company - The LNG Industry


                                       75
<PAGE>

                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the  undersigned to sign
this registration statement on its behalf.

                                        Golar LNG Limited


                                        By: /s/     Kate Blankenship
                                            ------------------------------------
                                            Name:   Kate Blankenship
                                            Title:  Chief Accounting Officer

Date:     November 27, 2002
      ---------------------------


                                       76
<PAGE>


                                GOLAR LNG LIMITED

             INDEX TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

                                                                     Page

Report of Independent Accountants.....................................F-2

Audited Consolidated and Combined Statements of Operations
for the years ended December 31, 2001, 2000 and 1999..................F-3

Audited Consolidated and Combined Statements of Comprehensive
Income for the years ended December 31, 2001, 2000 and 1999...........F-4

Audited Consolidated and Combined Balance Sheets
as of December 31, 2001 and 2000......................................F-5

Audited Consolidated and Combined Statements of Cash Flows
for the years ended December 31, 2001, 2000 and 1999..................F-6

Audited Consolidated and Combined Statements of
Changes in Stockholders' Equity for the years
ended December 31, 2001 and 2000 .....................................F-7

Notes to Consolidated and Combined Financial Statements...............F-8

Unaudited Consolidated and Combined Statements of Operations
for the six months ended June 30, 2002 and 2001......................F-30

Unaudited Consolidated Balance Sheets as of
June 30, 2002 and December 31, 2001..................................F-31

Unaudited Consolidated and Combined Statements of Cash Flows
for the six months ended June 30, 2002 and 2001......................F-32

Notes to Unaudited Interim Consolidated
and Combined Financial Statements....................................F-33

                                      F-1
<PAGE>

Report of Independent Accountants

To the Board of Directors and Stockholders of Golar LNG Limited

In our opinion,  the  accompanying  consolidated and combined balance sheets and
the related  consolidated and combined  statements of operations,  comprehensive
income,  stockholders'  equity and cash flows  present  fairly,  in all material
respects,  the financial position of Golar LNG Limited and its subsidiaries (the
"Company")  at December 31, 2001 and 2000,  and the results of their  operations
and their cash flows for the years ended  December  31,  2001,  2000 and 1999 in
conformity with accounting principles generally accepted in the United States of
America,  on the basis described in Note 2. 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 of these  statements in  accordance  with  auditing  standards  generally
accepted in the United States of America, which 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,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1, the Company is considering  various  funding  strategies
for its capital  commitments,  including  payments due in 2003,  under long-term
shipbuilding contracts for which it has not yet obtained full financing.

PricewaterhouseCoopers
London, United Kingdom

April 2,  2002,  except as to the  third  paragraph  in Note 1, the final  three
paragraphs in Note 14 and Note 28 (B) which are as of October 15, 2002


                                      F-2
<PAGE>


Golar LNG Limited
Consolidated and Combined  Statements of Operations for the years ended December
31, 2001, 2000 and 1999
(in thousands of $, except per share data)

<TABLE>
<CAPTION>
                                               Note           2001          2000           1999
<S>                                            <C>         <C>           <C>            <C>
Operating revenues
Time charter revenues                                      112,324       110,705         79,007
Vessel management fees                                       1,899         2,304          2,785
--------------------------------------------- ------ -------------  ------------  -------------
Total operating revenues                                   114,223       113,009         81,792
--------------------------------------------- ------ -------------  ------------  -------------
Operating expenses
Vessel operating expenses                                   24,537        20,973         18,249
Administrative expenses                                      8,232         7,715          7,935
Restructuring expenses                            6          1,894             -              -
Depreciation and amortization                               31,614        36,488         29,464
--------------------------------------------- ------ -------------  ------------  -------------
Total operating expenses                                    66,277        65,176         55,648
--------------------------------------------- ------ -------------  ------------  -------------
Operating income                                            47,946        47,833         26,144
--------------------------------------------- ------ -------------  ------------  -------------
Financial income (expenses)
Interest income                                              3,254         2,124          3,553
Interest expense                                          (32,508)      (44,539)       (26,414)
Other financial items                             7       (12,363)       (2,405)        (4,903)
--------------------------------------------- ------ -------------  ------------  -------------
Net financial expenses                                    (41,617)      (44,820)       (27,764)
--------------------------------------------- ------ -------------  ------------  -------------
Income   (loss)   before  income  taxes
and minority interest                                        6,329         3,013        (1,620)
--------------------------------------------- ------ -------------  ------------  -------------
Minority   interest   in   net   income                      1,607         3,439              -
of subsidiaries
Income taxes                                      8            356            78            237
--------------------------------------------- ------ -------------  ------------  -------------
Net income (loss)                                            4,366         (504)        (1,857)
============================================= ======  ============= ============  =============

Earnings (loss) per share
Basic and diluted                                 9          $0.08       $(0.01)        $(0.03)
============================================= ======  ============= ============  =============
</TABLE>

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


                                      F-3
<PAGE>


Golar LNG Limited
Consolidated and Combined Statements of Comprehensive Income for the years ended
December 31, 2001, 2000 and 1999
(in thousands of $)

<TABLE>
<CAPTION>
                                                                2001           2000          1999
<S>                                                           <C>            <C>           <C>
Net income (loss)                                              4,366           (504)       (1,857)

Other Comprehensive income (loss), net of tax:
  Recognition of minimum pension liability                    (1,472)        (3,598)            -
  Recognition  of transition  obligation  under FAS 133       (2,850)              -            -
  Reversal of transition obligation under FAS 133                 64               -            -
-----------------------------------------------------       -------- -------------- -------------
Other comprehensive income (loss)                             (4,258)        (3,598)            -
=====================================================       ======== ============== =============

-----------------------------------------------------       -------- -------------- -------------
Comprehensive income (loss)                                      108         (4,102)       (1,857)
=====================================================       ======== ============== =============
</TABLE>

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


                                      F-4
<PAGE>


Golar LNG Limited
Consolidated and Combined Balance Sheets as of December 31, 2001 and 2000
(in thousands of $)

<TABLE>
<CAPTION>
                                                              Note          2001            2000
<S>                                                           <C>        <C>             <C>
ASSETS
Current Assets
Cash and cash equivalents                                                 57,569           5,741
Restricted cash and short-term investments                                14,163          13,091
Short term investments                                                         -          14,231
Trade accounts receivable                                     11             188             111
Other receivables, prepaid expenses and accrued income        12           2,602           3,303
Amounts due from related parties                              13             261               -
Inventories                                                                2,650           2,059
--------------------------------------------------------- ------- --------------- ---------------
Total current assets                                                      77,433          38,536

Newbuildings                                                  14         132,856               -
Vessels and equipment, net                                    15         641,371         765,559
Deferred charges                                              16           4,177           2,856
Goodwill                                                      17               -           9,439
Other long term assets                                                       154           1,600
--------------------------------------------------------- ------- --------------- ---------------
Total assets                                                             855,991         817,990
========================================================= ======= =============== ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt                             21          41,053          10,171
Current indebtedness due to related parties                   21          85,278          12,000
Trade accounts payable                                                     1,995           1,799
Accrued expenses                                              18           7,684           7,281
Amounts due to related parties                                             1,049               -
Other current liabilities                                     19          18,887           2,403
--------------------------------------------------------- ------- --------------- ---------------
Total current liabilities                                                155,946          33,654
Long-term liabilities
Long-term debt                                                21         483,276         204,329
Long-term debt due to related parties                         21               -         287,400
Other long-term liabilities                                   22          16,552           9,562
--------------------------------------------------------- ------- --------------- ---------------
Total liabilities                                                        655,774         534,945
Commitments and contingencies (See Note 27)
Minority interest                                                         25,820          26,011
Stockholders' equity                                                     174,397         257,034
--------------------------------------------------------- ------- --------------- ---------------
Total liabilities and stockholders' equity                               855,991         817,990
========================================================= ======= =============== ===============
</TABLE>

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


                                      F-5
<PAGE>


Golar LNG Limited
Consolidated and Combined  Statements of Cash Flows for the years ended December
31, 2001, 2000 and 1999 (in thousands of $)

<TABLE>
<CAPTION>
                                                        Note         2001          2000          1999
<S>                                                     <C>     <C>            <C>           <C>
Operating activities
Net income (loss)                                                   4,366         (504)       (1,857)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
      Depreciation and amortization                                31,680        36,488        29,464
      Amortization of deferred charges                              2,097         1,359         1,742
      Income attributable to minority interests                     1,607         3,439             -
      Drydocking expenditure                                     (10,222)       (6,694)             -
      Trade accounts receivable                                      (77)           (4)           167
      Inventories                                                   (591)           257         (351)
      Prepaid expenses and accrued income                             725           188           200
      Amount due from/to related companies                          (238)       (5,217)       (5,829)
      Trade accounts payable                                          196           274       (3,461)
      Accrued expenses                                                267       (1,116)       (2,668)
      Other current liabilities                                    12,233         1,039         1,442
----- ---------------------------------------------    ----- ------------ ------------- -------------
      Net cash provided by operating activities                    42,043        29,509        18,849
----- ---------------------------------------------    ----- ------------ ------------- -------------
Investing activities
      Cash paid for Osprey's LNG interests, net                 (530,945)             -             -
      of cash acquired
      Investment in associated company and                17            -             -      (14,176)
      subsidiary
      Additions to newbuildings                           14    (132,856)      (93,960)      (10,245)
      Additions to vessels and equipment                          (7,258)       (2,900)       (3,030)
      Restricted cash and short term investments                  (1,072)      (13,091)             -
      Purchase of short term investments                                -      (14,231)             -
      Proceeds from maturity of short term                         14,231             -             -
      investments
      Proceeds from sales of other assets                               -         1,334             -
----- ---------------------------------------------    ----- ------------ ------------- -------------
      Net cash used in investing activities                     (657,900)     (122,848)      (27,451)
----- ---------------------------------------------    ----- ------------ ------------- -------------
Financing activities
        Proceeds from long-term debt                      21      325,000        88,191         8,879
        Proceeds from short term debt due to              21       85,278             -             -
        related parties
        Repayments of long-term debt                             (15,170)             -             -
        Financing costs paid                                      (3,231)             -         (286)
        Contribution from minority shareholders                         -         8,322           770
        Proceeds from issuance of equity                          275,808             -             -
----- ---------------------------------------------    ----- ------------ ------------- -------------
         Net cash  provided by financing                          667,685        96,513         9,363
      activities
----- ---------------------------------------------    ----- ------------ ------------- -------------
Net increase in cash and cash equivalents                          51,828         3,174           761
Cash and cash equivalents at beginning of period                    5,741         2,567         1,806
Cash and cash equivalents at end of period                         57,569         5,741         2,567
===================================================    ===== ============ ============= =============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
      Interest paid, net of capitalized interest                   37,811        42,662        23,080
      Income taxes paid                                               411           268            45
Non-cash investing and financing activities:
      Forgiveness   of   intercompany    payables,        13      455,890             -             -
      dividend out and return of capital
      Liabilities assumed in business combination                 214,500             -       117,430
===== =============================================    ===== ============ ============= =============
</TABLE>

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


                                      F-6
<PAGE>


Golar LNG Limited
Consolidated and Combined Statements of Changes in Stockholders'  Equity for the
years ended December 31, 2001 and 2000
(in thousands of $, except number of shares)

<TABLE>
<CAPTION>
                               Note    Invested    Amounts   Share     Additional  Accumulated    Retained   Total
                                        Equity     due       Capital   Paid        Other          Earnings   Stockholders'
                                                   from                in          Comprehensive             Equity
                                                   Related             Capital     Income
                                                   Parties
<S>                            <C>     <C>         <C>       <C>       <C>         <C>            <C>        <C>
Combined balance at                                                                                           225,056
December 31, 1999                      1,016,792   (791,736)       -         -              -         -
Net income (loss)                          (504)           -       -         -              -         -         (504)
Change in amounts due from
parent and affiliates                          -      36,080       -         -              -         -        36,080
Other comprehensive loss                       -         -         -         -        (3,598)         -       (3,598)
----------------------------   ------  ----------  --------  --------  --------  - ----------    -------    ----------
Combined balance at                                                                                           257,034
December 31, 2000                      1,016,288   (755,656)       -         -        (3,598)         -

