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

FORM 20-F

(Mark One)
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____

Commission file number 0-29106
KNIGHTSBRIDGE TANKERS LIMITED
(Exact name of Registrant as specified in its charter)
ISLANDS OF BERMUDA
(Jurisdiction of incorporation or organization)
Par-la-Ville Place

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

Securities registered or to be registered pursuant to section 12(b) of the Act:
None

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

Common Shares, $0.01 Par Value
(Title of class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None

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

17,100,000 Common Shares, $0.01 Par Value

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

Yes X No
----- -----

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

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

TABLE OF CONTENTS

PAGE
PART I

Item 1. Identity of Directors, Senior Management and
Advisors.........................1

Item 2. Offer Statistics and Expected
Timetable...........................................................1

Item 3. Key Information.....................................................1

Item 4. Information on the Company..........................................7

Item 5. Operating and Financial Review and Prospects.......................22

Item 6. Directors, Senior Management and
Employees..........................................................28

Item 7. Major Shareholders and Related Party
Transactions.......................................................32

Item 8. Financial Information..............................................32

Item 9. The Offer and Listing..............................................34

Item 10. Additional Information.............................................35

Item 11. Quantitative and Qualitative Disclosures about Market
Risk...............................................................38

Item 12. Description of Securities Other Than Equity
Securities.........................................................38

PART II

Item 13. Defaults, Dividend Arrearages and
Delinquencies......................................................39

Item 14. Material Modifications to the Rights of Security Holders
and Use of Proceeds................................................39

Item 15. Reserved

Item 16. Reserved

PART III

Item 17. Financial
Statements.........................................................40

Item 18. Financial
Statements.........................................................40

Item 19. Exhibits

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

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

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not Applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable

ITEM 3. KEY INFORMATION

A. SELECTED FINANCIAL DATA

The selected consolidated income statement data of Knightsbridge
Tankers Limited and its subsidiaries (the "Company") with respect to the fiscal
years ended December 31, 2001, 2000 and 1999 and the selected consolidated
balance sheet data of the Company with respect to the fiscal years ended
December 31, 2001 and 2000 have been derived from the Company's Consolidated
Financial Statements included herein and should be read in conjunction with such
statements and the notes thereto. The selected consolidated income statement
data with respect to the fiscal year ended December 31, 1998 and the fiscal
period ended December 31, 1997 and the selected consolidated balance sheet data
with respect to the fiscal years ended December 31, 1999 and 1998 and the fiscal
period ended December 31, 1997 has been derived from consolidated financial
statements of the Company not included herein. The following table should also
be read in conjunction with Item 5 "Operating and Financial Review and
Prospects" and the Company's Consolidated Financial Statements and Notes thereto
included herein.

Fiscal Year Fiscal Period
Ended Ended
December 31 December 31
-----------------------------------------------------------------------
2001 2000 1999 1998 1997

(in US$, except share data)

INCOME STATEMENT DATA:
Charter hire
revenues $ 61,534,355 $ 76,335,975 $ 40,275,925 $ 45,039,385 $ 42,138,180
Net operating income $ 43,140,556 $ 57,935,758 $ 21,842,043 $ 26,605,385 $ 26,573,686
Net income $ 33,915,432 $ 48,723,745 $ 12,572,476 $ 17,385,820 $ 19,479,297
Earnings per share
- basic and diluted $ 1.98 $ 2.85 $ 0.74 $ 1.02 $ 1.61
Cash dividends per share $ 4.24 $ 2.66 $ 1.80 $ 2.36 1.26

BALANCE SHEET DATA
(at December 31):
Cash and cash
equivalents $ 278,268 $ 247,370 $ 70,695 $ 315,223 $ 217,374
Vessels under capital
lease, net $ 354,593,912 $ 372,186,772 $389,779,632 $ 407,372,491 $ 424,965,352
Total assets $ 366,204,004 $ 404,739,841 $403,265,501 $ 428,293,722 $ 458,067,222
Long-term debt
(including current
portion) $ 125,397,399 $ 125,397,399 $127,078,937 $ 133,805,088 $ 140,531,239
Shareholders' equity $ 229,077,216 $ 277,218,288 $273,980,543 $ 292,188,066 $ 315,158,247
Common Shares $ 171,000 $ 171,000 $ 171,000 $ 171,000 $ 171,000
Common shares
outstanding 17,100,000 17,100,000 17,100,000 17,100,000 17,100,000

B. CAPITALIZATION AND INDEBTEDNESS

Not Applicable

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable

D. RISK FACTORS

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

Industry Specific Risk Factors

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

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

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

- demand for oil and oil products;

- global and regional economic conditions;

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

- changes in seaborne and other transportation patterns

The factors that influence the supply of tanker capacity include:

- the number of newbuilding deliveries;

- the scrapping rate of older vessels; and

- the number of vessels that are out of service.

Our vessels are currently operated under bareboat charters to Shell
International Petroleum Company Limited. We receive a set minimum base rate
charter hire and variable additional hire under these bareboat charters. The
amount of additional hire is determined quarterly with reference to three
round-trip traditional trade routes and therefore is subject to variation
depending on general tanker market conditions. We cannot assure you that we will
receive additional hire for any quarter.

Any decrease in shipments of crude oil from the Arabian Gulf may adversely
affect our financial performance

The demand for our very large crude carrier, or VLCC, oil tankers
derives primarily from demand for Arabian Gulf crude oil, which, in turn,
primarily depends on the economies of the world's industrial countries and
competition from alternative energy sources. A wide range of economic, social
and other factors can significantly affect the strength of the world's
industrial economies and their demand for Arabian Gulf crude oil. One such
factor is the price of worldwide crude oil. The world's oil markets have
experienced high levels of volatility in the last 25 years. If oil prices were
to rise dramatically, the economies of the world's industrial countries may
experience a significant downturn.

Any decrease in shipments of crude oil from the Arabian Gulf would
have a material adverse effect on our financial performance at any time after
the expiration or termination of our current charters with Shell International
(or earlier if a decrease adversely affects VLCC charterhire rates for shipments
from the Arabian Gulf.) Among the factors which could lead to such a decrease
are:

- increased crude oil production from non-Arabian Gulf areas;

- increased refining capacity in the Arabian Gulf area;

- increased use of existing and future crude oil pipelines in the
Arabian Gulf area;

- a decision by Arabian Gulf oil-producing nations to increase
their crude oil prices or to further decrease or limit their
crude oil production;

- armed conflict in the Arabian Gulf and political or other
factors; and

- the development and the relative costs of nuclear power,
natural gas, coal and other alternative sources of energy.

The value of our vessels may fluctuate and also depends on whether Shell
International renews its charters which could result in a lower share price

Tanker values have generally experienced high volatility. Investors
can expect the fair market value of our VLCC oil tankers to fluctuate, depending
on general economic and market conditions affecting the tanker industry and
competition from other shipping companies, types and sizes of vessels, and other
modes of transportation. In addition, as vessels grow older, they generally
decline in value. These factors will affect the value of our vessels at the
termination of their charters or earlier at the time of their sale. It is very
possible that the value of our vessels could be well below both their implied
value based on the trading price for our shares and their present market value
without the Shell International charters. While the trading price for our shares
depends on many factors, the failure of Shell International to renew the
charters could result in a lower market price for our shares. Based on the
closing price of $15.75 for our common shares on April 29, 2002, taking into
account our total indebtedness of $125.4 million, and assuming no other factors,
such as liquidity premiums, our cash position, or expectations of future
performance, the implied value of each of our vessels with the Shell
International charter was $78.9 million. The market value of a similar vessel,
without charter, may be significantly lower than the implied value of our
vessels.

Company Specific Risk Factors

Because our charters may expire in 2004, we may incur additional expenses and
not be able to recharter our vessels profitably

Each of our charters with Shell International expires approximately
seven years after the date of delivery of each vessel to us, which could be as
early as February 2004, unless extended at the option of the charterer for an
additional period of approximately seven years, on eight months' prior written
notice. The charterer has the sole discretion to exercise that option under one
or more of the charters. The charterer will not owe any fiduciary or other duty
to us or our shareholders in deciding whether to exercise the extension option,
and the charterer's decision may be contrary to our interests or those of our
shareholders.

We cannot predict at this time any of the factors that the charterer
will consider in deciding whether to exercise any of its extension options under
the charters. It is likely, however, that the charterer would consider a variety
of factors, which may include whether a vessel is surplus or suitable to the
charterer's requirements and whether competitive charterhire rates are available
to the charterer in the open market at that time.

In the event Shell International does not extend our current charters,
we will present to our shareholders a recommendation by our Board of Directors
as to whether it believes that the sale of our vessels is in our shareholders'
best interests or whether an alternative plan, such as attempting to arrange a
replacement charter, might be of greater benefit to us. Replacement charters may
include shorter term time charters and employing the vessels on the spot charter
market (which is subject to greater fluctuation than the time charter market).
Any replacement charters may bring us lower charter rates and would likely
require us to incur greater expenses which may reduce the amounts available, if
any, to pay distributions to shareholders.

We operate in the highly competitive international tanker market which could
affect our position if Shell International does not renew our charters

The operation of tanker vessels and transportation of crude and
petroleum products and the other businesses in which we operate are extremely
competitive. Competition arises primarily from other tanker owners, including
major oil companies as well as independent tanker companies, some of whom have
substantially greater resources than we do. Competition for the transportation
of oil and oil products can be intense and depends on price, location, size,
age, condition and the acceptability of the tanker and its operators to the
charterers. During the term of our existing charters with Shell International we
are not exposed to the risk associated with this competition. In the event that
Shell International does not renew the charters in 2004, we will have to compete
with other tanker owners, including major oil companies as well as independent
tanker companies for charterers. Due in part to the fragmented tanker market,
competitors with greater resources could enter and operate larger fleets through
acquisitions or consolidations and may be able to offer better prices and
fleets, which could result in our achieving lower revenues from our VLCC oil
tankers.

Compliance with environmental laws or regulations may adversely affect our
earnings and financial conditions if Shell International does not renew its
charters

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

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

We are highly dependent on Shell International and its guarantors

We are highly dependent on the due performance by Shell International
of its obligations under the charters and by its guarantors, Shell Petroleum
N.V. and The Shell Petroleum Company Limited, of their obligations under their
respective guarantees. Any failure by Shell International or the guarantors to
perform their obligations could result in enforcement by our lenders of their
rights including foreclosing on the mortgages over the vessels and the
outstanding capital stock of our subsidiaries, all of which are pledged to the
lenders, and all of the subsidiaries' rights in the charters, and the consequent
forfeiture of our vessels. Our shareholders do not have any recourse against
Shell International or its guarantors.

Our ability to recharter or sell the vessels if Shell International
and its guarantors default would be subject to the rights of the lenders and the
rights of the lessor under finance leases to which we are a party for our
vessels. In addition, if Shell International were to default on its obligations
under a charter or not exercise its charter extension option, we may be required
to change the flagging or registration of the related vessel and may incur
additional costs, including maintenance and crew costs.

Incurrence of expenses or liabilities may reduce or eliminate distributions

We have made distributions quarterly since April 1997, in an aggregate
amount equal to the charterhire received from Shell International less our cash
expenses and less any reserves required in respect of any contingent
liabilities. It is possible that we could incur other expenses or contingent
liabilities that would reduce or eliminate the cash available for distribution
by us as dividends. In particular, toward the end of the term of the charters in
2004, we are likely to have additional expenses and may have to set aside
amounts for future payments of interest and principal. Our loan agreements
prohibit the declaration and payment of dividends if we are in default under
them. In addition, the declaration and payment of dividends is subject at all
times to the discretion of our Board. We cannot assure you that we will pay
dividends in the amounts anticipated or at all.

