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Operations

Ship Finance International Limited ("Ship Finance" or the "Company") has its own independent and dedicated management team through its 100% owned subsidiary, Ship Finance Management AS. The Company's objective is to engage in cost efficient ownership and chartering out of vessels, while our clients is responsible for the day to day commercial employment of the vessels in the market.

Ship Finance has a strategy of minimizing the uncertainty associated with operational costs through extensive outsourcing of many services, such as technical management of the vessels:

Tankers and OBOs
Most of our tanker and OBO vessel-owning subsidiaries have entered into fixed rate management agreements with Frontline Management, a wholly owned subsidiary of Frontline Ltd. ("Frontline"). Under the management agreements, Frontline Management is responsible for all technical management of the vessels, including crewing, maintenance, repair, capital expenditures, drydocking, vessel taxes, maintaining insurance and other vessel operating expenses.

Frontline Management has a strategy of extensive outsourcing of the services they perform, and its ship management, crewing and accounting services are provided by a number of independent and competitive ship management companies.

• The vessels are managed by independent ship management companies. Pursuant to management agreements, each of the independent ship management companies provides operations, ship maintenance, crewing, technical support, shipyard supervision and related services to Frontline Management. A central part of the strategy is to benchmark operational performance and cost level among the ship managers.
• Independent ship managers provide crewing for the vessels. Currently, most vessels are crewed entirely with full crews from Russia, India or the Philippines, or crews that are comprised of a combination of these nationalities.
• The accounting management services for each of the vessel owning subsidiaries of the Company are provided by the ship managers.

Container Vessels
The container vessels Sea Alfa and Sea Beta is on a time charter to an Asian regional container operator. We have outsourced the technical management of these vessels to Frontline Management, and Ship Finance will cover costs incurred. In January 2009, the time charter agreements on Sea Alfa and Sea Beta will be changed to an 11 year bareboat agreement with the same operator.

The container vessel Montemar Europa is on a time charter. We have outsourced the technical management of these vessels to Frontline Management, and Ship Finance will cover costs incurred.

The 5 container vessels to Horizon Lines Inc. (NYSE: HRZ) have been chartered on bareboat basis, which means that Horizon Lines will be responsible for the technical and operational management of the vessels.

Drilling Units
The jack-up drilling rigs, West Ceres and the West Prospero, and the drillship West Polaris have been chartered to subsidiaries of Seadrill Limited (OSE: SDRL) on bareboat basis, which means that Seadrill will be responsible for the technical and operational management of the vessels.

Dry Bulk Vessels
The Panamax dry bulk vessel Golden Shadow and the two newbuilding Capesize bulkers have been chartered to Golden Ocean Group Limited (OSE: GOGL) on bareboat basis, which means that Golden Ocean will be responsible for the technical and operational management of the vessels.