Push down of World
Shipholding Ltd. basis            23   (133,758)         -         -         -          6,384         -     (127,374)
Net loss                                 (3,210)         -         -         -              -         -       (3,210)
Change in amounts due from
parent and affiliates             13           -     299,766       -         -              -         -       299,766
Other comprehensive loss                       -                   -         -        (2,786)         -       (2,786)
----------------------------   ------  ----------  --------  -------   --------    ----------    -------   ----------
Combined balance at May                  879,320   (455,890)       -         -              -         -       423,430
31, 2001

Issue of ordinary shares,         24           -         -    56,012   219,796              -         -       275,808
net of issuance costs
Forgiveness of
inter-company balances,           13   (455,890)     455,890       -         -              -         -             -
dividend out and return of
capital
Purchase of the Golar LNG                                  -
businesses from Osprey
Maritime and Seatankers,               (423,430)                      (107,515)             -         -     (530,945)
Ltd, entities under common                                         -
control
Net income                                     -           -       -         -              -     7,576         7,576
Other comprehensive loss                       -           -       -         -        (1,472)         -       (1,472)
----------------------------   ------  ----------  --------  -------   --------    ----------    -------   ----------
Consolidated balance at                        -           -  56,012   112,281        (1,472)     7,576       174,397
December 31, 2001
============================   ======  ==========  ========  =======   ========    ===========   =======   ==========
</TABLE>

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


                                      F-7
<PAGE>


Golar LNG Limited
Notes to Consolidated and Combined Financial Statements

1. GENERAL

Golar LNG Limited  (the  "Company"  or "Golar")  was  incorporated  in Hamilton,
Bermuda on May 10, 2001 for the purpose of acquiring the  liquefied  natural gas
("LNG")  shipping  interests  of  Osprey  Maritime  Limited  ("Osprey")  and  of
Seatankers Management Co. Ltd. ("Seatankers").  Osprey, through its parent World
Shipholding  Ltd.  ("World  Shipholding"),  and Seatankers,  are both indirectly
controlled by Mr. John Fredriksen.  Mr.  Fredriksen is a Director,  the Chairman
and  President of Golar.  Osprey  acquired its LNG interests in 1997 through the
acquisition of Gotaas Larsen Shipping Corporation ("Gotaas Larsen").

The  Company  owns and  operates a fleet of six  liquefied  natural  gas ("LNG")
carriers,  five of which are currently under long term charter contracts and one
of which is under a  medium-term  charter.  The Company owns five of its vessels
through  wholly owned  subsidiaries  and has a 60 per cent interest in the sixth
vessel. Additionally, the Company is building four new LNG carriers at a cost of
$658.9 million excluding financing costs.

The Company has  sufficient  facilities  to meet its  anticipated  funding needs
until August 2003.  These  facilities  include $15 million from a related  party
which can be drawn down as needed in 2003 until such time as permanent financing
has been secured. As at October 2002 additional  facilities of $316 million will
be needed to meet  commitments  under the  newbuilding  construction  program in
August 2003 and thereafter.  It is intended that these facilities will come from
a combination of debt finance,  lease arrangements for existing vessels and cash
flow from  operations.  Alternatively,  if market and economic  conditions favor
equity  financing,  the  Company  may  raise  equity  to fund a  portion  of the
construction  costs.  The Company is in advanced  negotiations  with a number of
financial institutions and others to provide sufficient facilities to meet these
construction  commitments in full as they fall due.  Accordingly,  the financial
statements have been prepared on a going concern basis of accounting.

Acquisition of Osprey by World Shipholding

In August  2000,  World  Shipholding  commenced  the  acquisition  of Osprey,  a
publicly  listed  Singapore  company with LNG  tankers,  oil tankers and product
tankers.  World  Shipholding  gained a controlling  interest of more than 50 per
cent of Osprey in November 2000. In January 2001, World  Shipholding's  interest
increased to over 90 per cent and the acquisition was completed in May 2001. The
acquisition  of Osprey by World  Shipholding  was  accounted  for as a  purchase
transaction  and the purchase  price was  therefore  allocated to the assets and
liabilities  acquired based on their fair value as of each acquisition date with
vessels being valued on the basis of independent  appraisals.  The fair value of
the net assets  acquired  exceeded the  purchase  price.  As such,  the negative
goodwill associated with the acquisition has been allocated to reduce the values
of the vessels and the new basis reflected in Golar LNG's  financial  statements
through  push down  accounting  (as  indicated  in Note 23),  which  occurred on
January 31, 2001.


                                      F-8
<PAGE>

Acquisition of LNG interests by Golar LNG Limited

On May 21, 2001, the Company  entered into purchase  agreements  with Osprey and
Seatankers to purchase its LNG shipping interests.  These LNG shipping interests
comprised  the  ownership of LNG  carriers,  a contract and options to build LNG
vessels and a management  organization that provides management services for LNG
carriers owned by the Company and third parties.  To finance the purchase of the
LNG operations,  the Company raised $280 million through the placement in Norway
of 56 million  shares at a price of $5.00 per share.  Osprey  subscribed  for 28
million shares with the remaining 28 million shares being  subscribed by private
investors.  In addition,  a  wholly-owned  subsidiary of the Company raised $325
million  through  a credit  facility  secured  by the  underlying  vessels.  The
purchase price for the LNG operations was $530.9 million as indicated below:

(in millions  of $)

Proceeds from share issuance                                 280.0
Credit facility                                              325.0
                                                           -------
                                                             605.0
Less: transaction fees and expenses                          (4.2)
Less: surplus cash available                                (69.9)
                                                           -------
Purchase price                                               530.9
Less: net assets acquired                                  (423.4)
                                                           -------
Excess of purchase price over net assets acquired            107.5
                                                           =======

The purchase price included amounts paid to Osprey and Seatankers  totaling $5.0
million for the  assignment of newbuilding  contracts and options.  The purchase
price paid was net of an amount of $128.7 million, being 60 per cent of the loan
assumed  relating to the  financing  of the Golar Mazo as  described in Note 21.
Additionally,  the Company forgave  certain  intercompany  receivables  totaling
$455.9 million.

Mr. John  Fredriksen  indirectly  controls 50.01 per cent of the Company through
the initial  12,000 shares issued at the Company's  formation and the 28 million
shares  purchased by Osprey.  As required under  generally  accepted  accounting
principles in the United  States,  the purchase of the LNG  operations  has been
treated by the Company as a transaction  between  entities under common control.
The  Company  recorded  the LNG  assets  and  liabilities  acquired  from  World
Shipholding and Seatankers at the amounts  previously  reflected in the books of
World Shipholding and Seatankers on what is known as a "predecessor  basis". The
difference  between the  purchase  price as  described  above and the net assets
recorded in the Company's books using the  predecessor  basis was reflected as a
reduction in equity in the amount of $107.5 million.

2. ACCOUNTING POLICIES

Basis of accounting

The financial  statements are prepared in accordance with accounting  principles
generally  accepted in the United States.  Investments in companies in which the
Company directly or indirectly holds more than 50 per cent of the voting control
are consolidated in the financial  statements.  All  inter-company  balances and
transactions have been eliminated. Investments in companies in which the Company
holds  between 20 per cent and 50 per cent of an  ownership  interest,  and over
which the Company exercises significant  influence,  are accounted for using the
equity method.

For the year ended December 31, 2001, the five months to May 31, 2001, have been
carved out of the financial statements of Osprey and are presented on a combined
basis.  For the seven  months  from  June 1,  2001 to  December  31,  2001,  the
financial  statements  of  Golar  as  a  separate  entity  are  presented  on  a
consolidated  basis. For the years ended December 31, 2000 and 1999 the combined
financial  statements  presented  herein have been  carved out of the  financial
statements  of Osprey.  With effect from May 31, 2001 the  predecessor  basis of
accounting  has been applied to the  acquisition  of the LNG interests of Osprey
and Seatankers as discussed above.  The financial  statements for the year ended
December 31, 2001, therefore reflect the following:

                                      F-9
<PAGE>

o    the pushdown of purchase  accounting  adjustments  with effect from January
     31, 2001 (resulting from the acquisition of Osprey by World Shipholding);

o    the application of the predecessor basis of accounting with effect from May
     31, 2001  resulting  from the Company's  acquisition of the LNG interest of
     Osprey and Seatankers; and

o    the  establishment  of a new equity and debt structure with effect from May
     31, 2001 in connection with the common control  acquisition by Golar of the
     LNG business of Osprey and the carry over of the  historic  basis from this
     date;

These events are explained further elsewhere in these Notes.

The accompanying  financial  statements include the financial  statements of the
corporations listed in Note 3.

Osprey is a shipping  company  with  activities  that  include  oil  tankers and
product carriers as well as LNG carriers.  Where Osprey's  assets,  liabilities,
revenues and expenses relate to the LNG business, these have been identified and
carved out for inclusion in these financial  statements.  Where Osprey's assets,
liabilities,  revenues and expenses  relate to one specific line of business but
not the LNG  business,  these have been  identified  and not  included  in these
financial  statements.  The  preparation of the carved out financial  statements
requires  allocation of certain assets and  liabilities and expenses where these
items are not identifiable as related to one specific  activity.  Administrative
overheads  of Osprey  that  cannot  be  related  to a  specific  vessel  type of
operations  have been allocated based on the number of vessels in Ospreys' fleet
including  its tanker  operations.  The  Osprey  group  operated  a  centralized
treasury  system  and did not  have  separate  banks  accounts  for  each of its
subsidiaries. For the LNG operations there were separate bank accounts for Golar
Mazo and for the remaining LNG activities  interest income has been allocated in
the carved out combined financial  statements based on operating cash flows, net
of debt servicing.  Management has deemed the related allocations are reasonable
to present the financial position,  results of operations, and cash flows of the
Company.  Management believes the various allocated amounts would not materially
differ  from  those  that  would  have been  achieved  had Golar  operated  on a
stand-alone basis for all periods presented. The financial position,  results of
operations and cash flows of the Company are not necessarily indicative of those
that would have been  achieved  had the Company  operated  autonomously  for all
years  presented  as  the  Company  may  have  made  different  operational  and
investment decisions as a Company independent of Osprey.

During the period of Osprey's  ownership  of the LNG  business,  overhead  costs
allocated,  as  described  above,  are derived  from costs  associated  with the
corporate headquarters in Singapore and from the London office which managed and
still does manage the operations of the business. The amount of costs, presented
as part of  administrative  expenses,  that was  allocated  from  the  Singapore
headquarters  was  $743,000,  $3,000,000  and  $1,353,000  for the  years  ended
December 31, 2001, 2000 and 1999  respectively.  In addition,  of the $1,894,000
restructuring  expenses incurred during 2001,  $1,598,000 was allocated from the
Singapore headquarters.

The preparation of financial  statements in accordance  with generally  accepted
accounting  principles  requires that  management make estimates and assumptions
affecting  the reported  amounts of assets and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those  estimates.  The financial  statements do
not purport to be indicative of either our future financial  position or results
of operations had Golar been a stand-alone entity for the periods presented.

Revenue and expense recognition

Revenues and expenses are  recognized on the accrual basis.  Revenues  generated
from time charter  hire are recorded  over the term of the charter as service is
provided. Revenues generated from management fees are also recorded ratably over
the term of the contract as service is provided.  Revenues include minimum lease
payments  under time  charters as well as the  reimbursement  of certain  vessel
operating costs.

Vessel  operating costs include an allocation of  administrative  overheads that
relate to  vessel  operating  activity  which  includes  certain  technical  and
operational  support  staff  for the  vessels,  information  technology,  legal,
accounting,  and corporate  costs.  These costs are allocated  based on internal
cost studies, which management believes are reasonable estimates.  For the years
ended December 31, 2001,  2000 and 1999,  $2,033,000,  $1,909,000 and $1,591,000
have been allocated to vessel operating costs, respectively.

Cash and cash equivalents

The Company considers all demand and time deposits and highly liquid investments
with original maturities of three months or less to be equivalent to cash.

Short term investments

The  Company  considers  all  short-term  investments  as  held to  maturity  in
accordance with Statement of Financial  Accounting Standards No. 115 "Accounting
for Certain  Investments in Debt and Equity  Securities".  These investments are
carried  at  amortized  cost.  The  Company  places its  short-term  investments
primarily  in  fixed  term   deposits   with  high  credit   quality   financial
institutions.


                                      F-10
<PAGE>

Inventories

Inventories,  which  are  comprised  principally  of  lubricating  oils and ship
spares, are stated at the lower of cost or market value. Cost is determined on a
first-in, first-out basis.