If we cannot refinance our loans, we may have to sell our vessels, which may
leave no additional funds for distributions to shareholders

Whether or not Shell International renews our charters, our
outstanding loan facility will mature in 2004, seven years and six months after
the date of delivery of the related vessel, and we will be obligated to repay or
refinance the related loan at that time. There is no assurance that we will be
able to repay or refinance those loans. In addition, even if Shell International
renews the charters for one or more of our vessels, but we are unable to
refinance the related loan facility on acceptable terms, we may be forced to
attempt to sell the vessels subject to the charters. Depending on the market
value for our vessels at the time, it is possible that there could be no funds
left to distribute to our shareholders.

We have a limited business purpose which limits our flexibility

Our bye-laws limit our business to engaging in the acquisition,
disposition, ownership, leasing and chartering of our five VLCC oil tankers.
During the terms of our charters with Shell International we expect that the
only source of operating revenue from which we may pay distributions will be
from these charters.

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

A government could requisition for title or seize our vessels.
Requisition for title occurs when a government takes control of a vessel and
becomes her owner. Also, a government could requisition our vessels for hire.
Requisition for hire occurs when a government takes control of a vessel and
effectively becomes her charterer at dictated charter rates. If a vessel is
requisitioned for hire from a pre-existing charterer beyond the scheduled
termination date, Shell International will be obligated to pay to us only those
amounts received by it as charterhire from the requisitioning entity, less
operating costs. This amount could be materially less than the charterhire that
would have been payable otherwise. In addition, we would bear all risk of loss
or damage to the vessel after the charter would otherwise have terminated.

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

Knightsbridge Tankers Limited (the "Company") was incorporated in
Bermuda on September 18, 1996. The Company's registered and principal executive
offices are located at Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM
08, Bermuda, and its telephone number is +1 (441) 295-0182. The Company was
incorporated for the purpose of the acquisition, disposition, ownership, leasing
and chartering of, through wholly-owned subsidiaries (the "Subsidiaries"), five
very large crude oil carriers ("VLCCs") (the "Vessels"), and certain related
activities. The Company charters the Vessels to Shell International Petroleum
Company Limited (the "Charterer") on long-term "hell and high water" bareboat
charters (the "Charters"). The obligations of the Charterer under these charters
are jointly and severally guaranteed (the "Charter Guarantees") by Shell
Petroleum N.V. and The Shell Petroleum Company Limited (the "Charter
Guarantors"). The Charterer and the Charter Guarantors are all companies of the
Royal Dutch/Shell Group of Companies. References herein to the Company include
the Company and the Subsidiaries, unless otherwise indicated.

The business of the Company is limited by its Bye-Laws to the
consummation of the transactions described above and related activities
including the ownership of the Subsidiaries engaged in the acquisition,
disposition, ownership, leasing and chartering of the Vessels and engaging in
activities necessary, suitable or convenient to accomplish, or in connection
with or incidental to, the foregoing, including entering into the Credit
Facility (as defined below) and U.K finance leases and the refinancing thereof.
During the terms of the Charters, the Company expects that its only source of
operating revenue from which the Company may pay distributions to shareholders
on its common shares, par value $.01 per share, (the "Common Shares") will be
cash payments from the Subsidiaries to the Company. Also, during the terms of
the Charters, the Subsidiaries' only source of operating revenue will be
charterhire paid to the Subsidiaries by the Charterer. The Company's Bye-Laws
may be amended only upon the affirmative vote of 66-2/3% of the outstanding
Common Shares, and, insofar as the Company's purposes or powers are concerned or
insofar as the interests of the lenders under the Credit Facility are
prejudiced, with the approval of the lenders under the Credit Facility. In
addition, the Company and the Subsidiaries have agreed with the Charterer not to
take certain acts which would subject them to general jurisdiction of the U.S.
courts.

In February, 1997, upon the exercise by the underwriters of their
overallotment option, the Company offered and sold to the public 16,100,000
Common Shares at an initial offering price of $20 per share. Simultaneously, the
Company sold 1,000,000 Common Shares at a price of $20 per share to ICB
International Limited ("ICB International"), an indirect wholly-owned subsidiary
of ICB Shipping Aktiebolag (publ) ("ICB"). ICB has since disposed of almost all
of those shares. ICB is a Swedish oil tanker owning and operating company which
until December 29, 1999, was publicly traded. ICB has been a subsidiary of
Frontline Ltd. ("Frontline"), a Bermuda publicly traded oil tanker owning and
operating company since September 23, 1999 when Frontline through purchases of
shares became the indirect owner of more than 90 % of the shares and votes in
ICB. As of December 31, 2001, ICB International owns approximately 0.01 % of the
outstanding Common Shares. ICB Shipping (Bermuda) Limited (the "Manager"),
another wholly-owned subsidiary of ICB and of which Frontline is the ultimate
parent, manages the business of the Company.

The Company used the net proceeds of the offerings described above,
together with advances totaling $145.6 million under a credit facility from an
international syndicate of lenders (the "Credit Facility"), primarily to fund
the purchase by the Subsidiaries of the Vessels. Upon their purchase from their
previous owners on February 27, 1997 (the "Delivery Date"), the Vessels were
delivered by the Company to the Charterer under the Charters. The term of each
of the Charters is a minimum of seven years, with an option for the Charterer to
extend the period for each Vessel's Charter for an additional seven-year term,
to a maximum of 14 years per Charter. Under the Charters, the Charterer pays the
greater of a base rate of hire or a spot market related rate. See B. Business
Overview below.

The Subsidiaries have each entered into conditional sale/leaseback
arrangements (the "U.K. Finance Leases") with a subsidiary of National
Westminster Bank plc, NatWest Leasing and Asset Finance Ltd. (the "U.K. Lessor")
pursuant to which each Subsidiary has sold a Vessel to the U.K. Lessor under a
conditional sale agreement (the "CSA") and concurrently leased its Vessel back
from the U.K. Lessor for a term of 25 years. By virtue of certain benefits under
United Kingdom tax laws which will be passed to the Charterer, the U.K. Finance
Leases enable the Charterer to achieve a reduction in its costs of hiring and
using the Vessels, without reducing the Base Hire, Additional Hire, if any, or
Supplemental Hire (as these terms are defined herein) payable to the
Subsidiaries. During the term of the U.K. Finance Leases, the Vessels will
remain on the Company's consolidated balance sheet and each Subsidiary will
retain title to the related Vessel.

On the Delivery Date, the U.K. Lessor paid to the Subsidiaries an
amount equal to $439.8 million in the aggregate and each Subsidiary delivered
its related Vessel to the Charterer as agent for the U.K. Lessor. Each
Subsidiary procured the opening of a letter of credit (each a "Letter of Credit"
and, collectively, the "Letters of Credit") by a major commercial bank (each an
"LC Bank" and, collectively, the "LC Banks") from which the U.K. Lessor will be
paid rental and other payments due under the U.K. Finance Leases. The
Subsidiaries also established letter of credit reimbursement accounts (each a
"LC Account" and, collectively, the "LC Accounts") with the LC Banks, as
security for their respective obligations to reimburse the LC Banks for amounts
paid under the Letters of Credit. Interest on the LC Accounts will be added to
such security, and, therefore, will not benefit the Company.

The U.K. Lessor, the Charterer and each Subsidiary have entered into a
direct support agreement (each a "Direct Support Agreement" and, collectively,
the "Direct Support Agreements") containing certain indemnification and other
payment obligations of the Charterer in favor of the U.K. Lessor. The U.K.
Finance Leases are structured so that the LC Banks may not make claims for
reimbursement against the Subsidiaries or the Vessels for amounts paid or
capable of being drawn under the Letters of Credit, other than claims in respect
of funds on deposit in the LC Accounts (including interest thereon), except in
the event that such funds are returned to the Subsidiaries or paid to a creditor
or a trustee or similar official and then only to the extent of such returned or
paid funds. In addition, the U.K. Lessor may not make claims against the
Subsidiaries or the Vessels for amounts otherwise due under the U.K. Finance
Leases and capable of being drawn under the Letters of Credit, except to the
extent that the Charterer has paid to a Subsidiary under the Charters separate
amounts denominated in Pounds Sterling ("Sterling Hire") for the sole purpose of
enabling the Subsidiaries to meet their obligations to the U.K. Lessor.

The U.K. Lessor, the Charterer and each Subsidiary (with the consent
of the Charterer) may not terminate the U.K. Finance Leases apart from under
certain conditions and upon such termination a termination sum (the "Termination
Sum") will be payable to the U.K. Lessor. One of those conditions includes the
termination of the Charter and the failure to substitute an acceptable
replacement charter. The recourse of the U.K. Lessor against the Subsidiaries or
the Vessels for all or any portion of the Termination Sum will be limited to
amounts capable of being drawn under the Letters of Credit and to any amounts
paid in respect thereof by the Charterer to the Subsidiaries as Sterling Hire.
To the extent the Termination Sum exceeds the amount capable of being drawn
under the Letters of Credit, the Charterer will be obligated to pay the U.K.
Lessor the difference. Also, upon termination, the U.K. Lessor will agree to
sell its interest in the related Vessel and to allow the relevant Subsidiary to
control the disposition of such interest in the related Vessel and to receive
the net proceeds of any sale thereof except in limited circumstances. However,
the Subsidiaries' rights will be subject to the rights of the agent on behalf of
the lenders under the Credit Facility, as described below, who will be entitled
to control such disposition in certain circumstances.

The Company has entered into the Credit Facility with a syndicate of
international lenders, pursuant to which the Company on the Delivery Date
borrowed $145.6 million in the form of term loans. Of such amount, $125.4
million was in respect of five loans (the "Primary Loans"), each in respect of a
Vessel, and $20.2 million was in respect of five loans (the "Amortizing Loans"),
each in respect of a Vessel. The Primary and Amortizing Loans were equal to
approximately 31.65% of the purchase price of the Vessels, which was
$439,821,545 million in the aggregate. Each Primary Loan will mature on August
27, 2004. The Amortizing Loans amortized in equal quarterly installments
beginning on April 15, 1997 through January 15, 2000, when they were repaid in
full. Whether or not the term of any of the Charters is extended, the Company is
obligated to repay the borrowings under the Credit Facility on the maturity
date. The Credit Facility provides for payment of interest on the outstanding
principal balance of each of the Primary Loans and on the Amortizing Loans
quarterly, in arrears, at a floating interest rate based on the rate in the
London interbank eurocurrency market. However, the Company has entered into an
interest rate swap transaction (the "Swap") with Goldman Sachs Capital Markets,
L.P., an affiliate of Goldman, Sachs & Co. (the "Swap Counterparty"), so that it
has effectively fixed its interest rate on the Primary Loans and the Amortizing
Loans at the rate of approximately 7.14% and 6.51%, respectively, per annum.

If a Subsidiary sells or disposes of the related Vessel or the Company
sells or disposes of its shareholding in such Subsidiary, or the U.K. Lessor
sells or otherwise disposes of its interest in a Vessel and rebates the proceeds
thereof to the Subsidiary the Company will be obligated to make a loan
prepayment in respect of the Credit Facility which will be applied against the
Primary Loans in a manner depending upon whether the disposal occurred prior to,
or on or after February, 2004.

The Credit Facility is secured by, among other things, a pledge by the
Company of 100% of the issued and outstanding capital stock of the Subsidiaries,
a guarantee from each Subsidiary, a mortgage on each Vessel (collectively, the
"Mortgages"), assignments of the Charters and the Charter Guaranties and an
assignment of the U.K. Lessor's rights to take title to the Vessels and the
proceeds from the sale or any novation thereof. The Credit Facility is not
guaranteed by the Charterer or the Charter Guarantors. The failure by the
Company to make payments due and payable under the Credit Facility could result
in the acceleration of all principal and interest on the Credit Facility, the
enforcement by the lenders under the Credit Facility of their rights with
respect to the security therefor, and the consequent forfeiture by the Company
of one or more of the Vessels. The Credit Facility and the Swap also provide for
other customary events of default.