Newbuildings

The carrying  value of  newbuildings  represents  the  accumulated  costs to the
balance  sheet  date,  which  the  Company  has  had to  pay by way of  purchase
installments,  and other capital  expenditures  together with  capitalized  loan
interest. No charge for depreciation is made until the vessel is delivered.

Vessels and equipment

Vessels and equipment are stated at cost less accumulated depreciation. The cost
of vessels and equipment  less the estimated  residual value is depreciated on a
straight-line basis over the assets' remaining useful economic lives.

Included in vessels and equipment is drydocking expenditure which is capitalized
when  incurred  and  amortized  over  the  period  until  the  next  anticipated
drydocking, which is generally between two and five years. For vessels which are
newly built or acquired  and for the amounts  reflected as part of the push down
of the World  Shipholding  basis, the  consideration  paid is allocated  between
drydocking and other vessels costs to reflect the different  useful lives of the
component assets.

Useful lives applied in depreciation are as follows:

Vessels                               40 years
Deferred drydocking expenditure       two to five years
Office equipment and fittings         three to six years

Impairment of long-lived assets

Long-lived  assets  that  are  held and used by the  Company  are  reviewed  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying  amount of an asset may not be  recoverable.  In  addition,  long-lived
assets to be  disposed of are  reported at the lower of carrying  amount or fair
value less estimated costs to sell.

Deferred charges

Costs associated with long term financing,  including debt arrangement fees, are
deferred and  amortized  over the term of the  relevant  loan.  Amortization  of
deferred loan costs is included in Other Financial Items.

Goodwill

Goodwill  represents  the  excess of the  purchase  price over the fair value of
assets  acquired  in  business  acquisitions  accounted  for under the  purchase
method.  Goodwill is  presented  net of  accumulated  amortization  and is being
amortized on a straight-line basis over a period of approximately 20 years.

Derivatives

The Company  enters into  interest rate swap  transactions  from time to time to
hedge a portion of its exposure to floating interest rates.  These  transactions
involve the  conversion of floating  rates into fixed rates over the life of the
transactions  without an exchange of underlying  principal.  Hedge accounting is
used to account for these swaps provided certain hedging criteria are met. As of
January 1, 2001, the Company adopted Statement of Financial  Accounting Standard
("SFAS") No. 133,  "Accounting for Derivatives  and Hedging  Activities"  ("SFAS
133"). Certain hedge relationships met the hedge criteria prior to SFAS 133, but
do not meet the  criteria  for hedge  accounting  under SFAS 133.  Upon  initial
adoption,   the  company  recognized  the  fair  value  of  its  derivatives  as
liabilities  of $2.8  million  and a charge  of $2.8  million  was made to other
comprehensive income.


                                      F-11
<PAGE>

Pre-SFAS 133

Hedge  accounting  is  applied  where  the  derivative  reduces  the risk of the
underlying hedged item and is designated at inception as a hedge with respect to
the hedged item.  Additionally,  the derivative  must result in payoffs that are
expected to be inversely correlated to those of the hedged item. Derivatives are
measured for effectiveness both at inception and on an ongoing basis. When hedge
accounting  is  applied,   the  differential  between  the  derivative  and  the
underlying  hedged item is accrued as interest rates change and recognized as an
adjustment to interest expense. The related amount receivable from or payable to
counterparties is included in accrued interest income or expense,  respectively.
Prior to January 1, 2001,  the fair  values of the  interest  rate swaps are not
recognized in the financial statements.

If a derivative ceases to meet the criteria for hedge accounting, any subsequent
gains and losses are currently  recognized in income. If a hedging instrument is
sold or terminated  prior to maturity,  gains and losses continue to be deferred
until the hedged instrument is recognized in income. Accordingly,  should a swap
be terminated while the underlying debt remains outstanding, the gain or loss is
adjusted to the basis of the  underlying  debt and amortized  over its remaining
useful life.

Post-SFAS 133

SFAS 133, as amended by SFAS 137  "Accounting  for  Derivative  Instruments  and
Hedging  Activities-Deferral of the Effective Date of FASB Statement No.133" and
SFAS 138  "Accounting  for Certain  Derivative  Instruments  and Certain Hedging
Activities  an  amendment  of FASB  Statement  No.  133",  requires an entity to
recognize all  derivatives  as either assets or liabilities on the balance sheet
and  measure  these  instruments  at fair  value.  Changes  in the fair value of
derivatives are recorded each period in current earnings or other  comprehensive
income,  depending  on whether a  derivative  is  designated  as part of a hedge
transaction  and, if it is, the type of hedge  transaction.  In order to qualify
for hedge accounting under SFAS 133, certain criteria and detailed documentation
requirements must be met.

The Company does not enter into derivative  contracts for speculative or trading
purposes.

Foreign currencies

The  Company's  functional  currency  is the U.S.  dollar  as all  revenues  are
received in U.S.  dollars and a majority of the Company's  expenditures are made
in U.S. dollars. The Company reports in U.S. dollars.

Transactions  in foreign  currencies  during the year are  translated  into U.S.
dollars  at the rates of  exchange  in  effect  at the date of the  transaction.
Foreign  currency  monetary assets and liabilities are translated using rates of
exchange at the balance sheet date.  Foreign  currency  non-monetary  assets and
liabilities are translated using historical rates of exchange.  Foreign currency
transaction  gains or losses are  included  in the  consolidated  statements  of
operations.


                                      F-12
<PAGE>

Stock-based compensation

Under  Statement  of  Financial  Accounting  Standards  No.  123  ("SFAS  123"),
"Accounting   for   Stock-Based   Compensation",   disclosures   of  stock-based
compensation   arrangements  with  employees  are  required  and  companies  are
encouraged,  but not required,  to record  compensation  costs  associated  with
employee stock option awards, based on estimated fair values at the grant dates.
The  Company  has  chosen to  account  for  stock-based  compensation  using the
intrinsic value method prescribed in Accounting  Principles Board Opinion No. 25
("APB 25")  "Accounting  for Stock Issued to  Employees"  and has  disclosed the
required  pro forma  effect on net income and  earning  per share as if the fair
value method of  accounting as prescribed in SFAS 123 had been applied (see Note
24).

Earnings (loss) per share

Basic  earnings  per  share  ("EPS")  is  computed  based on the  income  (loss)
available  to common  stockholders  and the  weighted  average  number of shares
outstanding  for basic EPS.  Diluted  EPS  includes  the  effect of the  assumed
conversion of potentially dilutive instruments (see Note 9).

3. SUBSIDIARIES AND INVESTMENTS

<TABLE>
<CAPTION>

Name                                     Country of         Principal Activities   Percentage held
                                         Incorporation                             as of December 31, 2001
<S>                                      <C>                <C>                    <C>
Golar Gas Holding Company Inc.           Liberia            Holding                100
Golar Maritime (Asia) Inc.               Liberia            Holding                100
Gotaas-Larsen Shipping  Corporation      Liberia            Holding                100
Oxbow Holdings Inc.                      British Virgin     Holding                100
                                         Islands
Golar Gas Cryogenics Inc.                Liberia            Vessel ownership       100
Golar Gimi Inc.                          Liberia            Vessel ownership       100
Golar Hilli Inc.                         Liberia            Vessel ownership       100
Golar Khannur Inc.                       Liberia            Vessel ownership       100
Golar Freeze Inc.                        Liberia            Vessel ownership       100
Faraway Maritime Shipping Inc.           Liberia            Vessel ownership        60
Golar LNG 2215 Corporation               Liberia            Vessel ownership       100
Golar LNG 1444 Corporation               Liberia            Vessel ownership       100
Golar LNG 1460 Corporation               Liberia            Vessel ownership       100
Golar LNG 2220 Corporation               Liberia            Vessel ownership       100
Golar International Ltd.                 Liberia            Vessel management      100
Golar Maritime Services Inc.             Philippines        Vessel management      100
Golar Maritime Services, S.A.            Spain              Vessel management      100
Gotaas-Larsen International Ltd.         Liberia            Vessel management      100
Golar Management Limited                 Bermuda            Management             100
Golar Maritime Limited                   Bermuda            Management             100
Aurora Management Inc.                   Liberia            Management              90
</TABLE>

4. ADOPTION OF NEW ACCOUNTING STANDARDS

In June  2001,  the  FASB  approved  SFAS  No.  141,  "Accounting  for  Business
Combinations"  ("SFAS  141"),  which  requires the  application  of the purchase
method  including  the  identification  of the  acquiring  enterprise  for  each
transaction.  SFAS No. 141 applies to all business combinations  initiated after
June 30, 2001 and all business combinations accounted for by the purchase method
that are  completed  after June 30,  2001.  The  adoption of SFAS No. 141 by the
Company  did not  have any  impact  on the  Company's  consolidated  results  of
operations, financial position, or liquidity.


                                      F-13
<PAGE>

In June 2001,  the FASB  approved SFAS No. 142,  "Goodwill and Other  Intangible
Assets"  ("SFAS 142").  SFAS No. 142 applies to all acquired  intangible  assets
whether acquired singly, as part of a group, or in a business combination.  SFAS
No. 142 will supersede APB Opinion No. 17, "Intangible  Assets".  This statement
is effective for fiscal years beginning after December 15, 2001. The adoption of
SFAS  No.  142  by the  Company  did  not  have  any  impact  on  the  Company's
consolidated results of operations, financial position, or liquidity.

In August 2001, the FASB approved SFAS No. 143, "Accounting for Asset Retirement
Obligations"  ("SFAS  143").  SFAS No.  143  requires  the fair value of a legal
liability related to an asset retirement be recognized in the period in which it
is incurred.  The associated  asset retirement costs must be capitalized as part
of the  carrying  amount  of  the  related  long-lived  asset  and  subsequently
amortized to expense.  Subsequent  changes in the liability will result from the
passage  of time  (interest  cost) and  revision  to cash flow  estimates.  This
statement  is  effective  for fiscal years  beginning  after June 15, 2002.  The
effect on the Company of adopting FAS 143 is under evaluation.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived  Assets" ("SFAS 144").  The objectives of SFAS 144 are to
address  significant issues relating to the implementation of FASB Statement No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to Be Disposed Of", and to develop a single accounting model based on the
framework  established in SFAS 121, for  long-lived  assets to be disposed of by
sale. The standard requires that long-lived assets that are to be disposed of by
sale be  measured  at the lower of book  value or fair  value less cost to sell.
Additionally,  the  standard  expands the scope of  discontinued  operations  to
include all components of an entity with  operations  that can be  distinguished
from the rest of the entity and will be eliminated  from the ongoing  operations
of the entity in a disposal transaction.  This statement is effective for fiscal
years beginning after December 15, 2001, and generally, its provisions are to be
applied  prospectively.  The Company is currently  evaluating the impact of this
statement  on its results of  operations,  financial  position,  and  liquidity.
However,  management  does not expect that the adoption of the SFAS No. 144 will
have a  material  effect  on the  Company's  results  of  operations,  financial
position or liquidity.

5. SEGMENTAL INFORMATION

The Company has not presented segmental  information as it considers it operates
in one reportable  segment,  the LNG carrier market.  The Company's fleet is all
operating under time charters,  five of which are long-term,  and these charters
are with two  charterers,  British  Gas and  Pertamina.  In time  charters,  the
charterer,  not the Company,  controls the choice of which routes the  Company's
vessel will serve.  These routes can be  worldwide.  Accordingly,  the Company's
management, including the chief operating decision makers, does not evaluate the
Company's performance either according to customer or geographical region.


                                      F-14
<PAGE>

6. RESTRUCTURING EXPENSES

Restructuring  expenses  of $1.9  million in the year ended  December  31,  2001
consist  of  employment   severance  costs  for  management  and  administrative
employees in London and Singapore  incurred in connection with the restructuring
of Osprey's operations  following the acquisition by World Shipholding which was
completed prior to May 31, 2001.  These have been allocated to the Company based
on the number of vessels in Ospreys' fleet including its tanker operations.  The
total number of employees  terminated,  from which the cost has been  allocated,
was 17. The cost of $1.9 million represents the actual cost and employee numbers
are actual  numbers  terminated,  there being no  provision  brought  forward or
carried forward.

7. OTHER FINANCIAL ITEMS

(in thousands of $)                                2001      2000      1999

Amortization of deferred financing costs          2,097     1,359     1,742
Financing arrangement fees and other costs        1,857       983     3,042
Market  valuation   adjustment  for  interest
rate derivatives                                  8,221         -         -
Foreign exchange loss                               188        63       119
--------------------------------------------     -------   -------  -------
                                                  12,363     2,405    4,903
============================================     =======   =======  =======

8.  TAXATION

Bermuda

Under  current  Bermuda law, the Company is not required to pay taxes in Bermuda
on either income or capital gains.  The Company has received  written  assurance
from the  Minister  of Finance in Bermuda  that,  in the event of any such taxes
being imposed, the Company will be exempted from taxation until the year 2016.

United States

Pursuant to the Internal  Revenue Code of the United States (the  "Code"),  U.S.
source income from the  international  operations  of ships is generally  exempt
from U.S. tax if the Company  operating  the ships meets  certain  requirements.
Among  other  things,  in  order to  qualify  for this  exemption,  the  company
operating the ships must be incorporated in a country which grants an equivalent
exemption from income taxes to U.S.  citizens and U.S.  corporations and must be
more than 50 per cent owned by  individuals  who are residents,  as defined,  in
such country or another foreign  country that grants an equivalent  exemption to
U.S. citizens and U.S. corporations. The management of the Company believes that
by virtue of the above provisions,  it was not subject to tax on its U.S. source
income.


                                      F-15
<PAGE>

A reconciliation between the income tax expense resulting from applying the U.S.
Federal  statutory  income tax rate and the reported  income tax expense has not
been presented herein as it would not provide  additional useful  information to
users of the  financial  statements  as the  Company's  net income is subject to
neither Bermuda nor U.S. tax.

Other Jurisdictions

Current  taxation  relates  to the  taxation  of a United  Kingdom  branch  of a
subsidiary and tax on interest income received by certain other  subsidiaries of
the Company.  The Company  records  deferred income taxes to reflect the net tax
effects of  temporary  differences  between  the  carrying  amount of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. The Company recorded deferred tax assets (liabilities) of $154,000 and
$163,000  at  December  31,  2001  and  2000,  respectively.  These  assets  and
liabilities relate to differences for depreciation and pension liabilities.

9. EARNINGS (LOSS) PER SHARE

The Company's capital  structure was determined with the capital  reorganization
that took place on May 31,  2001.  For the periods  prior to May 31,  2001,  the
preparation  of the carved out combined  financial  statements did not result in
the recording of any specific  share  capital.  To provide a measurement of EPS,
the  computation  of basic EPS is based on the shares issued in connection  with
the formation of the Company and the  subsequent  placement of 56 million shares
as described in Note 1. The computation of diluted EPS assumes the foregoing and
the  conversion  of  potentially  dilutive  instruments.  There were no dilutive
securities outstanding during the years ended December 31, 2000 and 1999.

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

(in thousands of $)                               2001     2000      1999

Net income (loss) available to stockholders       4,366    (504)    (1,857)
===============================================  =======  =======   =======

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

(in thousands )                                   2001     2000      1999

Basic earnings per share:
Weighted  average  number  of  common  shares    56,012    56,012   56,012
outstanding
===============================================  =======  =======   =======

Diluted earnings per share:
Weighted  average  number  of  common  shares    56,012    56,012   56,012
outstanding
Dilutive share options                                7         -        -
----------------------------------------------   ------   -------   -------
                                                 56,019    56,012   56,012
===============================================  =======  =======   =======

10. LEASES

Rental income

The minimum  future  revenues to be received on time charters as of December 31,
2001 were as follows:

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

2002                                                                 122,177
2003                                                                 121,098
2004                                                                 122,339
2005                                                                 123,307
2006                                                                 120,344
2007 and later                                                       950,590
----------------------------------------------------------------------------
Total                                                              1,559,855
============================================================================

The long-term  contracts for two of the Company's  vessels are time charters but
the economic terms are analogous to bareboat contracts,  under which the vessels
are paid a fixed  rate of hire and the vessel  operating  costs are borne by the
charterer on a costs pass through basis.  The pass through of operating costs is
not reflected in the minimum lease revenues set out above.


                                      F-16
<PAGE>

The cost and accumulated  depreciation of the vessels leased to a third party at
December  31,  2001  were   approximately   $735.5  million  and  $29.3  million
respectively  and at December  31, 2000 were  approximately  $867.6  million and
$104.4 million respectively.

Rental expense

The Company is  committed to make rental  payments  under  operating  leases for
office  premises.  The  future  minimum  rental  payments  under  the  Company's
non-cancelable operating leases are as follows:

Year ending December 31,
(in thousands of $)

2002                                                                  946
2003                                                                  798
2004                                                                  658
2005                                                                    -
2006                                                                    -
2007 and later                                                          -
-------------------------------------------------------------------------
Total minimum lease payments                                        2,402
=========================================================================

Total minimum lease payments have been reduced by minimum sublease rentals under
non-cancelable  leases of  approximately  $1,425,000 for each of the years ended
December  31, 2002 and 2003,  and  $1,306,000  for the year ended  December  31,
2004.This relates to former office space that the Company no longer occupies. At
the time the Company  entered into this  sublease  arrangement,  a provision was
recognized for the difference  between the Company's future obligation under the
lease agreement and its  anticipated  sublease income over the remaining term of
the lease.  This  provision is recognized as a reduction to rental  expense over
the life of the lease  agreement and  eliminates  the Company's  ongoing  rental
expense  for these  facilities.  The  provision  is  recorded  in other  current
liabilities and other long-term  liabilities.  The provision balance at December
31, 2001 and 2000 was $2,194,000 and $2,644,000, respectively, of which $885,000
and  $626,000 is shown in other  current  liabilities  at December  31, 2001 and
2000,  respectively.  Total rental expense for operating  leases was $2,101,000,
$1,642,000 and $1,791,000 for the years ended December 31, 2001,  2000 and 1999,
respectively and total sublease income was  approximately  $1,158,000,  $839,000
and $852,000 for the years ended December 31, 2001, 2000 and 1999, respectively.
The  amortization of the provision  described  above was $450,000,  $344,500 and
$367,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

11. TRADE ACCOUNTS RECEIVABLE

Trade accounts  receivable are presented net of allowances for doubtful accounts
amounting to $nil and  $211,000,  as of December 31, 2001 and December 31, 2000,
respectively.

12. OTHER RECEIVABLES, PREPAID EXPENSES AND ACCRUED INCOME

(in thousands of $)                                       2001       2000

Other receivables                                        2,023      2,314
Prepaid expenses                                           312        116
Accrued interest income                                    267        873
-------------------------------------------------------------------------
                                                         2,602      3,303
=========================================================================

13. DUE FROM RELATED COMPANIES

Amounts  due  from  related  companies  as at  December  31,  2001  of  $261,000
represents  fees due from Osprey for  management of two VLCCs and seconded staff
costs (Note 26).

Amounts  due  from  related   companies  as  at  December  31,  2000   represent
inter-company  balances  with Osprey and the effect of the  carve-out of the LNG
operations  from the  Osprey  group.  Included  in this  balance is an amount of
$299.4  million  relating to the Gotaas Larsen loan facility in the Osprey group
as discussed in Note 21. The balance of $755.6  million at December 31, 2000 was
reduced  to $676.5  million  in May 2001  primarily  by the  repayment  of $78.8
million of the Gotaas Larsen loan  facility.  As part of the  acquisition of the
LNG interests by the Company in May 2001, the balance was eliminated as follows:

(in thousands of $)

Forgiveness of intercompany balances, dividend out
   and return of capital                                            450,298
Elimination of carve out adjustments                                  5,592
---------------------------------------------------------------------------
                                                                    455,890
---------------------------------------------------------------------------
Repayment of GL facility (Note 21)                                  220,635
---------------------------------------------------------------------------
                                                                    676,525
===========================================================================

14. NEWBUILDINGS

(in thousands of $)                                       2001       2000

Purchase price installments at end of period              129,864       -
Interest and other costs capitalized at end of period       2,992       -
-------------------------------------------------------------------------
                                                          132,856       -
=========================================================================

In January 2000, the newbuilding Golar Mazo was delivered to the company and was
transferred from Newbuildings to Vessels and equipment.

The amount of interest  capitalized in relation to  newbuildings  was $2,637,000
and $196,000 for the years ended December 31, 2001 and 2000, respectively.


                                      F-17
<PAGE>

The  Company  has  contracts  to build four new LNG  carriers at a total cost of
$658.9  million,  excluding  financing  costs.  As at  December  31,  2001,  the
installments for these vessels were due to be paid as follows:

(in millions of $)

Paid in 12 months to 31 December 2001                               129.7
Payable in 12 months to 31 December 2002                            170.8
Payable in 12 months to 31 December 2003                            230.8
Payable in 12 months to 31 December 2004                            127.6
                                                                    -----
                                                                    658.9
                                                                    =====

At December 31, 2001,  the Company did not have  facilities  in place to finance
its entire  newbuilding  program.  As of October 2002 the Company had total loan
facilities of $304 million, to finance its newbuilding program. These consist of
a $180 million  facility from Lloyds TSB Bank Plc ($162 million is in respect of
the  contract  cost and the balance is for  associated  finance  costs and other
sundry items) of which $129.6 million has been drawn down to finance newbuilding
installments,  $64.0  million from a related  party,  Greenwich,  of which $49.0
million has been drawn down as discussed  in Note 28 and a $60 million  facility
from  certain of the Golar LNG facility  Lenders.  The Company will then require
additional   financing  of  approximately  $316  million  to  fund  all  of  its
newbuilding construction commitments.

In August 2002 the Company  negotiated  revised  payment  terms for  newbuilding
installments.  This has  resulted  in the  installments  due in the years  ended
December 31, 2002, 2003 and 2004 being changed to $154.6 million, $198.4 million
and $176.1 million respectively.

The  commitments  up to August 2003 will be funded from existing  facilities and
cash  generated  from  operations.  Additional  facilities  are required to meet
progress payments from August 2003 and further installments arising periodically
thereafter until completion of the program in 2004.

15. VESSELS AND EQUIPMENT, NET

(in thousands of $)                                    2001         2000

Cost                                                  671,697      871,597
Accumulated depreciation                              (30,326)    (106,038)
--------------------------------------------------------------------------
Net book value                                        641,371      765,559
==========================================================================

Included in the above amounts as at December 31, 2001 and 2000 is equipment with
a net book value of $1,337,000 and $2,404,000, respectively.

Depreciation  expense for the years ended  December 31, 2001,  2000 and 1999 was
$31,614,000,  $35,991,000 and $29,464,000 respectively.  Depreciation expense is
shown net of amounts  allocated  to other  Osprey  entities  totaling  $367,000,
$702,000  and $603,000  for the years ended  December  31, 2001,  2000 and 1999,
respectively.

16. DEFERRED CHARGES

Deferred  charges  represent  financing  costs,  principally  bank fees that are
capitalized  and  amortized to other  financial  items over the life of the debt
instrument. The deferred charges are comprised of the following amounts:

(in thousands of $)                                    2001         2000

Debt arrangement fees                                  4,647         4,783
Accumulated amortization                               (470)       (1,927)
--------------------------------------------------------------------------
                                                       4,177         2,856
==========================================================================


                                      F-18
<PAGE>

17. GOODWILL

Goodwill is stated net of related accumulated amortization as follows:

(in thousands of $)                                    2001         2000

Goodwill                                                  -          9,936
Accumulated amortization                                  -          (497)
--------------------------------------------------------------------------
                                                          -          9,439
==========================================================================

On March 24, 1999,  the Company  increased  its  ownership  in Faraway  Maritime
Shipping, Inc ("Faraway") from 40 per cent to 60 per cent for cash consideration
of $14.2 million,  net of cash acquired of $0.4 million.  At that time,  Faraway
had a  newbuilding  contract  for the  construction  of the  Golar  Mazo,  a LNG
carrier.  The  acquisition  has been  accounted  for by the  purchase  method of
accounting.  Accordingly,  goodwill  has been  recognized  for the amount of the
excess of the purchase price over the fair value of the net assets  acquired and
is  amortized  on a  straight-line  basis  over 20 years.  The  amortization  of
goodwill  commenced in January 2000 following the delivery of the Golar Mazo. At
the  date  of  acquisition  Faraway  had  no  other  business  other  than  this
newbuilding contract. Accordingly in 1999 and earlier years, Faraway reported no
revenue, costs or net income in its financial statements.