The Credit Facility contains a number of covenants made by the Company
and each of the Subsidiaries that, among other things, restrict the ability of
the Company to incur additional indebtedness, pay dividends if the Company is in
default, change the business conducted by the Company, create liens on assets or
dispose of assets. In addition, upon termination of a Charter, the Company and
the relevant Subsidiary will be subject to additional covenants pursuant to the
Credit Facility pertaining primarily to the maintenance and operation of the
Vessels.

The Charter Guarantors have entered into the separate joint and
several Charter Guaranties in favor of the Company and each Subsidiary. Pursuant
to the Charter Guaranties, the Charter Guarantors on a joint and several basis
fully and unconditionally guarantee the prompt payment and performance by the
Charterer of all its obligations under and in connection with each Charter to
the relevant Subsidiary and certain indemnification obligations under the
Charters to the Company. The Charter Guaranties do not confer any rights or
remedies thereunder on any person, other than the Company and the Subsidiaries,
and are not guaranties of the payment of dividends or any other amounts to the
holders of Common Shares. As the Charter Guarantors are holding companies, the
Charter Guaranties are effectively subordinated to the debt of their
subsidiaries which are operating companies.

B. BUSINESS OVERVIEW

The Charterer is Shell International Petroleum Company Limited, a
wholly-owned subsidiary of The Shell Petroleum Company Limited, which, in turn,
is a subsidiary of N.V. Koninklijke Nederlandsche Petroleum Maatschappij, which
owns 60% of its share capital, the remaining 40% being owned by The "Shell"
Transport and Trading Company, p.l.c.

The principal activities of the Charterer are to buy, sell and
otherwise deal in, and to transport, crude oil, petroleum products and coal and
to provide services to the companies of the Royal Dutch/Shell Group of
Companies. The Charterer currently charters the Vessels from the Subsidiaries
under the Existing Charters.

Pursuant to the Charters, each Vessel is chartered for an initial term
of seven years (ending in February, 2004). Each Charter is subject to extension
at the option of the Charterer for an additional period of seven years plus,
subject to the notice requirement described below, at the option of the
Charterer, up to 90 days plus up to 30 days thereafter upon at least eight
months' prior notice of such extension, which notice shall be irrevocable. The
obligation of the Charterer to pay charterhire for the Vessels commenced on the
Delivery Date. The Charterer is obligated to give written notice (which shall be
irrevocable), not less than three months prior to the seventh or as applicable,
the fourteenth, anniversary of the Delivery Date (February, 2004 and February,
2011, respectively), of the number of days, if any, by which the original term
or the extended term, respectively, of a Charter will extend beyond such
anniversary.

Pursuant to the terms of the Charters, the Charterer's obligation to
pay charterhire for the entire charter period is absolute, whether there is a
loss or damage to a Vessel of any kind or whether such Vessel or any part
thereof is rendered unfit for use or is requisitioned for hire or for title, and
regardless of any other reason whatsoever. The Charter Guarantors have agreed to
guarantee all of the Charterer's obligations under each of the Charters.

A Subsidiary has the right to assign the income it receives under the
relevant Charter without the Charterer's consent; however, the Subsidiary may
not otherwise assign its rights and obligations under such Charter, without the
prior written consent of the Charterer, which consent shall not be unreasonably
withheld, provided that for this purpose (i) a transfer of the legal ownership
of the shares of a Subsidiary shall be deemed to be an assignment of such rights
and obligations by such Subsidiary for which the Charterer's consent shall be
required, and (ii) without limitation, it shall be reasonable for the Charterer
to withhold its consent to a transfer and assignment by a Subsidiary of its
rights and obligations under the relevant Charter to a person or entity with
whom the Charterer does not wish, in good faith, for policy or other reasons to
enter into a business relationship.

The Charterer may not assign its rights and obligations under each of
the Charters nor may it charter a Vessel by demise, to any company other than a
company of the Royal Dutch/Shell Group of Companies without the prior written
consent of the relevant Subsidiary, which consent shall not be unreasonably
withheld. The Charterer may otherwise charter a Vessel without the prior consent
of the relevant Subsidiary, provided that the Charterer remains responsible as
principal (or appoints another person to be responsible in its stead) for
navigating and managing such Vessel throughout the period of such Charter and
for defraying all expenses in connection with such Vessel throughout such
period. In any such case the Charterer will remain liable for payment and
performance of the Charterer's obligations under such Charter and the relevant
Charter Guaranty shall remain in effect with respect to such Charter.

Under each Charter, the Charterer is liable for all expenses of
operating, repairing and maintaining the related Vessel, other than the initial
registration expenses of such Vessel, and bears all risk of loss of or damage to
such Vessel during the term of such Charter. In addition, a Subsidiary (i) has
no liability to the Charterer for breaches of any of its representations or
warranties made to the Charterer with respect to the Vessel owned by such
Subsidiary, except to the extent of actual recoveries made by a Subsidiary from
third parties in relation thereto, and (ii) is not liable to continue to supply
a Vessel or any part thereof if, following the delivery of such Vessel under a
Charter, such Vessel or any part thereof is lost, damaged rendered unfit for
use, confiscated, seized, requisitioned, restrained or appropriated and, in any
such case or for any reason whatsoever, the charterhire payable in respect of
such Vessel shall continue to be payable.

The Charterer is obligated under each Charter to indemnify the
relevant Subsidiary and the Company in respect of events arising prior to and
through the term of the Charters with respect to, among other things (i) all
costs and expenses of operating, maintaining and replacing all parts in respect
of the Vessels and (ii) all liabilities, claims and proceedings claimed by
anyone arising in any manner out of, among other things, the operation or
chartering of the Vessels, including environmental liabilities, other than
liabilities arising out of the gross negligence or willful misconduct of such
Subsidiary or the Company. The indemnities provided in the Charters continue in
full force (in respect of events occurring during the pendency of a Charter)
notwithstanding termination or expiration of such Charter. All amounts payable
under the Charters by the Charterer, including indemnity payments, are required
to be paid free from and without deduction for certain taxes specified in the
Charter. The Charterer has the right at its expense to assume the defense of
indemnified claims.

During the term of each Charter, the Charterer is required, at its own
cost, (a) to maintain the related Vessel, as well as the machinery, cargo
handling and other equipment, appurtenances and spare parts thereof, in the same
good state of repair and efficient operating condition as other vessels owned or
operated by companies of the Royal Dutch/Shell Group of Companies, ordinary wear
and tear excepted, and (b) to keep each Vessel with unexpired classification of
Lloyds Register of Shipping and with other required certificates (including,
without limitation, those required by the Vessel's country of registry). In
addition, the Charterer is required to drydock such Vessel and clean and paint
its underwater parts whenever the same shall be necessary, in accordance with
the practices applied to other vessels owned or operated by companies of the
Royal Dutch/Shell Group of Companies. A Subsidiary shall have the right, at any
time on reasonable notice to the Charterer and at such Subsidiary's expense, to
inspect or survey the relevant Vessel, to ascertain that such Vessel is being
properly repaired and maintained, provided that such inspection or survey will
not interfere with such Vessel's trading requirements and such Subsidiary shall
be required to rebate to Charterer a sum equivalent to charterhire payable
during any period of drydocking caused solely by the subsidiary's inspection and
survey.

Pursuant to the Charters, the Charterer is obliged to maintain marine
(hull and machinery), war, protection and indemnity and pollution risk insurance
on each Vessel in a manner consistent with insurance arrangements currently in
force in relation to similar vessels owned or operated by companies of the Royal
Dutch/Shell Group of Companies, provided that the Charterer is entitled to self
insure with respect to marine (hull and machinery) and war risks.

The daily charterhire rate payable under each Charter is comprised of
two primary components: (i) the Base Rate, which is a fixed minimum rate of
charterhire equal to $22,069 per Vessel per day, payable quarterly in arrears,
and (ii) Additional Hire, which is additional charterhire (determined and paid
quarterly in arrears and may equal zero) that will equal the excess, if any, of
a weighted average of the daily time charter rates for three round-trip trade
routes traditionally served by VLCCs, less an agreed amount of $10,500 during
the initial term of the Charters, and $14,900 for any extended term,
representing daily operating costs over the Base Rate. This charterhire
computation is intended to enable the Company to receive the greater of (i) an
average of prevailing spot charter rates for VLCCs trading on such routes after
deducting daily operating costs of $10,500 during the initial term of the
Charters, and $14,900 for any extended term and (ii) the Base Rate.

The Charterer has also been obligated to pay Supplemental Hire
quarterly in arrears until January 15, 2000 in fixed amounts that were
calculated with reference to the swap fixed interest rate under the Credit
Facility and which were equivalent to amounts due under the Amortizing Loan.
Supplemental Hire therefore served the Company's business purpose of repaying
the Amortizing Loan. The Charterer was obligated to pay supplemental Hire as set
forth below:

January 15, 1999 $1,819,615
April 15, 1999 $1,789,599
July 15, 1999 $1,763,484
October 15, 1999 $1,736,769
January 15, 2000 $1,709,153

The amount of Additional Hire, if any, that is payable is calculated based on a
determination of the London Tanker Brokers Panel (the "Brokers Panel") or
another panel of brokers mutually acceptable to the Subsidiaries and the
Charterer of the average spot rates (the "Average Spot Rates") in Worldscale
points over the three months ending on the last day of the month preceding the
relevant charterhire payment date (the "Hire Payment Date") on the following
three standard notional round voyage routes and cargo sizes for similar ships:

(A) Arabian Gulf to Rotterdam with 280,000 tonnes of cargo;

(B) Arabian Gulf to Singapore with 260,000 tonnes of cargo; and

The determination of the Brokers Panel shall be binding upon both the
Subsidiaries and the Charterer. "Worldscale" is an index commonly used in the
tanker industry for calculating freight rates in the spot charter market.

Industry Conditions

The oil tanker industry has been highly cyclical, experiencing
volatility in charterhire rates and vessel values resulting from changes in the
supply of and the demand for crude oil and tanker capacity. The demand for
tankers is influenced by, among other factors, the demand for crude oil, global
and regional economic conditions, developments in international trade, changes
in seaborne and other transportation patterns, weather patterns, oil production,
armed conflicts, port congestion, canal closures, embargoes and strikes. In
addition, the Company anticipates that the future demand for VLCCs, such as the
Vessels, will also be dependent upon continued economic growth in the United
States, Continental Europe and the Far East and competition from pipelines and
other sizes of tankers. Adverse economic, political, social or other
developments in any of these regions could have an adverse effect on the
Company's business and results of operations. In addition, even if demand for
crude oil grows in these areas, demand for VLCCs may not necessarily grow and
may even decline. Demand for crude oil is affected by, among other things,
general economic conditions, commodity prices, environmental concerns, taxation,
weather and competition from alternatives to oil. Demand for the seaborne
carriage of oil depends partly on the distance between areas that produce crude
oil and areas that consume it and their demand for oil. The incremental supply
of tanker capacity is a function of the delivery of new vessels and the number
of older vessels scrapped, in lay-up, converted to other uses, reactivated or
lost. Such supply may be affected by regulation of maritime transportation
practices by governmental and international authorities. All of the factors
influencing the supply of and demand for oil tankers are outside the control of
the Company, and the nature, timing and degree of changes in industry conditions
are unpredictable. Furthermore, the amount of Additional Hire will be determined
quarterly with reference to three round-trip trade routes between the following
locations: (i) the Arabian Gulf and Rotterdam, The Netherlands, (ii) the Arabian
Gulf and Japan and (iii) the Arabian Gulf and Singapore. Therefore, the demand
for oil in the areas serviced by such routes could have a significant effect on
the amount of Additional Hire that may be payable. There can be no assurance
that Additional Hire will be payable for any quarter.

VLCCs are specifically designed for the transportation of crude oil
and, due to their size, are used to transport crude oil primarily from the
Arabian Gulf to the Far East, Northern Europe, the Caribbean and the Louisiana
Offshore Oil Port ("LOOP"). While VLCCs are increasingly being used to carry
crude oil from other areas, any decrease in shipments of crude oil from the
Arabian Gulf would have a material adverse effect on the Company at any time
after the expiration or termination of the Charters (or earlier if such decrease
adversely affects charterhire rates for shipments from the Arabian Gulf).

Among the factors which could lead to such a decrease are (i)
increased crude oil production from non-Arabian Gulf areas, (ii) increased
refining capacity in the Arabian Gulf area, (iii) increased use of existing and
future crude oil pipelines in the Arabian Gulf area, (iv) a decision by Arabian
Gulf oil-producing nations to increase their crude oil prices or to further
decrease or limit their crude oil production, (v) armed conflict in the Arabian
Gulf or along VLCC trading routes, (vi) political or other factors and (vii) the
development and the relative costs of nuclear power, natural gas, coal and other
alternative sources of energy.

VLCC demand is primarily a function of demand for Arabian Gulf crude
oil, which in turn is primarily dependent on the economies of the world's
industrial countries and competition from alternative energy sources. A wide
range of economic, political, social and other factors can significantly affect
the strength of the world's industrial economies and their demand for Arabian
Gulf crude oil. One such factor is the price of worldwide crude oil. The world's
oil markets have experienced high levels of volatility in the last 25 years. If
oil prices were to rise dramatically, the economies of the world's industrial
countries may experience a significant downturn. See Item 5. Operating and
Financial Review and Prospects -- Operating Results -- The Tanker Market.

Vessel Values

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

Since the mid-1970s, during most periods there has been a substantial
worldwide oversupply of crude oil tankers, including VLCCs. In addition, the
market for secondhand VLCCs has generally been weak since the mid-1970s.
Notwithstanding the aging of the world tanker fleet and the adoption of new
environmental regulations which will result in a phaseout of many single hull
tankers, significant deliveries of new VLCCs would adversely affect market
conditions.

Loss and Liability Insurance

There are a number of risks associated with the operation of
ocean-going vessels, including mechanical failure, collision, property loss,
cargo loss or damage and business interruption due to political circumstances in
foreign countries, hostilities and labor strikes. In addition, the operation of
any vessel is subject to the inherent possibility of marine disaster, including
oil spills and other environmental mishaps, and the liabilities arising from
owning and operating vessels in international trade. The United States Oil
Pollution Act of 1990, or OPA, which imposes virtually unlimited liability upon
owners, operators and demise charterers of any vessel trading in the United
States exclusive economic zone for certain oil pollution accidents in the United
States, has made liability insurance more expensive for ship owners and
operators trading in the United States market and has also caused insurers to
consider reducing available liability coverage. Pursuant to the Charters, the
Charterer will bear all risks associated with the operation of the Vessels,
including, without limitation, any total loss of one or more Vessels. The
Charterer will also indemnify each Subsidiary and the Company, and the Charter
Guarantors have agreed to guarantee such obligation, for all liabilities arising
prior to and during the term of the Charters in connection with the chartering
and operation of the Vessels, including, under environmental protection laws and
regulations, other than liabilities arising out of the gross negligence or
willful misconduct of such Subsidiary or the Company.

The Charterer is entitled to self-insure the marine (hull and
machinery) and war risk on each Vessel. In event of loss, following full
payments of charterhire under the Charter's "hell and high water" provisions, a
lump sum payment will be made to the relevant Subsidiary on expiration of a
Charter, based upon three independent shipbrokers' evaluations of fair market
values of similar vessels at the expiry of the Charter.

Protection and indemnity insurance covers the legal liability of the
Charterer, the Subsidiaries and, as required, their respective associated
companies or managers for their shipping activities. This includes the legal
liability and other related expenses of injury or death of crew, passengers and
other third parties, loss or damage to cargo, claims arising from collisions
with other vessels, damage to other third-party property, pollution arising from
oil or other substances, and salvage, towing and other related costs, including
wreck removal. The Company expects that the Charterer will obtain coverage to
the fullest extent from time to time available on normal terms from members of
the International Group of P&I Associations (currently approximately $4.25
billion, with the exception of oil pollution liability, which has been available
up to $500 million per Vessel per accident increasing to $1.0 billion from
February 20, 2000). The Company believes that the Charterer has entered each of
the Vessels into a P&I Association that is a member of the International Group
of P&I Associations. As a member of a mutual association, the Charterer (and,
under certain circumstances, a Subsidiary) will be subject to calls payable to
the association based on its claim records as well as the claim record of all
other members of the association.

Environmental and Other Regulations

Government regulation significantly affects the ownership and
operation of our vessels. The various types of governmental regulation that
affect our vessels include international conventions, national, state and local
laws and regulations in force in the countries in which our vessels may operate
or where our vessels are registered. We cannot predict the ultimate cost of
complying with these requirements, or the impact of these requirements 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 and regulatory laws
and have all permits, licenses and certificates necessary for the conduct of 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.

Our vessels are subject to both scheduled and unscheduled inspections
by a variety of governmental and private entities, each of which may have unique
requirements. These entities include the local port authorities such as the
Coast Guard, harbor master or equivalent, classification societies, flag state
administration or country of registry, and charterers, particularly terminal
operators and major oil companies which conduct frequent vessel inspections.

Environmental Regulation--IMO.

In April 2001, the International Maritime Organization, or IMO, the
United Nations' agency for maritime safety, revised its regulations governing
tanker design and inspection requirements. The proposed regulations, which are
expected to become effective September 2002 provided they are ratified by the
IMO member states, provide for a more aggressive phase-out of single hull oil
tankers as well as increased inspection and verification requirements. They
provide for the phase-out of most single hull oil tankers by 2015 or earlier,
or, subject to approval by the vessel's flag state until 2017, depending on the
age of the vessel and whether or not the vessel complies with requirements for
protectively located segregated ballast tanks. Segregated ballast tanks use
ballast water that is completely separate from the cargo oil and oil fuel
system. Segregated ballast tanks are currently required by the IMO on crude oil
tankers constructed after 1983. The changes which are intended to reduce the
likelihood of oil pollution in international waters, will result in scrapping of
most tankers built prior to 1980 in the period until 2007.

The proposed regulation identifies three categories of tankers based
on cargo carrying capacity and the presence or absence of protectively located
segregated ballast tanks. Under the new IMO regulations, single-hull oil tankers
with carrying capacities of 20,000 deadweight, or dwt, tons and above carrying
crude oil, fuel oil, heavy diesel oil or lubricating oil as cargo, and of 30,000
dwt and above carrying other oils, which do not comply with IMO requirements for
protectively located segregated ballast tanks will be phased out no later than
2007. Single-hull oil tankers with similar carrying capacities which do comply
with IMO requirements for protectively located segregated ballast tanks are to
be phased out by 2015, or under certain conditions, 2017, depending on the date
of delivery of the vessel. All other single-hull oil tankers with carrying
capacities of 5,000 dwt and above and not falling into one of the above
categories will also be phased out by 2015, depending on the date of delivery of
the vessel.

All of the Company's Vessels have double hulls and comply with the
proposed IMO regulations.

The requirements contained in the International Safety Management
Code, or ISM Code, promulgated by the IMO, also 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 describing
procedures for responding to emergencies. Our vessel manager is certified as an
approved ship manager under the ISM Code.

The ISM Code requires that vessel operators obtain a safety management
certificate for each vessel they operate. This certificate evidences compliance
by a vessel's management with code requirements for a safety management system.
No vessel can obtain a certificate unless its manager has been awarded a
Document of Compliance, issued by each flag state, under the ISM Code. All of
our vessels have received safety management certificates.

Noncompliance with the ISM Code and other IMO regulations may subject
the 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 by the applicable deadlines will be prohibited from trading in
U.S. and European Union ports, as the case may be.

The IMO continues to review and introduce new regulations on a regular
basis. It is impossible to predict what additional regulations, if any, may be
passed by the IMO, whether those regulations will be adopted by member countries
and what effect, if any, such regulations might have on the operation of oil
tankers. The Charterer has advised the Company that it currently intends to use
the Vessels to deliver crude oil primarily to Northern Europe, East Asia, the
United States and the Gulf of Mexico (primarily LOOP) from oil producing areas
in the Arabian Gulf. Because patterns of world crude oil trade are not constant,
the Vessels may load crude oil in any crude oil producing areas of the world for
delivery to areas where oil refineries are located. In the Company's opinion,
trading of the Vessels in such areas will not expose the Vessels to regulations
more stringent than those of the United States and/or the IMO. However,
additional laws and regulations may be adopted which could limit the use of oil
tankers such as the Vessels in oil producing and refining regions.

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 U.S.
or its territories or possessions, or whose vessels operate in the waters of the
U.S., which include the U.S. territorial waters and the two hundred nautical
mile exclusive economic zone of the U.S. The Comprehensive Environmental
Response, Compensation and Liability Act, or CERCLA, applies to the discharge of
hazardous substances whether on land or at sea. Both OPA and CERCLA impact our
operations.

Under OPA, vessel owners, operators 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:

- natural resource damages and related assessment costs;

- real and personal property damages;

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

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

- loss of subsistence use of natural resources.

OPA limits the liability of responsible parties to the greater of
$1,200 per gross ton or $10 million per tanker that is over 3,000 gross tons.
This 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 tanker
owners' responsibilities under these laws.

CERCLA, which applies to owners and operators of vessels, contains a
similar liability regime and provides for cleanup, removal and natural resource
damages. Liability under CERCLA is limited to the greater of $300 per gross ton
or $5 million. 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 do not apply if the responsible party fails or
refuses to report the incident or to cooperate and assist in connection with the
substance removal activities. OPA and CERCLA each preserve the right to recover
damages under existing law, including maritime tort law. We believe that we are
in substantial compliance with OPA, CERCLA and all applicable state regulations
in the ports where our vessels will call.

OPA requires owners and operators of vessels to establish and maintain
with the Coast Guard evidence of financial responsibility sufficient to meet the
limit of their potential strict liability under OPA. The Coast Guard has enacted
regulations requiring evidence of financial responsibility in the amount of
$1,500 per gross ton for tankers, coupling the OPA limitation on liability of
$1,200 per gross ton with the CERCLA liability limit of $300 per gross ton.
Under the regulations, evidence of financial responsibility may be demonstrated
by insurance, surety bond, self-insurance or guaranty. Under OPA regulations, an
owner or operator of more than one tanker will be required to demonstrate
evidence of financial responsibility for the entire fleet in an amount equal
only to the financial responsibility requirement of the tanker having the
greatest maximum liability under OPA/CERCLA.

Under OPA, with limited exceptions, all newly-built or converted
tankers operating in U.S. waters must be built with double-hulls. Existing
vessels that do not comply with the double-hull requirement must be phased out
over a 20-year period beginning in 1995 based on size, age and place of
discharge, unless retrofitted with double-hulls. Notwithstanding the phase-out
period, OPA currently permits existing single-hull tankers to operate until the
year 2015 if their operations within U.S. waters are limited to:

- discharging at the Louisiana Offshore Oil Port, also known as the
LOOP; or

- unloading with the aid of another vessel, a process referred to
in the industry as "lightering," within authorized lightering
zones more than 60 miles off-shore.

Currently, all of the Company's Vessels comply with the double hull
requirements set forth under OPA.