The  goodwill  was  assigned  no value  from  January  31,  2001  following  the
acquisition  of Osprey by World  Shipholding  and this has also been recorded in
the application of predecessor basis in the books of the Company.

18. ACCRUED EXPENSES

(in thousands of $)                                          2001      2000

Vessel operating and drydocking expenses                     3,160     3,343
Administrative expenses                                      2,787       892
Interest expense                                             1,426       173
Provision for financing arrangement fees and other costs       115     2,622
Provision for tax                                              196       251
----------------------------------------------------------------------------
                                                             7,684     7,281
============================================================================

Accrued  administrative  expenses as at December  31, 2001  include $2.4 million
costs  associated  with the indefinite  postponement of a public offering of the
company's shares in the United States of America.

19.   OTHER CURRENT LIABILITIES

(in thousands of $)                                           2001     2000

Deferred drydocking and operating cost revenue               1,200     1,777
Revenue received in advance                                  5,964         -
Marked to market interest rate swaps valuation              10,838         -
Other provisions                                               885       626
----------------------------------------------------------------------------
                                                            18,887     2,403
============================================================================

20.   PENSIONS

The Company has two pension plans covering substantially all of the employees of
the Company and Osprey.  Benefits are based on the  employee's  years of service
and  compensation.  Net  periodic  pension plan costs are  determined  using the
Projected Unit Credit Cost method. The Company's plans are funded by the Company
in  conformity  with  the  funding  requirements  of the  applicable  government
regulations  and actuarial  recommendations.  Plan assets  consist of both fixed
income and equity funds managed by professional fund managers.


                                      F-19
<PAGE>

The components of net periodic benefit costs are as follows:

(in thousands of $)                        2001          2000        1999

Service cost                              1,407         1,161        1,398
Interest cost                             3,346         3,066        2,695
Expected return on plan assets           (2,620)       (3,021)      (2,899)
Amortization of prior service cost            -             -            -
Recognized actuarial loss                   615           (18)          67
--------------------------------------------------------------------------
Net periodic benefit cost                 2,748         1,188        1,261
==========================================================================

The net periodic  benefit  costs  include  amounts  relating to the employees of
Osprey, a related party. The Company continues to administer the plans on behalf
of  Osprey  and  has  charged  a  management  fee  to  Osprey  that  includes  a
proportionate  cost of plan  contributions  as  well as  certain  administration
costs.  As such, in the  preparation  of historical  financial  statements,  the
Company has reduced  administration  expenses  by  $473,000,  for the year ended
December  31, 2001,  $951,000 for the year ended  December 31, 2000 and $520,000
for the year ended December 31, 1999, to reflect  administration  expenses as if
this management agreement had existed for all periods presented.

The change in benefit  obligation and plan assets and  reconciliation  of funded
status as of December 31 are as follows:

(in thousands of $)                                       2001       2000

Reconciliation of benefit obligation:
Benefit obligation at January 1                           45,836      41,423
    Service cost                                           1,407       1,161
    Interest cost                                          3,346       3,066
    Participant contributions                                  -           -
    Actuarial (gain)/loss                                  1,514       2,833
    Foreign currency exchange rate changes                  (66)           -
    Benefit payments                                     (2,461)     (2,647)
----------------------------------------------------------------------------
Benefit obligation at December 31                         49,576      45,836
============================================================================

Reconciliation of fair value of plan assets:
Fair value of plan assets at January 1                    33,309     38,921
    Actual return on plan assets                         (3,903)    (4,515)
    Employer contributions                                 1,453      1,550
    Participant contributions                                  -          -
    Foreign currency exchange rate changes                  (72)          -
    Benefit payments                                     (2,461)    (2,647)
---------------------------------------------------------------------------
 Fair value of plan assets at December 31                 28,326     33,309
===========================================================================

Excess (deficit) of plan assets                          (21,250)   (12,527)
over projected benefit obligation (1)
    Unrecognized prior service cost                            -          -
    Unrecognized actuarial loss (gain)                     7,479     10,019
---------------------------------------------------------------------------
Net amount recognized                                    (13,771)    (2,508)
===========================================================================

(1) The Company's  plans are composed of two plans that are both  underfunded at
December  31,  2001  and one  plan  that is  overfunded  and  one  plan  that is
underfunded at December 31, 2000.


                                      F-20
<PAGE>

The details of these plans are as follows:

<TABLE>
<CAPTION>
                                         December 31, 2001             December 31, 2000
                                      UK Scheme   Marine scheme     UK scheme   Marine scheme
(in thousands of $)
<S>                                   <C>         <C>                <C>         <C>
Accumulated benefit obligation        (6,318)     (37,255)          (5,489)      (34,152)
----------------------------------------------------------------------------------------
Projected benefit obligation          (6,539)     (43,037)          (6,060)      (39,776)
Fair value of plan assets              5,569       22,757            6,701        26,608
----------------------------------------------------------------------------------------
Funded status                           (970)     (20,280)             641       (13,168)
========================================================================================
</TABLE>

The amounts  recognized in the Company's balance sheet as of December 31 were as
follows:

(in thousands of $)                                     2001         2000

Prepaid benefit cost                                         -        1,438
Accrued benefit liability                             (15,243)      (7,544)
Minimum pension liability                                1,472        3,598
---------------------------------------------------------------------------
Net amount recognized                                 (13,771)      (2,508)
===========================================================================

The weighted  average  assumptions used in accounting for the Company's plans at
December 31 are as follows:

                                                       2001          2000

Discount rate                                          7.1%          7.3%
Expected return on plan assets                         8.0%          8.0%
Rate of compensation increase                          4.0%          4.0%

21. DEBT

(in thousands of $)                                    2001          2000

Total long-term debt due to third parties              524,329       214,500
Total long-term debt due to related parties                  -       299,400
Total short-term debt due to related parties            85,278             -
----------------------------------------------------------------------------
Total debt                                             609,607       513,900
Less: current portion of long-term debt
due to third parties                                  (41,053)      (10,171)
Less:  current  portion  long-term debt and
short-term debt due to related parties                (85,278)      (12,000)
----------------------------------------------------------------------------
                                                       483,276       491,729
============================================================================


                                      F-21
<PAGE>

The outstanding debt as of December 31, 2001 is repayable as follows:

Year ending December 31,
(in thousands of $)

2002                                                                 126,332
2003                                                                  42,014
2004                                                                  43,056
2005                                                                  46,689
2006                                                                  55,421
2007 and later                                                       296,095
----------------------------------------------------------------------------
Total                                                                609,607
============================================================================

The weighted average interest rate for debt, which is denominated in US dollars,
as of  December  31,  2001  and  2000  was  6.3  per  cent  and  8.6  per  cent,
respectively.  All of the Company's debt is US Dollar denominated  floating rate
debt.

The Company  refinanced  its debt  facility  covering five of its vessels in May
2001 as discussed  further below and thereby extended its loan repayment profile
and eliminated the balloon payment that would have been due in 2002.

At December 31, 2001, the debt of the Company  comprised the following,  details
of which are set out below:

(in thousands of $)

Greenwich loans                                                      85,278
Mazo facility                                                       204,329
Golar LNG facility                                                  320,000
---------------------------------------------------------------------------
                                                                    609,607
===========================================================================

For the purposes of the carved out combined  financial  statements for the years
ended December 31, 2000 and 1999, two tranches of debt have been included.

1.   In connection  with the  acquisition of the LNG operations of Gotaas Larsen
     by Osprey in 1997,  Osprey  entered into a secured loan  facility  (the "GL
     Facility") for an amount of $352.4  million.  The GL Facility  provided for
     floating rate interest of LIBOR plus 2.5 per cent to 4.0 per cent. The loan
     was  initially  for 22 months,  repayable  in quarterly  installments.  The
     balance of this loan was  extended for a three years period until the third
     quarter  of 2002.  This loan has been  carved out and is  reflected  in the
     balance sheet as short-term and long-term  debt due to related  parties and
     offset within equity by an amount due from related  parties.  This loan was
     retired by Osprey in May 2001, as discussed below.

2.   On November 26, 1997 Osprey entered into a secured loan facility (the "Mazo
     facility") with a banking consortium for an amount of $214.5 million.  This
     facility  bears  floating rate  interest of LIBOR plus 0.865 per cent.  The
     repayment terms are six monthly  commencing on June 28, 2001. The long-term
     debt is secured by a mortgage on the vessel Golar Mazo.

                                      F-22
<PAGE>

In  connection  with the Mazo  facility,  Osprey also  entered into a collateral
agreement  with the same  banking  consortium  and a bank  Trust  Company.  This
agreement  requires  that  certain  cash  balances,  representing  interest  and
principal  repayments for defined future  periods,  be held by the Trust Company
during the period of the loan. These balances are referred to in these financial
statements as restricted cash.

In May 2001 the GL Facility  was retired by Osprey and  related  party  balances
were  cancelled  and the Golar group  entered into a secured loan  facility (the
"Golar LNG Facility") with a banking consortium for an amount of US$325 million.
This six year facility  bears floating rate interest of LIBOR plus 1.5 per cent.
The loan is repayable in 22 quarterly  installments  and a final balloon payment
of $147.5  million.  The long-term  debt is secured by a mortgage on the vessels
Golar  Spirit,  Khannur,  Gimi,  Hilli and Golar  Freeze.  In November  2001, an
amendment to the Golar LNG Facility was signed which  accelerates  the repayment
terms  such that the final  balloon  payment  reduces  to  $147.5  million.  The
repayments  are  increased by $10 million in 2002 and $7.5  million in 2003;  in
2004 and 2005 they are  unchanged  and they decrease by $2.5 million in 2006 and
2007. In 2007 the final repayment is reduced by $12.5 million to $147.5 million.

In August 2001, Golar obtained a loan of $32.6 million from Greenwich,  in order
to finance the first  installment due on newbuilding  hull number 2215. The loan
is for a period of 360 days and bears  floating  rate interest of LIBOR plus 2.5
per cent.  A  subsidiary  of Golar  guaranteed  a loan of $32.6  million made to
Greenwich  by Nordea and Den norske  Bank and  entered  into an  assignment  and
security agreement in respect of its shipbuilding  contract with Den norske Bank
as security agent. No  consideration  has been paid or will be paid by Greenwich
for the provision of the guarantee.

In August 2001, Golar obtained a loan of $32.7 million from Greenwich,  in order
to finance the first installments due on newbuilding hull numbers 1460 and 2220.
The loan is for a period of one year and bears  floating  rate interest of LIBOR
plus 2.5 per cent.  In  connection  with this,  two  subsidiaries  of Golar have
guaranteed  a loan of $32.7  million  made to Greenwich by Nordea and Den norske
Bank and they have both entered  into an  assignment  and security  agreement in
respect of their shipbuilding  contracts with Den norske Bank as security agent.
No consideration has been paid by Greenwich for the provision of the guarantee.

In September 2001, Golar obtained an additional $20 million in loan finance from
Greenwich,  by way of an  addendum  to the loan of $32.6  million in relation to
hull 2215, in order to finance the second instalment on this vessel. The loan is
for a period of six months and bears  floating  rate  interest of LIBOR plus 2.5
per cent.

The rate of  interest  that  Greenwich  pays to the  banks  providing  the above
facilities is LIBOR plus 1.5 per cent.

In December 2001 the Company  signed a loan  agreement  with Lloyds TSB bank Plc
for the purpose of  financing  part of the building of  newbuilding  hull number
2215 for an amount up to $180  million to include  ship yard costs,  capitalized
interest and building supervision charges.

Certain of the Company's  debt is  collateralized  by ship mortgages and, in the
case of some debt, pledges of shares by each guarantor subsidiary.  The existing
financing  agreements  impose  operation  and financing  restrictions  which may
significantly  limit or prohibit,  among other things,  the Company's ability to
incur   additional   indebtedness,   create  liens,   sell  capital   shares  of
subsidiaries,  make  certain  investments,  engage in mergers and  acquisitions,
purchase and sell vessels, enter into time or consecutive voyage charters or pay
dividends  without  the  consent  of  our  lenders.  In  addition,  lenders  may
accelerate the maturity of indebtedness under financing agreements and foreclose
upon the  collateral  securing the  indebtedness  upon the occurrence of certain
events of  default,  including  a failure  to comply  with any of the  covenants
contained in the financing  agreements.  Various debt  agreements of the Company
contain  certain  covenants,  which require  compliance  with certain  financial
ratios.  Such ratios  include  equity  ratio  covenants  and  minimum  free cash
restrictions.  As of December  31, 2001 and 2000 the Company  complied  with the
debt covenants of its various debt agreements.