Owners or operators of tankers operating in the waters of the U.S.
must file vessel response plans with the Coast Guard, and their tankers are
required to operate in compliance with their Coast Guard approved plans. These
response plans must, among other things:

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

- describe crew training and drills; and

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

Environmental Regulation--Other

Although the U.S. is not a party to these conventions, many countries
have ratified and follow the liability scheme adopted by the IMO and set out in
the International Convention on Civil Liability for Oil Pollution Damage, 1969,
or CLC. Under this convention, a vessel's registered owner is strictly liable
for pollution damage caused in the territorial waters of a contracting state by
discharge of oil, subject to some complete defenses. Liability is limited to
approximately $270 per gross registered ton or approximately $28.3 million,
whichever is less. If, however, the country in which the damage results is a
party to the 1992 Protocol to the CLC, the maximum liability rises to $74.9
million. The limit of liability is tied to a unit of account which varies
according to a basket of currencies. The right to limit liability is forfeited
under the CLC where the spill is caused by the owner's actual fault and under
the 1992 Protocol, where the spill is caused by the owner's intentional or
reckless conduct. Vessels trading to states which are party to this convention
must provide evidence of insurance covering the limited liability of the owner.
In jurisdictions where the CLC has not been adopted, various legislative schemes
or common law govern, and liability is imposed either on the basis of fault or
in a manner similar to the CLC.

In addition, 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.
OPA specifically permits individual states to impose their own liability regimes
with regard to oil pollution incidents occurring within their boundaries, and
many states have enacted legislation providing for unlimited liability for oil
spills.

It is impossible to predict what additional legislation, if any, may
be promulgated by the United States or any other country or authority.

Proposed EU Regulations

The International Maritime Organization has approved an accelerated
timetable for the phase-out of single hull oil tankers. The new regulations,
expected to take effect in September 2002 provided they are ratified by the IMO
member states, require the phase-out of most single hull oil tankers by 2015 or
earlier, depending on the age of the tanker and whether or not it has segregated
ballast tanks. Under the new regulations the maximum permissible age for single
hull tankers after 2007 will be 26 years, as opposed to 30 years under current
regulations. The amendments to the International Convention for the Prevention
of Marine Pollution from Ships 1973, as amended in 1978, accelerates the
phase-out schedule previously set by the IMO in 1992. The European Union has
already adopted a directive incorporating the IMO regulations so that port
states may enforce them.

The sinking of the oil tanker Erika off the coast of France on
December 12, 1999 polluted more than 250 miles of French coastline with heavy
oil. Following the spill, the European Commission adopted a "communication on
the safety of oil transport by sea," also named the "Erika communication."

As a part of this, the Commission has adopted a proposal for a general
ban on single-hull oil tankers. The timetable for the ban shall be similar to
that set by the United States under OPA in order to prevent oil tankers banned
from U.S. waters from shifting their trades to Europe. The ban plans for a
gradual phase-out of tankers depending on vessel type:

- Single-hull oil tankers larger than 20,000 dwt without protective
ballast tanks around the cargo tanks. This category is proposed
to be phased out by 2005.

- Single-hull oil tankers larger than 20,000 dwt in which the cargo
tank area is partly protected by segregated ballast tank. This
category is proposed to be phased out by 2015.

- Single-hull tankers below 20,000 dwt. This category is proposed
to be phased out by 2015.

In addition, Italy has announced a ban of single hull crude oil
tankers over 5,000 dwt from most Italian ports, effective April 2001. This ban
will be placed on oil product carriers, effective December 31, 2003. It is
impossible to predict what legislation or additional regulations, if any, may be
promulgated by the European Union or any other country or authority.

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
the vessel's country of registry and the international conventions of which that
country is a member. In addition, where surveys are required by international
conventions and corresponding laws and ordinances of a flag state, the
classification society will undertake them on application or by official order,
acting on behalf of the authorities concerned.

The classification society also undertakes on request other surveys
and checks that are required by regulations and requirements of the flag state.
These surveys are subject to agreements made in each individual case and/or to
the regulations of the country concerned.

For maintenance of the class, regular and extraordinary surveys of
hull, machinery, including the electrical plant, and any special equipment
classed are required to be performed as follows:

Annual Surveys: For seagoing ships, annual surveys are conducted for
the hull and the machinery, including the electrical plant, and where applicable
for special equipment classed, at intervals of 12 months from the date of
commencement of the class period indicated in the certificate.

Intermediate Surveys: Extended annual surveys are referred to as
intermediate surveys and typically are conducted two and one-half years after
commissioning and each class renewal. Intermediate surveys may be carried out on
the occasion of the second or third annual survey.

Class Renewal Surveys: Class renewal surveys, also known as special
surveys, are carried out for the ship's hull, machinery, including the
electrical plant, and for any special equipment classed, at the intervals
indicated by the character of classification for the hull. At the special
survey, the vessel is thoroughly examined, including audio-gauging to determine
the thickness of the steel structures. Should the thickness be found to be less
than class requirements, the classification society would prescribe steel
renewals. The classification society may grant a one-year grace period for
completion of the special survey. Substantial amounts of money may have to be
spent for steel renewals to pass a special survey if the vessel experiences
excessive wear and tear. In lieu of the special survey every four or five years,
depending on whether a grace period was granted, a shipowner has the option of
arranging with the classification society for the vessel's hull or machinery to
be on a continuous survey cycle, in which every part of the vessel would be
surveyed within a five-year cycle.

At an owner's application, the surveys required for class renewal may
be split according to an agreed schedule to extend over the entire period of
class. This process is referred to as continuous class renewal.

All areas subject to survey as defined by the classification society
are required to be surveyed at least once per class period, unless shorter
intervals between surveys are prescribed elsewhere. The period between two
subsequent surveys of each area must not exceed five years.

Most vessels are also drydocked every 30 to 36 months 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.

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.

Sale of Vessels and Replacement Charters

At least five months prior to the end of the term of a Charter
(including the extension thereof), the Company is obligated pursuant to its
Bye-Laws to call a special meeting of its shareholders for the purpose of
presenting the shareholders with a proposal to cause the Company to sell the
related Vessel (or the Subsidiary owning such Vessel) and cause the distribution
of the net proceeds of such sale to the shareholders to the extent permitted
under Bermuda law. The materials to be distributed to shareholders in connection
with such meeting will include a recommendation by the Board as to whether it
believes that the sale of the Vessel is in the best interest of the Company or
whether an alternative plan, such as attempting to arrange a replacement
charter, might be of greater benefit to the Company. Replacement charters may
include shorter term time charters and employing the Vessels on the spot charter
market (which is subject to greater fluctuation than the time charter market).
Any such replacement charters would likely require the Company to incur greater
expenses (which may reduce the amounts available to pay dividends to
shareholders), including insurance, maintenance, crew labor costs, vessel
registration costs and, in the case of spot charters, bunker (fuel oil) costs
and port charges. Also, the Company's ability to recharter or sell the Vessels
would be subject to the rights of the lenders under the Credit Facility and the
rights of the U.K. Lessor under the U.K. Finance Lease Transactions. Any
proposal to cause the sale of a Vessel (or the Subsidiary owning such Vessel)
and he distribution of the resulting net proceeds (subject to any mandatory
prepayments under the Credit Facility) will be adopted if approved by he holders
of a majority of the Common Shares voting at a duly constituted meeting of the
holders thereof at which a quorum is present and voting. If not directed by the
Company's shareholders to cause the sale of the Vessel (or the Subsidiary owning
such Vessel), the Company will attempt to recharter the Vessel on an
arm's-length basis upon such terms as the Manager recommends, subject to
approval by the Board, or implement such other plan as the Board shall approve.
Alternatively, if directed by the shareholders to sell a Vessel, the Manager,
pursuant to the Management Agreement, shall solicit bids for the sale of such
Vessel through one or more independent shipbrokers. In such case, the Manager
will be obligated to recommend the sale of the Vessel to the bidder whose bid is
on the most favorable terms to the Company. Neither the Charterer, the
Guarantors nor any other company of the Royal Dutch/Shell Group of Companies
shall have any preferential rights with respect to any sale or rechartering of
any Vessel in such instance.

Whether or not all or any of the Charters are renewed, each of the
Primary Loans will mature in July 2004, seven years and six months after the
Delivery Date of the related Vessel, and the Company will be obligated to repay
or refinance such borrowings at such time. There is no assurance that the
Company will be able to repay or refinance such borrowings. In addition, as
noted above, if the Charters for one or more of the Vessels are renewed and the
Company is unable to refinance the related Primary Loans on acceptable terms,
the Company may be forced to attempt to sell the Vessels subject to the
Charters.

There can be no assurance as to the ability of the Manager to sell or
recharter a Vessel or as to the amount or timing of any payments to be received
therefrom.

Any sale or any alternative plan will also be subject to the Company's
obligations under the U.K. Finance Lease Transactions.

C. ORGANIZATIONAL STRUCTURE

The Company has five wholly-owned subsidiaries, that each own one of
the Vessels. The following table sets out the details of the Subsidiaries:

COUNTRY OF OWNERSHIP VESSEL
NAME INCORPORATION INTEREST OWNED

Cedarhurst Tankers LDC Cayman Islands 100% Magdala
Hewlett Tankers LDC Cayman Islands 100% Megara
Inwood Tankers LDC Cayman Islands 100% Murex
Lawrence Tankers LDC Cayman Islands 100% Macoma
Woodmere Tankers LDC Cayman Islands 100% Myrina

D. PROPERTY, PLANT AND EQUIPMENT

Each Vessel is an approximately 298,000 deadweight tonne ("dwt")
double hull VLCC built by Daewoo Heavy Industries, Ltd. (the "Builder") at its
shipyard in Korea. The Vessels meet all material existing regulatory
requirements affecting the Vessels and their operations. The name, dwt, hull
type and date of original delivery from the Builder's yard are set forth below.

APPROXIMATE DATE OF DELIVERY FROM
VESSEL NAME DWT HULL TYPE BUILDER'S YARD

Murex 298,000 Double June 2, 1995
Macoma 298,000 Double August 1, 1995
Magdala 298,000 Double September 28, 1995
Myrina 298,000 Double November 15, 1995
Megara 298,000 Double March 5, 1996

The Vessels are modern, high-quality double hull tankers designed for
enhanced safety and reliability and for relatively low operating and maintenance
costs. Design features include a cargo system designed for optimum port
performance, a high grade anti-corrosion paint system and pipeline materials
which have been specified with a view to long service, an efficient power
generation system including shaft generator, additional firefighting and safety
equipment over and above minimum standards and improved structural design.

The Vessels are all registered in the Isle of Man.

Other than its interests in the Vessels, the Company has no interest
in any other property.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. OPERATING RESULTS

In February, 1997, the Company offered and sold to the public
16,100,000 Common Shares at the initial public offering price of $20 per share.
Simultaneously the Company sold 1,000,000 Common Shares at a price of $20 per
share to ICB International Ltd.

The Company's five subsidiaries each purchased one VLCC from their
previous owner on February 27, 1997 and immediately delivered the Vessels to the
Charterer under five separate "hell and high water" bareboat charters, each with
a minimum term of seven years with an option for the Charterer to extend the
period for each Vessel with another seven year period. The first seven year
period is until February 2004.

Under the Charters, the Charterer pays the higher of a base rate of
hire or a spot market related rate. The charterhire is payable quarterly in
arrears and the spot market rate of hire is assessed on a quarterly basis. In
each quarter where the spot market related rate is lower than the base rate the
charterhire payable is the base rate. In each quarter where the spot market
related rate is higher than the base rate, the spot market related rate is
payable.

The base rate is the aggregate of a bareboat charter component of
$22,069 per vessel per day and an operating element of $10,500 per day (in the
first seven years) which result in a time charter equivalent rate of $32,569 per
day.

The spot market related rate is assessed through a formula agreed
between the Company and the Charterer and based on market awards provided by the
London Tanker Broker Panel. The London Tanker Broker Panel is asked to provide
for each quarter the average spot rates for three standard notional round
voyages for ships similar to the Vessels:

i) Arabian Gulf to Rotterdam with 280,000 tonnes of cargo;

ii) Arabian Gulf to Singapore with 260,000 tonnes of cargo; and

iii) Arabian Gulf to Japan with 260,000 tonnes of cargo.

The relevant spot rates are weighted with (i) representing 50% and (ii) and
(iii) each representing 25% when the spot market related rate is determined.

The calculated spot market related rates for each of the years ended December
31, 2001, 2000 and 1999 were:

2001 2000 1999
First Quarter $ 68,506 $ 21,713 $ 31,003
Second Quarter $ 42,949 $ 38,684 $ 18,330
Third Quarter $ 25,163 $ 59,056 $ 17,498
Fourth Quarter $ 33,360 $ 78,145 $ 15,421

The strengthening of the spot market rates that commenced in 2000 continued
during the first half of 2001 before there was a significant weakening in the
spot market that has continued through to the first quarter of 2002. As a
consequence, additional hire was paid in the first, second and fourth quarters
of 2001 but not in the third. The charterhire payment for the fourth quarter of
2001 was received in January 2002.

The Tanker Market

In the first quarter of 2000 the tanker market showed significant
improvement which continued into the early part of 2001. This strengthening of
the market arose from a number of factors. After production quota cuts in 1999,
OPEC responded to market demand by increasing output in 2000. Due to the weak
market in 1999 and early 2000 a substantial number of tankers were scrapped
which together with higher oil production created a balance between demand and
supply in the tanker market. The VLCC rates as a consequence started to improve
from the end of the first quarter of 2000 and continued to strengthen through
the year, with fourth quarter earnings averaging more than $70,000 per day. This
was a sharp improvement compared to the corresponding figures for 1999 when
modern VLCCs earned $21,000 per day on average for the year and less then
$16,000 per day in the forth quarter. In early 2001, OPEC reduced production
quotas to accommodate a seasonal reduction in oil demand with the aim to keep
OPEC crude oil prices within the range of US$22-28 per barrel. As a result,
tanker rates started to decline in 2001 compared to the record rates seen in the
fourth quarter of 2000. OPEC instituted a further export cut in September 2001
and this, together with a general global economic slowdown, led to a steep fall
in rates. Further quota cuts have been implemented in 2002 and rates at the end
of the first quarter of 2002 remain at low levels.

As a result of declining freight rates, the age composition of the VLCC fleet
and new IMO rules that set a definite date for the trading life of older
tankers, scrapping of older VLCC tonnage increased in the second half of 2001
and a total of approximately 40 VLCCs were removed from the active fleet in 2001
as they were sold for scrap, lost or converted for use in the offshore industry.
The trend has continued in 2002 and so far in the year approximately 20 VLCCs
have been sold for scrap. The current VLCC orderbook for delivery in the next 3
years stands at approximately 80 vessels.

Critical Accounting Policies and Estimates

The Company's accounting policies are more fully described in Note 2 of the
Notes to Consolidated Financial Statements. As disclosed in Note 2 of the Notes
to Consolidated Financial Statements, the preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions about future
events that affect the amounts reported in the financial statements and
accompanying notes. Future events and their effects cannot be determined with
absolute certainty. Therefore, the determination of estimates requires the
exercise of judgment. Actual results inevitably will differ from those
estimates, and such differences may be material to the financial statements.

The most significant accounting estimates inherent in the preparation of the
Company's financial statements include estimates associated with the
determination of (i) the estimated useful lives of the Company's vessels, and
(ii) the estimated fair values of the Company's interest rate swap agreements.
Various assumptions and other factors underlie the determination of these
significant estimates.

The process of determining significant estimates is fact specific and takes into
account factors such as historical experience, current and expected economic and
industry conditions, present and expected conditions in the financial markets,
and in some cases, the credit worthiness of counter parties to contracts held by
the Company. The Company constantly re-evaluates these significant factors and
makes adjustments where facts and circumstances dictate. Historically, actual
results have not significantly deviated from those determined using the
estimates described above.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR
ENDED DECEMBER 31, 2000

Charterhire

In 2001, charterhire revenue totaled $61,534,335, a decrease of 19%
compared with $76,335,975 in the year ended December 31, 2000. In 2000, the
Company benefited from the strengthening in the tanker market and, in accordance
with the terms of the Charters, received Additional Hire. This strong market
continued in the first half of 2001 but thereafter there was a weakening of the
market such that Additional Hire was not received in the third quarter and only
$363,860 was received for the fourth quarter. The Additional Hire, which is
calculated on a quarterly basis, totalled $21,258,410 for the year, equivalent
to an average of $11,648 per day per vessel compared with $35,949,705 in 2000,
equivalent to an average of $19,645 per day per vessel.

Operating Expenses

Operating expenses decreased in 2001 due to a reduction in
administrative expenses. This was achieved primarily through a reduction in the
premium paid for the Company's directors' and officers' liability insurance. The
Company does not incur and does not expect to incur significant administrative
expenses, apart from premiums in respect of the Company's directors' and
officers' and general liability insurance, which the Company prepays on an
annual basis. There can be no assurance, however, that the Company will not have
other cash expenses or contingent liabilities for which reserves will be
required.

Interest Income And Expense

Interest income, being interest on bank deposits, increased by $19,898
to $205,374 in 2001. This reflects the higher cash balances during the first
part of 2001 due to the additional revenues in this period.

Interest expense increased by 0.8% to $9,008 839 in 2001 from
$8,933,869 in 2000. Interest expense relates entirely to the Primary Loan in
2001 and 2000, with the exception of $5,101 relating to the Amortizing Loan in
2000. Amortization of the Credit Facility expense, the main component of other
financial costs, was $371,543 in 2001 and 2000. In addition, during 2001 and
2000, the Company incurred a fee to the agent bank for the Credit Facility in
the amount of $50,000. There can be no assurance that the Company will not have
other financial expenses for which reserves will be required.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR
ENDED DECEMBER 31, 1999

Charterhire

In 2000, charterhire revenue totaled $76,335,975, an increase of
89.5%, or $36,060,050, compared with $40,275,925 in the year ended December 31,
1999. In 1999, the conditions prevailing in the tanker market meant that only
base rate charterhire of $22,069 per day per vessel was received. In 2000, the
Company benefited from the strengthening in the tanker market and, in accordance
with the terms of the Charters, received Additional Hire. This Additional Hire,
which is calculated on a quarterly basis, totalled $35,949,705 for the year,
equivalent to an average of $19,645 per day per vessel. No additional hire was
earned in 1999.

Operating Expenses

Operating expenses decreased in 2000 due to a reduction in
administrative expenses. This was achieved primarily through a reduction in the
premium paid for the Company's directors' and officers' liability insurance. The
Company does not incur and does not expect to incur significant administrative
expenses, apart from premiums in respect of the Company's directors' and
officers' and general liability insurance, which the Company prepays on an
annual basis. There can be no assurance, however, that the Company will not have
other cash expenses or contingent liabilities for which reserves will be
required.

Interest Income And Expense

Interest income and interest expense were affected in 2000 by the
repayment of the final installment of the Amortizing Loan as discussed below.
Interest income decreased by $215,611 to $185,476 in 2000. The Company received
interest on bank deposits in the amount of $185,476 in 2000, as compared to
$111,434 in 1999. Interest received from the Charterer (in the form of
Supplemental Hire) in respect of the Amortizing Loan totaled $289,653 in 1999
and $nil in 2000.

Interest expense decreased by 3.4% to $8,933,869 in 2000 from
$9,249,110 in 1999. Interest relating to the Primary Loan was $8,959,457 in 1999
and 1998. Interest relating to the Amortizing Loan was $289,653 in 1999 and
$5,101 in 2000. Amortization of the Credit Facility expense, the main component
of other financial costs, was $371,543 in 2000 and 1999. In addition, during
2000 and 1999, the Company incurred a fee to the agent bank for the Credit
Facility in the amount of $50,000. There can be no assurance that the Company
will not have other financial expenses for which reserves will be required.

Inflation

Management does not believe that inflation will significantly affect
the Company's expenses over the term of the Charters. However, during the term
of the Charters, inflationary pressures could result in increased spot charter
rates, thereby resulting in an increase in Additional Hire being payable by the
Charterer. On the other hand, in the event that inflation becomes a significant
factor in the world economy, management believes that inflationary pressures
could materially and adversely affect the market for crude oil and oil tankers
(including the Vessels) and result in increased vessel operating costs. These
factors may affect the Charterer's decision as to whether to extend the term
with respect to one or more of the Charters and may be significant to the
Company in the event that the Charterer does not exercise such rights of
extension.

The Company's borrowings under the Credit Facility bear interest at a
floating rate. The Company has entered into the Swap, which effectively converts
its obligations to a fixed rate, assuming the Swap Counterparty performs its
obligations thereunder. In the event of a default by such Swap Counterparty, the
Company could face increased interest expense.

Although the Company's activities are conducted worldwide, the
international shipping industry's functional currency is the United States
Dollar and virtually all of the Company's operating revenues and most of its
anticipated cash expenses are expected to be denominated in United States
Dollars. Accordingly, the Company's operating results following expiration of
termination of the Charters are not expected to be adversely affected by
movements in currency exchange rates or the imposition of currency controls in
the jurisdictions in which the vessels operate.

B. LIQUIDITY AND CAPITAL RESOURCES

Total assets of the Company at December 31, 2001, were $366,204,004
compared with $404,739,841 at December 31, 2000. The Company's shareholders'
equity at December 31, 2001, was $229,077,216 compared with $277,218,288 at
December 31, 2000. This decrease in shareholders' equity of $48,141,072 is due
to net income for 2001 of $33,915,432 less distributions to the shareholders of
$72,504,000. In addition, with the adoption of SFAS 133, discussed in greater
detail in Note 2 to the Notes to Consolidation Financial Statements, the Company
has recorded the fair value of its interest rate swap agreement. The interest
rate swap is designated as a cash flow hedge against future variable-rate
interest payments on the Company's debt. SFAS No. 133 requires that all
derivative instruments be recorded on the balance sheet at their fair value. The
Company is recording changes in the fair value of the interest rate swap each
period as an asset or a liability, as appropriate, with an equal adjustment to
accumulated other comprehensive income, which is a component of shareholders'
equity. At December 31, 2001 the derivative liability was $9,552,504 reflecting
the unfavorable fair value of the interest rate swap at that date.

Cash generated from operating activities in 2001 was $72,534,898 of which
$72,504,000 was distributed to shareholders.

The Company's sources of capital have been the proceeds of its initial
public offering and the Credit Facility and the U.K. Finance Lease. While the
Manager is required to bear the Company's expenses (other than certain
extraordinary expenses, insurance premiums for directors' and officers'
liability and general liability insurance and principal and interest on account
of the Credit Facility), the Manager has no additional obligation to make
additional capital contributions to the Company. The Company has sufficient
sources of income through the payment of charterhire by the Charterer during the
term of the Charters to pay ordinary recurring expenses that are not borne by
the Manager. However, there can be no assurance that the Company will be able to
repay or refinance its borrowings when the Primary Loan becomes due, or that it
will not incur extraordinary expenses. Payments of principal and interest on the
Amortizing Loan were due in quarterly installments through January 15, 2000. The
Supplemental Hire was in an amount equivalent to those quarterly installments.

Recently Issues Accounting Standards

In June 2001, the U.S. Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, "Business Combinations" which requires the application of the purchase
method in accounting for business combinations 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 financial position or results of operations.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS No. 142 applies to all acquired intangible assets whether acquired
singly, as part of a group, or in a business combination. The adoption of SFAS
No. 142 by the Company on January 1, 2002 did not have any impact on the
Company's consolidated financial position or results of operations.