                                      F-23
<PAGE>

22.   OTHER LONG-TERM LIABILITIES

(in thousands of $)                                    2001          2000

Pension obligations                                    15,243        7,544
Other provisions                                        1,309        2,018
--------------------------------------------------------------------------
                                                       16,552        9,562
====================================================================+=====

23.  PUSH DOWN ACCOUNTING

The effect of push down  accounting  in January  2001 was to reduce the value of
assets and liabilities recorded by Golar to reflect the change in basis realized
as a result of World Shipholding's acquisition of Osprey as follows:

(in thousands of $)

Vessels and equipment, net                                           109,832
Deferred charges                                                       1,702
Goodwill                                                               9,439
Pension obligations                                                    9,999
FAS 133 transition obligation                                          2,786
----------------------------------------------------------------------------
                                                                     133,758
============================================================================

24. SHARE CAPITAL AND SHARE OPTIONS

The Company was  incorporated  on May 10, 2001 and 12,000 common shares of $1.00
par value each were issued to the initial shareholder.  In May 2001, the Company
issued  56,000,000 common shares at a price of $5.00 per share in a placement in
Norway subscribed to by approximately 130 financial investors. These shares were
issued to finance the  acquisition of the LNG interest of Osprey as described in
Note 1.

At December 31, 2001, authorized and issued share capital is as follows:

Authorized share capital:

(in thousands of $, except share numbers)

100,000,000 common shares of $1.00 each                              100,000
============================================================================

Issued share capital:

(in thousands of $, except share numbers)

56,012,000 common shares of $1.00 each                                56,012
============================================================================

In July 2001, the Board of the Company approved the grant of options to eligible
employees  to  acquire  an  aggregate  amount of up to  2,000,000  shares in the
company.  In July  2001,  the Board of Golar  approved  the grant of  options to
acquire 400,000 shares at a subscription price of $5.75 to certain directors and
officers of the Company. These options vest on July 18, 2002 and are exercisable
for a maximum period of nine years following the first  anniversary  date of the
grant.  The weighted average fair value of the options granted in the year ended
December 31, 2001 was $1.785. The fair value of the option grant is estimated on
the  date of  grant  using  the  Black-Scholes  option  pricing  model  with the
following  weighted  average  assumptions  used for the grant in the year  ended
December 31, 2001:  risk free interest  rate of 4.39 per cent;  expected life of
five years,  expected volatility of 20 per cent, expected dividend yield of zero
per cent.

                                      F-24
<PAGE>

Compensation  cost of $47,300 has been recognized in the year ended December 31,
2001 in connection with the grant of the 400,000 options. This amount represents
the difference  between the subscription  price of $5.75 and the market price of
$6.01 (the  equivalent  to NOK56 at the exchange  rate of NOK9.3153 to $1.00) on
the date of grant, recognized over the vesting period of the options.

Had the compensation costs for the plan been determined consistent with the fair
value method  recommended in SFAS 123, the Company's net income and earnings per
share would have been reduced to the following pro forma amounts:

(in thousands of $, except per share data)                           2001

Net income
    As reported                                                      4,366
    Pro-forma                                                        4,089

Basic and diluted earnings per share
    As reported                                                      $0.08
    Pro-forma                                                        $0.07

In February  2002,  the Board of Golar approved an employee share option scheme.
Under the  terms of the  scheme,  options  may be  granted  to any  director  or
eligible  employee of the Company or its  subsidiaries.  Options are exercisable
for a maximum period of nine years following the first  anniversary  date of the
grant.  The  exercise  price for the options may not be less than the average of
the fair market value of the underlying shares for the three trading days before
the date of grant.  The number of shares  granted under the plans may not in any
ten year  period  exceed  seven  per cent of the  issued  share  capital  of the
Company. No consideration is payable for the grant of an option.

25. FINANCIAL INSTRUMENTS

Interest rate risk management

In certain  situations,  the Company  may enter into  financial  instruments  to
reduce the risk associated with  fluctuations in interest rates. The Company has
a portfolio of swaps that convert  floating rate interest  obligations  to fixed
rates, which from an economic perspective hedge the interest rate exposure.  The
Company does not hold or issue  instruments for speculative or trading purposes.
The counterparties to such contracts are Credit Lyonnais, Bank of Taiwan, Credit
Agricole  Indosuez,  The Fuji Bank,  Limited,  and the Industrial Bank of Japan,
Limited.  Credit risk exists to the extent that the counterparties are unable to
perform under the contracts.

Prior to the adoption of SFAS 133, all interest rate derivatives were designated
and effective as hedges of the Company's exposure to interest rate fluctuations.
After the adoption of SFAS 133 on January 1, 2001, hedge accounting has not been
applied.  As a result  of the  adoption  of SFAS 133,  the  Company  recorded  a
transition adjustment of $2.8 million on January 1, 2001. For the purpose of the
carved-out  combined financial  statements for the years ended December 31, 2000
and 1999, the portfolio of swaps has been  allocated  based on the proportion of
hedged loans that have been carved out and pushed down from Osprey.

The Company  manages its debt  portfolio  with interest rate swap  agreements in
U.S.  dollars  to  achieve an overall  desired  position  of fixed and  floating
interest  rates.  The Company has entered into the following  interest rate swap
transactions involving the payment of fixed rates in exchange for LIBOR:

<TABLE>
<CAPTION>
                                          Notional Amount
Instrument                            December 31,   December 31,      Maturity       Fixed Interest
                                      2001           2000              Dates          Rates
(in thousands of $)
<S>                                   <C>              <C>             <C>            <C>
Interest rate swaps:
   Receiving floating, pay fixed      194,829         350,793          2001 - 2009    5.47% to
                                                                                      6.52%
Interest rate options:
   Caps                                     -         29,159           2001           8.00%
</TABLE>


                                      F-25
<PAGE>

At December 31,  2001,  the notional  principal  amount of the debt  outstanding
subject to such swap agreements was $195.0 million (2000 - $380.0 million).

Foreign currency risk

The majority of the vessels' gross earnings are receivable in U.S. dollars.  The
majority of the Company's  transactions,  assets and liabilities are denominated
in U.S. dollars,  the functional  currency of the Company.  There is a risk that
currency  fluctuations will have a negative effect on the value of the Company's
cash-flows.  The Company has not entered into derivative contracts to reduce its
exposure to transaction risk. Accordingly,  such risk may have an adverse effect
on the Company's financial condition and results of operations.

Fair values

The  carrying  value  and  estimated  fair  value  of  the  Company's  financial
instruments at December 31, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                      2001          2001           2000         2000
(in thousands of $)                  Carrying       Fair Value    Carrying      Fair Value
                                     Value                        Value
<S>                                   <C>           <C>           <C>           <C>
Non-Derivatives:
Cash and cash equivalents              57,569        57,569         5,741         5,741
Restricted cash and short-term         14,163        14,163        13,091        13,091
investments
Short-term investments                      -             -        14,231        14,231
Long-term debt                        524,329       524,329       513,900       513,900
Short-term debt                        85,278        85,278             -             -
Derivatives:
Interest rate swap
Asset                                       -             -             -           162
Liability                             (10,838)      (10,838)            -        (4,810)

</TABLE>

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

The estimated  fair value for  restricted  cash and  short-term  investments  is
considered  to be equal to the carrying  value since they are placed for periods
of less than six months.

The  estimated  fair value for  long-term  debt is considered to be equal to the
carrying  value  since it bears  variable  interest  rates  which are reset on a
quarterly or six monthly basis.

The fair value of interest rate swaps is estimated by obtaining  quotes from the
related banking institution.

Concentrations of risk

There  is a  concentration  of  credit  risk  with  respect  to  cash  and  cash
equivalents,  restricted  cash and  short-term  investments  to the extent  that
substantially  all of the amounts  are  carried  with the Nordea Bank of Finland
PLC, The Industrial Bank of Japan and The Bank of New York. However, the Company
believes  this risk is remote as these banks are high credit  quality  financial
institutions.

During the year ended December 31, 2001, two customers accounted for substantial
amount  of the  total  revenues  of the  company.  The  Company's  revenues  and
associated  accounts  receivable  are derived from its four time  charters  with
British  Gas,  two time  charters  with  Pertamina  and, to a much more  limited
extent,  from its four management  contracts with National Gas Shipping  Company
Limited (Abu Dhabi)  ("NGSCO").  Pertamina is a state enterprise of the Republic
of Indonesia. Credit risk is mitigated by the long-term contracts with Pertamina
being on a ship-or-pay  basis.  Also, under the various  contracts the Company's
vessel hire charges are paid by the Trustee and Paying Agent from the  immediate
sale  proceeds of the delivered  gas. The Trustee must pay the shipowner  before
Pertamina and the gas sales contracts are with the Chinese Petroleum Corporation
and KOGAS. The Company  considers the credit risk of British Gas and NGSCO to be
low.

                                      F-26
<PAGE>

During the years ended December 31, 2001, 2000 and 1999,  British Gas, Pertamina
and two other companies, Ras Laffan Liquified Natural Gas Co Ltd and SK Shipping
Co Ltd, each accounted for more than 10% of gross revenue in one or more years.

During 1999, SK Shipping,  Pertamina and Ras Laffan accounted for $32.5 million,
$26.1  million and $8.2 million  respectively.  During 2000,  Pertamina  and Ras
Laffan accounted for $59.5 million and $16.3 million respectively.  During 2001,
Pertamina  and  British  Gas  accounted  for $62.8  million  and  $45.8  million
respectively.

26. RELATED PARTY TRANSACTIONS

Golar was incorporated  for the purpose of acquiring the LNG shipping  interests
of Osprey and  Seatankers.  Osprey,  through its parent World  Shipholding,  and
Seatankers are indirectly controlled by Mr. John Fredriksen.  The purchase price
paid for the LNG  operations  of Osprey  was $525.9  million  based on an agreed
gross value of the LNG carriers of $635.0  million,  plus the amount of net book
value of all other non-shipping assets of the companies  acquired.  The purchase
price paid was net of an amount of $128.7 million, being 60 per cent of the loan
assumed  relating to the financing of the Golar Mazo as described in Note 21 and
cash of $27.2 million.  Furthermore, the Company paid $2.5 million to Osprey for
the assignment of a newbuilding contract and options. Additionally,  immediately
prior to the sale, certain  inter-company  balances due to the companies forming
the LNG shipping interests of Osprey from other Osprey Companies totaling $450.3
million  were  forgiven.  On May 28, 2001,  the Company  entered into a purchase
agreement  with  Seatankers to purchase its one  newbuilding  contract for a LNG
carrier  and  options to build three new LNG  carriers.  The  Company  paid $2.5
million  to  Seatankers  for the  assignment  of the  newbuilding  contract  and
options.

In August 2001,  Golar obtained a loan of $32.6 million from Greenwich  Holdings
Limited ("Greenwich"), a company affiliated with John Fredriksen, who indirectly
controls the  Company's  largest  shareholder,  Osprey,  in order to finance the
first  installment due on newbuilding hull number 2215. The loan is for a period
of 360 days and bears  floating  rate  interest  of LIBOR  plus 2.5 per cent.  A
subsidiary  of Golar  guaranteed  a loan of $32.6  million  made to Greenwich by
Nordea  and Den  norske  Bank  and  entered  into  an  assignment  and  security
agreement,  in respect of its'  shipbuilding  contract,  with Den norske Bank as
security agent. No consideration  has been paid or will be paid by Greenwich for
the provision of the guarantee.

In August 2001, Golar obtained a loan of $32.7 million from Greenwich,  in order
to finance the first installments due on newbuilding hull numbers 1460 and 2220.
The loan is for a period of one year and bears  floating  rate interest of LIBOR
plus 2.5 per cent.  In  connection  with this,  two  subsidiaries  of Golar have
guaranteed  a loan of $32.7  million  made to Greenwich by Nordea and Den norske
Bank and they have both entered into an assignment  and security  agreement,  in
respect of their shipbuilding contracts, with Den norske Bank as security agent.
No consideration has been paid by Greenwich for the provision of the guarantee.

In September 2001, Golar obtained an additional $20 million in loan finance from
Greenwich,  by way of an  addendum  to the loan of $32.6  million in relation to
hull 2215, in order to finance the second instalment on this vessel. The loan is
for a period of six months and bears  floating  rate  interest of LIBOR plus 2.5
per cent. No  consideration  has been paid by Greenwich for the provision of the
guarantee.

                                      F-27
<PAGE>

For each of the loans  from  Greenwich  noted  above the  Company  has paid loan
arrangement fees directly to the lending banks.  These fees amounted to $415,700
in total.

During the year ended December 31, 2001 the rate of interest that Greenwich paid
to the banks  providing the above  facilities was LIBOR plus 1.5 per cent. As at
December 31, 2001, $291,000 of the interest due to Greenwich was outstanding.

Historically  the Company has been an  integrated  part of Osprey  Maritime.  As
such, the Singapore and London office  locations of Osprey have provided general
and corporate  management  services for both the Company as well as other Osprey
entities and operations.  As described in Note 2, management has allocated costs
related to these  operations  based on the number of  vessels  managed.  Amounts
allocated  to  the  Company  and  included  within  vessel  operating  expenses,
administrative expenses and depreciation expense were $3,227,000, $9,662,000 and
$9,449,000, for the years ended December 31, 2001, 2000 and 1999, respectively.

In the year ended December 31, 2001 Frontline  Management  (Bermuda)  Limited, a
subsidiary of Frontline Ltd. ("Frontline") has provided services to the company.
These services include management support, corporate services and administrative
services.  In the year ended December 31, 2001  management  fees to Frontline of
$258,962  have been  incurred  by Golar.  As at  December  31, 2001 an amount of
$547,966  was due to  Frontline  in respect  of these  fees and costs  incurred.
Frontline is a publicly  listed  company.  Its  principal  shareholder  is Hemen
Holding Limited, a company indirectly controlled by John Fredriksen.

The Company  agreed to provide  services to Osprey for the  management of two of
Osprey's  VLCC's until  November  2001. In the seven months ended December 2001,
management  fees of $106,667 were charged to Osprey in relation to such services
of which $nil was  outstanding  at December 31, 2001. In addition as at December
31, 2001 an amount of $261,000 was due from Osprey in respect of costs recharged
in relation to the above services.

In  the  year  ended  December  31,  2001  Seatankers  has  provided   insurance
administration  services to the  Company.  In the year ended  December  31, 2001
management  fees to  Seatankers  of $10,000 have been  incurred by Golar.  As at
December 31, 2001 an amount of $10,000 was due to Seatankers in respect of these
fees incurred.

Golar Management  holds a promissory note executed by Mr. McDonald,  Chairman of
Golar  Management  and Technical  Director,  on April 21, 1998,  under which Mr.
McDonald  promises to pay to Golar Management the principal sum of (pound)20,900
in monthly  installments of (pound)317.55.  The note carries an interest rate of
three per cent and an acceleration clause in the event Mr. McDonald's employment
with us is terminated  for any reason or in the event of a default on payment by
Mr.  McDonald.  Payments  under the note commenced in May 1998 and the principal
balance as of December 31, 2001 was (pound)8,577 or approximately $12,400

Management believes transactions with related parties are under terms similar to
those that would be arranged with other parties.

27. COMMITMENTS AND CONTINGENCIES

Assets Pledged

(in thousands of $)                                December 31,     December 31,
                                                    2001             2000
Vessels pledged under long-term loans               609,607          513,900
===============================================================================

Other Contractual Commitments and contingencies

The  Company  currently  insures  the legal  liability  risks  for its  shipping
activities  with the  United  Kingdom  Mutual  Steamship  Assurance  Association
(Bermuda), a mutual protection and indemnity association. Prior to February 2001
the  Company  insured  such  risks  with  The  Britannia  Steam  Ship  Insurance
Association Ltd. As a member of a mutual association,  the Company is subject to
calls  payable  to the  association  based on the  Company's  claims  record  in
addition  to the claims  records  of all other  members  of the  association.  A
contingent liability exists to the extent that the claims records of the members
of the  association  in the  aggregate  show  significant  deterioration,  which
results in additional calls on the members.

                                      F-28
<PAGE>

28. SUBSEQUENT EVENTS

A)   January 1, 2002 to March 31, 2002

In March 2002 the Company drew down $66.8  million on the loan  facility  signed
with Lloyds TSB Bank Plc. for the purpose of financing  the  newbuilding  number
2215.  $52.6  million was used to re-pay loans from  Greenwich in respect of the
same vessel (see Note 26).  In addition in March 2002 the third  installment  of
$32.4 million in relation to  newbuilding  number 2215 was paid and was financed
by drawing down on the loan facility.

In March 2002 the second installment of $16.2 million in relation to newbuilding
number 2220 was paid and was financed from cash reserves.

B)   April 1, 2002 onwards

Since  April 1, 2002 the  Company  has  rescheduled  certain of its  installment
payments for its newbuildings. This rescheduling is in consideration of interest
payable to the relevant shipyards on the outstanding amount at rates between six
and eight per cent per annum.

The following table summarizes installment payments made since April 1, 2002 and
future rescheduled installments

<TABLE>
<CAPTION>
                                   Hull No.   Hull No.   Hull No.   Hull No.  Total
(in millions of $)                 1444       2215       2220       1460
<S>                                <C>         <C>        <C>        <C>       <C>
Payments  from  April 1, 2002
to September 30, 2002              16.3      32.4                     8.4      57.1
===================================================================================

Future Payments
2002 (three months)                16.3                   16.2       16.5      49.0
2003                              100.6      32.4         32.4       33.0     198.4
2004                                                      84.0       92.1     176.1
2005
2006 and later
Total                             116.9      32.4        132.6      141.6     423.5
===================================================================================
</TABLE>

In June 2002,  Golar  obtained $16.3 million in loan finance from  Greenwich,  a
related party, by way of an addendum to an existing loan agreement in respect of
newbuilding  hull  numbers  1460  and  2220  in  order  to  finance  the  second
installment  due on  newbuilding  hull number 1444. In  connection  with this, a
subsidiary of Golar has  guaranteed a loan of $16.3 million made to Greenwich by
Nordea and Den norske Bank ASA and has entered into an  assignment  and security
agreement  in  respect of its  shipbuilding  contract  with Den  norske  Bank as
security agent. No consideration has been paid by Greenwich for the provision of
the  guarantee.  This addendum also extended the repayment  date of the original
loan, $32.7 million,  from August 2002 until August 2003. The additional loan of
$16.3 million is available  for a period of four months and bears  interest at a
rate of LIBOR plus 2.625 per cent.  This rate also applies to the original $32.7
million from June 2002.  The rate  increases to LIBOR plus three per cent on any
amounts still  outstanding as at February 20, 2003. The Company paid directly to
the lenders a non-refundable arrangement fee of $323,000 in respect of this loan
amendment.  The rate of interest that Greenwich pays to the banks  providing the
above facilities is LIBOR plus 1.625 per cent.

In July 2002, the Company  announced that it had reached  agreement with British
Gas to extend the  charter  of the Golar  Freeze for a period of five years upon
the expiration of the current charter in March 2003.

In September 2002,  Greenwich  confirmed the availability of an extension to the
loan facility in respect of hull numbers 1460,  2220 and 1444.  The total amount
drawn down under this  facility  of $49.0  million  can remain  outstanding,  if
required,  until December 2003.  Greenwich also confirmed the availability of an
additional  $15 million  facility  for the payment of  newbuilding  installments
should it be required.

In October 2002,  the Company  signed a loan agreement with certain of the Golar
LNG facility lenders in respect of a facility in the amount of up to $60 million
to be secured on the  Company's  existing  five  wholly-owned  vessels as second
priority charges.  The agreement allows us to draw down a maximum of $60 million
to assist in the financing of our newbuilding installment payments.


                                      F-29
<PAGE>

Golar LNG Limited
Unaudited  Consolidated and Combined Condensed  Statements of Operations for the
six months ended June 30, 2002 and 2001
(in thousands of $, except per share data)


                                                  Six months        Six months
                                                  ended June    ended June 30,
                                                    30, 2002              2001

Operating revenues
Time charter revenues                                 63,735            52,787
Vessel management fees                                   785               992
-------------------------------------------------------------------------------
Total operating revenues                              64,520            53,779
-------------------------------------------------------------------------------
Operating expenses
Vessel operating expenses                             13,594            11,410
Administrative expenses                                2,708             2,656
Restructuring expenses                                     -             1,894
Depreciation and amortization                         15,682            16,238
-------------------------------------------------------------------------------
Total operating expenses                              31,984            32,198
-------------------------------------------------------------------------------
Operating Income                                      32,536            21,581
-------------------------------------------------------------------------------
Financial income (expenses)
Interest income                                          578             2,151
Interest expense                                    (12,045)          (17,634)
Other financial items                                (5,908)           (6,939)
-------------------------------------------------------------------------------
Net financial expenses                              (17,375)          (22,422)
-------------------------------------------------------------------------------
Income  (loss)  before  income taxes
and minority interest                                 15,161             (841)
-------------------------------------------------------------------------------
Minority interest in net income of subsidiaries         (50)             1,552
Income taxes                                              92               150
-------------------------------------------------------------------------------
Net income (loss)                                     15,119           (2,543)
===============================================================================

Earnings (loss) per share
Basic and diluted                                      $0.27            ($0.05)
===============================================================================

                                      F-30
<PAGE>

Golar LNG Limited
Unaudited  Consolidated  and Condensed  Balance Sheet as of June 30, 2002 and 31
December 2001
(in thousands of $)
                                                      June 30,     December 31,
                                             Note     2002         2001
ASSETS
Current Assets
Cash and cash equivalents                               51,613      57,569
Restricted cash and short-term investments              13,235      14,163
Trade accounts receivable                                    -         188
Other  receivables, prepaid  expenses
and  accrued                                             3,008       2,602
income
Amounts due from related parties                           231         261
Inventories                                              2,571       2,650
--------------------------------------------------------------------------
Total current assets                                    70,658      77,433

Newbuildings                                   3       234,216     132,856
Vessels and equipment, net                             630,313     641,371
Deferred charges                                         6,003       4,177
Other long term assets                                     154         154
--------------------------------------------------------------------------
Total assets                                           941,344     855,991
===========================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt              4        42,341      41,053
Current indebtedness due to related parties    4        16,259      85,278
Trade accounts payable                                   1,693       1,995
Accrued expenses                                        10,078       7,684
Amounts due to related parties                             870       1,049
Other current liabilities                               19,331      18,887
--------------------------------------------------------------------------
Total current liabilities                               90,572     155,946
Long-term liabilities
Long-term debt                                 4       593,478     483,276
Long-term debt due to related parties          4        32,703           -
Other long-term liabilities                             16,888      16,552
--------------------------------------------------------------------------
Total liabilities                                      733,641     655,774

Minority interest                                       18,188      25,820
Stockholders' equity                                   189,515     174,397
--------------------------------------------------------------------------
Total liabilities and stockholders' equity             941,344     855,991
==========================================================================

                                      F-31
<PAGE>

Golar LNG Limited
Unaudited  Consolidated and Combined Condensed  Statements of Cash Flows for the
six months ended June 30, 2002 and 2001
(in thousands of $)

<TABLE>
<CAPTION>
                                                                     Six months        Six months
                                                                     ended June        ended June 30,
                                                                      30, 2002         2001
<S>                                                                  <C>               <C>
Operating activities
Net income (loss)                                                       15,119           (2,543)
Adjustments to reconcile net income (loss) to net cash
Provided by operating activities:
       Depreciation and amortization                                    15,682            16,238
       Amortization of deferred charges                                    550             1,801
       (Loss) income attributable to minority                             (50)             1,552
       interests
       Drydocking expenditure                                          (1,757)           (5,476)
       Trade accounts receivable                                           188                40
       Inventories                                                          79             (499)
       Prepaid expenses and accrued income                               (406)           (1,107)
       Amount due from/to related companies                              (149)           (5,585)
       Trade accounts payable                                            (302)               287
       Accrued expenses                                                  3,184               456
       Other current liabilities                                          (11)             7,716
------------------------------------------------------------------------------------------------
       Net cash provided by operating activities                        32,127            12,880
------------------------------------------------------------------------------------------------
Investing activities
       Cash paid for Osprey's LNG interests, net of                          -         (530,945)
       cash acquired
       Additions to newbuildings                                     (101,360)          (32,612)
       Additions to vessels and equipment                              (2,866)           (4,138)
       Restricted cash and short term investments                          928             (599)
       Purchase of short term investments                                    -          (18,417)
       Proceeds from maturity of short term                                  -            14,231
       investments
------------------------------------------------------------------------------------------------
       Net cash used in investing activities                         (103,298)         (572,480)
------------------------------------------------------------------------------------------------
Financing activities
     Proceeds from long-term debt                                      131,902           325,000
     Proceeds from short term debt due to related                       16,259                 -
     parties
     Repayments of long-term debt                                     (20,412)           (4,979)
     Repayments of short term debt due to related                     (52,575)                 -
     parties
     Financing costs paid                                              (2,376)           (2,788)
     Dividends paid to minority shareholders                           (7,583)                 -
     Proceeds from issuance of equity                                        -           274,500
------------------------------------------------------------------------------------------------
        Net cash  provided by financing activities                      65,215           591,733
------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents                              (5,956)            32,133
Cash and cash equivalents at beginning of period                        57,569             5,741
Cash and cash equivalents at end of period                              51,613            37,874
================================================================================================

Supplemental disclosure for cash flow information:
Non-cash investing and financing activities:
Forgiveness of intercompany payables, dividend out and return of capital     -           455,890
Liabilities assumed in business combination                                  -           214,500
</TABLE>

                                      F-32
<PAGE>

Golar LNG Limited
Notes to Unaudited Consolidated and Combined Financial Statements

1.  GENERAL

The  accompanying  financial  statements  and footnotes  have been condensed and
therefore  do  not  contain  all  disclosures  required  by  generally  accepted
accounting  principles.  These statements should be read in conjunction with the
Company's audited consolidated and combined financial statements.