In June 2001, the FASB issued SFAS No. 143, "Accounting for the Asset Retirement
Obligations". Under SFAS No. 143, an entity shall recognize the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred if a reasonable estimate of fair value can be made. If a reasonable
estimate of fair value cannot be made in the period the asset retirement
obligation is incurred, the liability shall be recognized when a reasonable
estimate of fair value can be made. Upon initial recognition of a liability for
an asset retirement obligation, an entity shall capitalize an asset retirement
cost by increasing the carrying amount of the related long-lived asset by the
same amount as the liability. An entity shall subsequently allocate that asset
retirement cost to expense using a systematic and rational method over its
useful life. SFAS No. 143 applies to legal obligations associated with the
retirement of a tangible long-lived asset that result from the acquisition,
construction, or development and/or the normal operation of a long-lived asset,
with limited exceptions. SFAS No. 143 does not apply to obligations that arise
solely from a plan to dispose of a long-lived asset, nor does it apply to
obligations that result from the improper operation of an asset. SFAS No. 143 is
effective for fiscal years beginning after December 15, 2002. Management has not
completed their evaluation of the impact of SFAS No. 143 on the Company's
results of operations or financial position. However, management does not expect
that the adoption of the SFAS No. 143 on January 1, 2003 will have a material
effect on the Company's consolidated financial position or results of
operations.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". The objectives of SFAS No. 144 are to address
significant issues relating to the implementation of SFAS 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 No. 121 for long-lived assets to be disposed of by sale. SFAS No. 144
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 costs 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. The adoption of SFAS No. 144 by the Company on January 1,
2002 did not have any impact on the Company's consolidated financial position or
results of operations.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

Not applicable

D. TREND INFORMATION

The oil tanker industry has been highly cyclical, experiencing
volatility in charterhire rates and vessel values resulting from changes in the
supply of and demand for crude oil and tanker capacity. See Item 4. Information
on the Company - Business Overview - Industry Conditions.

According to preliminary data from industry sources, which the Company
has not verified, there was no, or only marginal, increase in global oil demand
in 2001 compared with 2000. OPEC production, which has a significant impact on
demand for VLCCs, declined on a quarterly basis through 2001 and average OPEC
supply in 2001 fell below that of 2000. OPEC supply in the first half on 2002 is
expected to be significantly lower than the corresponding period of 2001.

As a consequence of lower OPEC production, and especially lower exports from the
Middle East Gulf, VLCC rates declined significantly in the second half of 2001
and to date in 2002. Lower rates have resulted in scrapping of 1970's built
tonnage and the VLCC count is lower today than a year ago.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

Set forth below are the names and positions of the directors and
executive officers of Knightsbridge Tankers Limited (the "Company").

The Company

Name Age Position
- ---- --- ---------

Ola Lorentzon 52 Director and Chairman
Tor Olav Troim 39 Director and Vice-Chairman
Douglas C. Wolcott 70 Director
David M. White 60 Director
Timothy J. Counsell 43 Director
Kate Blankenship 37 Chief Financial Officer and Secretary

Pursuant to a Management Agreement with the Company, the Manager
provides management, administrative and advisory services to the Company. Set
forth below are the names and positions of the directors and executive officers
of the Manager.

Name Age Position
- ---- --- --------

Kate Blankenship 37 Director, Chairman and Secretary
Tom E. Jebsen 44 Director and Vice-Chairman
Timothy J. Counsell 43 Director

Directors of both the Company and the Manager are elected annually,
and each director elected holds office until a successor is elected. Officers of
both the Company and the Manager are elected from time to time by vote of the
respective board of directors and hold office until a successor is elected.
Certain biographical information with respect to each director and executive
officer of the Company and the Manager is set forth below.

Ola Lorentzon has been a director of the Company since September 18, 1996 and
Chairman since May 26, 2000. Mr. Lorentzon has also been a director and
President of ICB since 1987 and has been Managing Director of Frontline
Management AS, a subsidiary of Frontline, since April 2000. Mr. Lorentzon is a
director of the United Kingdom Protection and Indemnity Club. Until 2000 Mr.
Lorentzon was a director of The Swedish Protection and Indemnity Club (SAAF),
Swedish Ships Mortgage Bank and The Swedish Shipowners' Association, Deputy
Chairman of the Liberian Shipowners Council and a member of the International
Association of Tanker Owners (Intertanko) Council.

Tor Olav Troim has been a director, Vice-Chairman and Chief Executive Officer of
the Company since May 26, 2000. Mr. Troim has been a director of Frontline since
July 1, 1996. Mr. Troim also serves as a director of ICB and Frontline
Management AS, both subsidiaries of Frontline. He is a director of Aktiv Inkasso
ASA, Northern Oil ASA, both Norwegian Oslo Stock Exchange listed companies. He
is also a director of Northern Offshore Ltd. and Golar LNG Limited, both Bermuda
companies 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.

Douglas C. Wolcott has been a director of the Company since September 18, 1996.
Mr. Wolcott has also served as President of Chevron Shipping Corporation until
1994. Mr. Wolcott previously served as Deputy Chairman and Director of the
United Kingdom Protection and Indemnity Club and as a director of London &
Overseas Freighters Limited. He is currently a director of the American Bureau
of Shipping and One Mind Connect, Inc.

David M. White has been a director of the Company since September 18, 1996. Mr.
White was Chairman of Dan White Investment Limited which is now closed. Mr.
White has also served as a director of NatWest Equity Primary Markets Limited
from January 1992 to March 1996, and was previously a director of both NatWest
Markets Corporate Finance Limited and NatWest Markets Securities Limited until
December 1991.

Timothy J. Counsell has been a director of the Company since March 27, 1998 and
a director of the Manager since May 14, 1999. Mr. Counsell is a partner of the
law firm of Appleby Spurling & Kempe, Bermudian counsel to the Company and has
been with that firm since 1990. Mr. Counsell is currently a director of BT
Shipping Limited and of Benor Tankers Ltd, alternate director of Bona
Shipholding Ltd and Resident Representative of Mosvold Shipping.

Kate Blankenship has been Chief Financial Officer of the Company since April 17,
2000 and Secretary of the Company since December 27, 2000. Mrs. Blankenship has
been a director and Chairman of the Manager since March 2000 and Secretary of
the Manager since December 28, 2000. Mrs. Blankenship has been Chief Accounting
Officer and Secretary of Frontline since 1994. Prior to joining Frontline, she
was a Manager with KPMG Peat Marwick in Bermuda. She is a member of the
Institute of Chartered Accountants in England and Wales.

Tom E. Jebsen has been a director of the Manager since March 2000. Mr. Jebsen
has served as Chief Financial Officer of Frontline Management since June 1997.
From December 1995 until June 1997, Mr. Jebsen served as Chief Financial Officer
of Tschudi & Eitzen Shipping ASA, a publicly traded Norwegian shipowning
company. From 1991 to December 1995, Mr. Jebsen served as Vice President of Dyno
Industrier ASA, a publicly traded Norwegian explosives producer. Mr. Jebsen is
also a director of Asuranceforeningen Skuld, Unitas, a mutual hull and machinery
club and Hugin AS, an internet company.

Management Agreement

Under the Management Agreement the Manager is required to manage the
day-to-day business of the Company subject, always, to the objectives and
policies of the Company as established from time to time by the Board. All
decisions of a material nature concerning the business of the Company are
reserved to the Company's Board of Directors. The Management Agreement will
terminate in 2012, unless earlier terminated pursuant to the terms thereof, as
discussed below.

For its services under the Management Agreement, the Manager is
entitled to a Management Fee equal to $750,000 per annum. The Company believes
that these fees are substantially on the same terms that would be obtained from
a non-affiliated party. The Manager was not affiliated with the Company, the
Charterer or Guarantors at the time these fees were negotiated.

Pursuant to the Management Agreement, the Manager is required to pay
from the Management Fee, on behalf of the Company, all of the Company's expenses
including the Company's directors' fees and expenses; provided, however, that
the Manager is not obligated to pay, and the Company is required to pay from its
own funds (i) all expenses, including attorneys' fees and expenses, incurred on
behalf of the Company in connection with (A) the closing of the Company's public
offering and all fees and expenses related thereto and to the documents and
agreements described herein, including in connection with the Credit Facility
and the U.K. Finance Leases, (B) any litigation commenced by or against the
Company unless arising from the Manager's gross negligence or willful
misconduct, and (C) any investigation by any governmental, regulatory or
self-regulatory authority involving the Company or the Offerings unless arising
from the Manager's gross negligence or willful misconduct, (ii) all premiums for
insurance of any nature, including directors' and officers' liability insurance
and general liability insurance, (iii) all costs in connection with the
administration and the registration and listing of the Common Shares, (iv)
principal and interest on the Credit Facility, (v) brokerage commissions, if
any, payable by the Company, (vi) all costs and expenses required to be incurred
or paid by the Company in connection with the redelivery of any Vessel following
the expiration or earlier termination of the related Charter, (including,
without limitation, any drydocking fees and the cost of special surveys and
appraisals) and (vii) any amount due to be paid by the Company pursuant to the
U.K. Finance Lease Transactions.

Notwithstanding the foregoing, the Manager will have no liability to
the Company under the Management Agreement for errors of judgment or negligence
other than its gross negligence or willful misconduct.

In the event the Charterer shall notify a Subsidiary that it will not
extend or renew a Charter for a Vessel, the Manager is required under the
Management Agreement to analyze the alternatives available to the Company for
the use or disposition of such Vessel, including the sale of such Vessel (or the
Subsidiary owning such Vessel) and the distribution of the proceeds to the
Company's shareholders, and to report to the Board with its recommendations and
the reasons for such recommendations at least five months before the expiration
of such Charter. If directed by the Company's shareholders to sell a Vessel (or
the Subsidiary owning such Vessel), the Manager is required upon the Board's
request to solicit bids for the sale of such Vessel (or the Subsidiary owning
such Vessel) for the presentation to the Board. In such case, the Manager will
be obligated to recommend the sale of the Vessel to the bidder which has offered
the bid most economically favorable to the Company and the holders of the Common
Shares. The Manager will receive a commission equal to 1% of the net proceeds of
such sale unless sold to the Manager or an affiliate of the Manager. If not
directed by the Company shareholders to sell the Vessel, the Manager is required
to attempt to recharter the Vessel on an arms-length basis upon such terms as
the Manager deems appropriate, subject to the approval of the Board. The Manager
will receive a commission equal to 1.25% of the gross freight earned from such
rechartering (which is the standard industry commission). In either such case,
the Manager, on behalf of the Company, may utilize the services of brokers and
lawyers, and enter into such compensation arrangements with them, subject to the
Board's approval, as the Manager deems appropriate.

If, upon the expiration of a Charter, the Company undertakes any
operational responsibility with respect to the related Vessel and requests the
Manager to perform any of such responsibility on the Company's behalf, the
parties will negotiate a new fee and expense arrangement. If the parties are
unable to reach a new fee and expense arrangement, either party may terminate
the Management Agreement on 30 days' notice to the other party.