The  statements as of and for the six month periods ended June 30, 2002 and June
30, 2001 are  unaudited.  In the opinion of  management,  the unaudited  interim
financial  statements  contain all adjustments (which were of a normal recurring
nature) necessary for a fair statement of the results for the interim periods.

The results of operations for the six month periods ended June 30, 2002 and June
30, 2001 are not necessarily indicative of those for a full fiscal year.

The Company has  sufficient  facilities  to meet its  anticipated  funding needs
until August 2003.  These  facilities  include $15 million from a related  party
which can be drawn down as needed in 2003 until such time as permanent financing
has been secured. As at October 2002 additional  facilities of $316 million will
be needed to meet  commitments  under the  newbuilding  construction  program in
August 2003 and thereafter.  It is intended that these facilities will come from
a combination of debt finance,  lease arrangements for existing vessels and cash
flow from  operations.  Alternatively,  if market and economic  conditions favor
equity  financing,  the  Company  may  raise  equity  to fund a  portion  of the
construction  costs.  The Company is in advanced  negotiations  with a number of
financial institutions and others to provide sufficient facilities to meet these
construction  commitments in full as they fall due.  Accordingly,  the financial
statements have been prepared on a going concern basis of accounting.

2.  ADOPTION OF NEW ACCOUNTING STANDARDS

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical  Corrections".
This Statement  rescinds FASB  Statement No. 4, Reporting  Gains and Losses from
Extinguishment  of Debt, and an amendment of that Statement,  FASB Statement No.
64,  Extinguishments  of Debt Made to Satisfy  Sinking-Fund  Requirements.  This
Statement also rescinds FASB Statement No. 44,  Accounting for Intangible Assets
of Motor Carriers.  This Statement amends FASB Statement No. 13,  Accounting for
Leases,  to  eliminate an  inconsistency  between the  required  accounting  for
sale-leaseback  transactions  and the  required  accounting  for  certain  lease
modifications  that have  economic  effects  that are similar to  sale-leaseback
transactions.   This  Statement   also  amends  other   existing   authoritative
pronouncements  to make various  technical  corrections,  clarify  meanings,  or
describe  their  applicability  under  changed  conditions.  This  statement  is
generally for  transactions  occurring  after May 15, 2002. The adoption of SFAS
No. 144 by the  Company  did not have any impact on the  Company's  consolidated
results of operations, financial position or liquidity.


                                      F-33
<PAGE>

In July  2002,  the  Financial  Accounting  Standards  Board  issued  SFAS  146,
"Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146").
The Statement  requires  companies to recognize  costs  associated  with exit or
disposal  activities  when  they  are  incurred  rather  than  at the  date of a
commitment to an exit or disposal plan.  SFAS 146 will be applied by the Company
prospectively to exit or disposal activities initiated after December 31, 2002.

3.   NEWBUILDINGS

(in thousands of $)                                      June 30,   December 31,
                                                         2002       2001

Purchase price installments at end of period             227,135    129,864
Interest and other costs capitalized at end of period      7,081      2,992
-------------------------------------------------------------------------------
                                                         234,216    132,856
===============================================================================

The  Company  has  contracts  to build four new LNG  carriers at a total cost of
$658.9 million, excluding financing costs. As at June 30, 2002, the installments
for these vessels were due to be paid as follows:

(in millions of $)

Paid in 18 months to June 30, 2002                                  227.1
Payable in six months to December 31, 2002                           57.3
Payable in 12 months to December 31, 2003                           198.4
Payable in 12 months to December 31, 2004                           176.1
                                                                    -----
                                                                    658.9
                                                                    =====

At June 30, 2002,  the Company did not have  facilities  in place to finance its
entire  newbuilding  program.  As of October 11, 2002 the Company had total loan
facilities of $304 million, to finance its newbuilding program. These consist of
a $180 million facility from Lloyds TSB Bank Plc ( $162 million is in respect of
the  contract  cost and the balance is for  associated  finance  costs and other
sundry items) of which $129.6 million has been drawn down to finance newbuilding
installments,  $64.0  million from a related  party,  Greenwich,  of which $49.0
million has been drawn down and a $60 million facility from certain of the Golar
LNG facility  lenders.  The Company will then  require  additional  financing of
approximately  $316  million  to  fund  all  of  its  newbuilding   construction
commitments.

Since June 30,  2002 the  Company  has  rescheduled  certain of its  installment
payments for its newbuildings. This rescheduling is in consideration of interest
payable to the relevant shipyards on the outstanding amount at rates between six
and eight per cent per annum.  This has resulted in the  installments due in the
six months to December 31, 2002 and years ended December 31, 2003 and 2004 being
changed to $57.3 million, $198.4 million and $176.1 million respectively.


                                      F-34
<PAGE>

4.  DEBT

In the six month period from  January 1, 2002 to June 30, 2002,  the Company has
drawn down  additional  debt and the debt  outstanding  at June 30,  2002 was as
follows:

(in thousands of $)                                      June 30,   December 31,
                                                          2002      2001

Total long-term debt due to third parties                 635,819    524,329
Total long-term debt due to related parties                32,703          -
Total short-term debt due to related parties               16,259     85,278
----------------------------------------------------------------------------
Total debt                                                684,781    609,607
Less: current portion of long-term debt
due to third parties                                      (42,341)   (41,053)

Less: current portion of long-term debt and
short-term debt due to related parties                    (16,259)   (85,278)
----------------------------------------------------------------------------
                                                          626,181    483,276
============================================================================

The outstanding debt as of June 30, 2002 is repayable as follows:

Year ending December 31,
(in thousands of $)

2002 (six months to December 31, 2002)                                36,901
2003                                                                  77,142
2004                                                                  46,532
2005                                                                  50,133
2006                                                                  59,494
2007 and later                                                       414,579
----------------------------------------------------------------------------
Total                                                                684,781
============================================================================

In  September  2002  Greenwich  Holdings  Ltd, a related  party,  confirmed  the
availability  of an extension of its outstanding  loans,  totaling $49.0 million
until December 2003, should this be required.

At June 30, 2002, the debt of the Company comprised the following:

(in thousands of $)

Greenwich loans                                                       48,962
Mazo facility                                                        198,917
Golar LNG facility                                                   305,000
Lloyds TSB facility                                                  131,902
-----------------------------------------------------------------------------
                                                                     684,781
=============================================================================

5. RELATED PARTY TRANSACTIONS

In  March  2002  the  Company  repaid  loans  from  Greenwich  Holdings  Limited
("Greenwich") totaling $52.6 million. Greenwich is a company affiliated with Mr.
John  Fredriksen,  who indirectly  controls the Company's  largest  shareholder,
Osprey Maritime Limited.


                                      F-35
<PAGE>

In June 2002,  Golar  obtained $16.3 million in loan finance from  Greenwich,  a
related party, by way of an addendum to an existing loan agreement in respect of
newbuilding  hull  numbers  1460  and  2220  in  order  to  finance  the  second
installment  due on  newbuilding  hull number 1444. In  connection  with this, a
subsidiary of Golar has  guaranteed a loan of $16.3 million made to Greenwich by
Nordea and Den norske Bank ASA and has entered into an  assignment  and security
agreement  in  respect of its  shipbuilding  contract  with Den  norske  Bank as
security agent. No consideration has been paid by Greenwich for the provision of
the  guarantee.  This addendum also extended the repayment  date of the original
loan, $32.7 million,  from August 2002 until August 2003. The additional loan of
$16.3 million is available  for a period of four months and bears  interest at a
rate of LIBOR plus 2.625 per cent.  This rate also applies to the original $32.7
million from June 2002.  The rate  increases to LIBOR plus three per cent on any
amounts still  outstanding as at February 20, 2003. The Company paid directly to
the lenders a non-refundable arrangement fee of $323,000 in respect of this loan
amendment.  The rate of interest that Greenwich pays to the banks  providing the
above facilities is LIBOR plus 1.625 per cent.

In the six months ended June 30, 2002 the Company paid interest of $1,230,560 to
Greenwich in respect of loan finance  received.  As at June 30, 2002 $661,392 of
the interest due to Greenwich was outstanding.

In the six months ended June 30, 2002 Frontline  Management (Bermuda) Limited, a
subsidiary of Frontline Ltd. ("Frontline") has provided services to the company.
These services include management support, corporate services and administrative
services. In the six months ended June 30, 2002, management fees to Frontline of
$177,750 have been  incurred by Golar.  As at June 30, 2002 an amount of $92,000
was due to Frontline in respect of these fees and costs incurred. Frontline is a
publicly listed company.  Its principal  shareholder is Hemen Holding Limited, a
company indirectly controlled by John Fredriksen.

In the six months ended June 30, 2002 Seatankers  Management Co. Ltd.,  which is
indirectly   controlled  by  Mr.  John   Fredriksen,   has  provided   insurance
administration  services to the Company.  In the six months ended June 30, 2002,
management fees to Seatankers of $10,000 have been incurred by Golar. As at June
30,  2002 an amount of $10,000  was due to  Seatankers  in respect of these fees
incurred.

Golar Management  holds a promissory note executed by Mr. McDonald,  Chairman of
Golar  Management  and Technical  Director,  on April 21, 1998,  under which Mr.
McDonald  promises to pay to Golar Management the principal sum of (pound)20,900
in monthly  installments of (pound)317.55.  The note carries an interest rate of
three per cent and an acceleration clause in the event Mr. McDonald's employment
with us is terminated  for any reason or in the event of a default on payment by
Mr.  McDonald.  Payments  under the note commenced in May 1998 and the principal
balance as of June 30, 2002 was (pound)6,789 or approximately $10,400.

Management believes transactions with related parties are under terms similar to
those that would be arranged with other parties.

6. SUBSEQUENT EVENTS

In July 2002, the Company  announced that it had reached  agreement with British
Gas to extend the  charter  of the Golar  Freeze for a period of five years upon
the expiration of the current charter in March 2003.

In September 2002,  Greenwich  confirmed the availability of an extension to the
loan facility in respect of hull numbers 1460,  2220 and 1444.  The total amount
drawn down under this  facility  of $49.0  million  can remain  outstanding,  if
required,  until December 2003.  Greenwich also confirmed the availability of an
additional  $15 million  facility  for the payment of  newbuilding  installments
should it be required.

In October 2002,  the Company  signed a loan agreement with certain of the Golar
LNG facility lenders in respect of a facility in the amount of up to $60 million
to be secured on the  Company's  existing  five  wholly-owned  vessels as second
priority charges.  The agreement allows us to draw down a maximum of $60 million
to assist in the financing of our newbuilding installment payments.


                                      F-36

</TEXT>
</DOCUMENT>