In addition to the circumstance set forth above, the Company may
terminate the Management Agreement at any time upon 30 days' notice to the
Manager for any reason, provided that any such termination shall have been
approved by a resolution duly adopted by the affirmative vote of the holders of
at least 66-2/3% of the Company's outstanding Common Shares. The Company may
terminate the Management Agreement at any time upon five business days' prior
written notice to the Manager in the event of the Manager's material breach
thereof, the failure of the Manager to maintain adequate authorization to
perform its duties thereunder, the Manager's insolvency, in the event that it
becomes unlawful for the Manager to perform its duties thereunder or if the
Manager ceases to be wholly-owned, directly or indirectly, by ICB or its
successor as ultimate parent of the Manager. Frontline, with its acquisition of
ICB, is ICB's successor as ultimate parent of the Manager. The Manager may
terminate the Management Agreement upon ten business days' prior written notice
to the Company in the event that the Company undergoes a "change of control"
which is the election of any director whose election was not recommended by the
then current Board. Upon any termination of the Management Agreement, the
Manager is required to promptly wind up its services thereunder in such a manner
as to minimize any interruption to the Company's business and submit a final
accounting of funds received and disbursed under the Management Agreement to the
Company and any undisbursed funds of the Company in the Manager's possession or
control will be promptly paid by the Manager as directed by the Company. The
Company believes that in the case of any termination of the Management
Agreement, the Company could obtain an appropriate alternative arrangement for
the management of the Company, although there can be no assurance that such
alternative arrangement would not cause the Company to incur additional cash
expenses. In the case of a termination without cause by the Company upon a
resolution adopted by the holders of at least 66 2/3% of the Company's Common
Shares (as described above) or by the Manager in the case of a "change in
control," the Company shall pay to the Manager an amount equal to the present
value calculated at a discount rate of 5% per annum of all fees which the
Manager would have received through the seventh anniversary of the Delivery Date
in the absence of such termination, and following the seventh anniversary of the
Delivery Date, the Company shall pay to the Manager an amount equal to the
present value calculated at a discount rate of 5% per annum of all fees which
the Manager would have received through the fifteenth anniversary of the
Delivery Date in the absence of such termination.

B. COMPENSATION

Pursuant to the Management Agreement, the Manager pays from the
Management Fee the annual directors' fees of the Company. For 2001, the
directors received from the Manager $72,000 in fees in the aggregate. No
separate compensation was paid to the Company's officers. The Manager expects to
pay the same directors' fee for the year 2002 as was paid to directors for 2001.

C. BOARD PRACTICES

As provided in the Company's Bye-laws, each Director shall hold office
until the next Annual General Meeting following his election or until his
successor is elected. The Officers of the Company are elected by the Board of
Directors as soon as possible following each Annual General Meeting and shall
hold office for such period and on such terms as the Board may determine.

The Company has established an audit committee comprised of Messrs.
White and Wolcott, independent directors of the Company.

D. EMPLOYEES

Neither the Company nor the Manager have had any employees since
inception.

E. SHARE OWNERSHIP

As of April 30, 2002, none of the directors or officers of the Company
owned any Common Shares.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

The Company is not directly or indirectly controlled by another
corporation, by a foreign government or by any other natural or legal person.

The following table presents certain information regarding the current
ownership of the Common Shares with respect to (i) each person who is known by
the Company to own more than 5 per cent of the Company's outstanding Ordinary
Shares; and (ii) all directors and officers as a group as of April 30, 2002.

ORDINARY SHARES
OWNER AMOUNT PER CENT

Smith Barney Asset Management 1,152,534 6.7%
Goldman, Sachs & Co. 985,180 5.8%
AIG Global Investment Group, Inc. 899,340 5.3%

There are no differences in the voting rights of the major shareholders.

As of April 30, 2002, none of the directors or officers of the Company
owned any Common Shares.

B. RELATED PARTY TRANSACTIONS

Not Applicable

C. INTERESTS OF EXPERTS AND COUNSEL

Not Applicable

ITEM 8. FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See Item 18.

Legal Proceedings

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

Dividend Policy

The Company policy is to pay quarterly distributions to holders of
record of Common Shares in each January, April, July and October in amounts
substantially equal to the charterhire received by the Company under the
Charters, less cash expenses and less any reserves required in respect of any
contingent liabilities. Currently, the Company does not have any material cash
expenses other than (i) a management fee of $750,000 per annum, payable to the
Manager (the "Management Fee") (ii) certain directors' and officers' liability
insurance premiums in the current amount of $60,000 per annum, (iii) the agent
bank annual fee of $50,000 and (iv) payment of interest on the Primary Loan.
Until January 15, 2000, when the Amortizing Loans were satisfied, the Company
also paid interest and principal on the Amortizing Loans (which were equivalent
to the amounts of Supplemental Hire). Any lease payments under the U.K. Finance
Leases are expected to be paid under the Letters of Credit or otherwise by the
Charterer, and therefore are not considered cash expenses of the Company and are
not expected to reduce amounts available to the Company for the payment of
distributions to shareholders.

Declaration and payment of any dividend is subject to the discretion
of the Company's Board of Directors. The declaration and payment of
distributions to shareholders is prohibited if the Company is in default under
the Credit Facility or if such payment would be or is reasonably likely to
result in an event of default under the Credit Facility. Any payment of
distributions to shareholders by the Company in any year may also be dependent
upon the adoption by the holders of a majority of the Common Shares voting at
the annual meeting of shareholders of the Company of a resolution effectuating a
reduction in the Company's share premium and a credit to the Company's
contributed capital surplus account. The Company's shareholders adopted such a
resolution at the Company's annual general meeting in March, 1999. The timing
and amount of dividend payments will be dependent upon the Company's earnings,
financial condition, cash requirements and availability, the provisions of
Bermuda law affecting the payment of distributions to shareholders and other
factors.

There can be no assurance that the Company will not have other
expenses, including extraordinary expenses, which could include costs of claims
and related litigation expenses, which are not covered by the indemnification
provisions of the Charters, or that the Company will not have contingent
liabilities for which reserves are required. As an "exempted" Bermuda company,
the Company does not expect to pay any income taxes in Bermuda. The Company also
does not expect to pay any income taxes in the Cayman Islands (the jurisdiction
of organization of the Subsidiaries) or the Isle of Man (the jurisdiction in
which the Vessels are registered).

The Company has paid dividends on a quarterly basis commencing in
April 1997, in an aggregate amount equal to the charterhire received from the
charterer less the Company's cash expenses and less any reserves required in
respect of any contingent liabilities. Such expenses will consist primarily of a
management fee, payments of principal and interest on loans, interest payments
on loans and the insurance premiums, plus any other expenses and contingent
liabilities not covered by the management fee. The Company intends to continue
to pay dividends on a quarterly basis. There can be no assurance that the
Company will not incur other expenses or contingent liabilities that would
reduce or eliminate the cash available for distribution as dividends. In
particular, toward the end of the term of the charters, the Company is likely to
have additional expenses and may have to set aside amounts for future payments
of interest.

In 2001, 2000 and 1999, the Company paid the following distributions
to shareholders.

RECORD DATE PAYMENT DATE AMOUNT PER SHARE

2001
January 26, 2001 February 9, 2001 $1.68
April 27, 2001 May 11, 2001 $1.39
July 26, 2001 August 9, 2001 $0.72
October 25, 2001 November 8, 2001 $0.45

2000
January 28, 2000 February 11, 2000 $0.44
April 27, 2000 May 12, 2000 $0.44
July 24, 2000 August 7, 2000 $0.61
October 26, 2000 November 8, 2000 $1.17

1999
January 25, 1999 February 9, 1999 $0.45
April 26, 1999 May 11, 1999 $0.45
July 27, 1999 August 11, 1999 $0.45
October 26, 1999 November 10, 1999 $0.45

Because the Primary Loan matures after the initial term of the
Charters and must be repaid or refinanced at such time, the Company may, in the
last year of the initial term of a Charter, set aside amounts for payment of
interest and principal which would be due on the related Primary Loan following
termination of such Charter in the event the Charterer does not renew such
Charter or the Company cannot arrange to recharter or sell the Vessel as of the
expiration date of such Charter. In addition, the Company may have to set aside
amounts in the last year of the initial term of a Charter in anticipation of
costs that may be incurred in connection with the resale or rechartering of the
Vessel in the event the Charterer does not renew such Charter. These amounts
would not be available for the payment of distributions to shareholders at such
time.

It is expected that any cash distributions by the Company will exceed
the Company's earnings and profits for U.S. tax purposes, with the result that
for each full year that the Charters are in place a portion of such
distributions may be treated as a return of the "basis" of a U.S. holder's
Common Shares. The Company is a passive foreign investment company ("PFIC"), and
as a result U.S. Holders must make a timely tax election known as "QEF Election"
with respect to the Company in order to prevent certain tax penalties from
applying to such U.S. holder. The Company intends to provide all necessary tax
information to shareholders during February of each year in order that they may
make such election. For the year ended December 31, 2001, the Company mailed
such tax information to its shareholders in February, 2002.

B. SIGNIFICANT CHANGES

Not Applicable

ITEM 9. THE OFFER AND LISTING

Not applicable except for Item 9.A.4. and Item 9.C

The following table sets forth, for the four most recent fiscal years
and the period during 1997 during which the Company's Common Shares were traded
on the Nasdaq National Market, the annual high and low closing prices for the
Common Shares as reported by the Nasdaq National Market.

HIGH LOW
FISCAL YEAR ENDED DECEMBER 31
2001 $27.800 $14.320
2000 $25.250 $11.938
1999 $21.875 $11.500
1998 $30.750 $18.500

FISCAL PERIOD ENDED DECEMBER 31
1997 $33.375 $20.375

The following table sets forth, for the two most recent fiscal years, the high
and low closing prices for the Common Shares as reported by the Nasdaq National
Market.

HIGH LOW
FISCAL YEAR ENDED DECEMBER 31, 2001
First quarter $25.188 $20.000
Second quarter $27.800 $20.000
Third quarter $22.690 $14.320
Fourth quarter $18.900 $15.000
FISCAL YEAR ENDED DECEMBER 31, 2000
First quarter $18.750 $11.938
Second quarter $20.750 $15.750
Third quarter $25.250 $18.375
Fourth quarter $24.000 $18.250

The following table sets forth, for the most recent six months, the high and low
closing prices for the Common Shares as reported by the Nasdaq National Market.

HIGH LOW

February 2002 $16.150 $15.450
January 2002 $17.530 $15.400
December 2001 $17.020 $15.000
November 2001 $16.820 $15.020
October 2001 $18.900 $16.120
September 2001 $18.240 $14.320

The Company's Common Shares have been quoted on the Nasdaq National Market under
the symbol "VLCCF" since its initial public offering in February 1997.

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

Not Applicable

B. MEMORANDUM AND ARTICLES OF ASSOCIATION

Incorporated by reference to "Description of Capital Stock" in the
prospectus contained in the Company's Registration Statement on Form F-1, filed
December 13, 1996 (File No. 333-6170).

C. MATERIAL CONTRACTS

Not Applicable

D. EXCHANGE CONTROLS

The Company has been designated as a non-resident of Bermuda for
exchange control purposes by the Bermuda Monetary Authority, whose permission
for the issue of the Common Shares was obtained prior to the offering thereof.

The transfer of shares between persons regarded as resident outside
Bermuda for exchange control purposes and the issuance of Common Shares to or by
such persons may be effected without specific consent under the Bermuda Exchange
Control Act of 1972 and regulations thereunder. Issues and transfers of Common
Shares involving any person regarded as resident in Bermuda for exchange control
purposes require specific prior approval under the Bermuda Exchange Control Act
1972.

Subject to the foregoing, there are no limitations on the rights of
owners of the Common Shares to hold or vote their shares. Because the Company
has been designated as non-resident for Bermuda exchange control purposes, there
are no restrictions on its ability to transfer funds in and out of Bermuda or to
pay dividends to United States residents who are holders of the Common Shares,
other than in respect of local Bermuda currency.

In accordance with Bermuda law, share certificates may be issued only
in the names of corporations or individuals. In the case of an applicant acting
in a special capacity (for example, as an executor or trustee), certificates
may, at the request of the applicant, record the capacity in which the applicant
is acting. Notwithstanding the recording of any such special capacity, the
Company is not bound to investigate or incur any responsibility in respect of
the proper administration of any such estate or trust.

The Company will take no notice of any trust applicable to any of its
shares or other securities whether or not it had notice of such trust.

As an "exempted company", the Company is exempt from Bermuda laws
which restrict the percentage of share capital that may be held by
non-Bermudians, but as an exempted company, the Company may not participate in
certain business transactions including: (i) the acquisition or holding of land
in Bermuda (except that required for its business and held by way of lease or
tenancy for terms of not more than 21 years) without the express authorization
of the Bermuda legislature; (ii) the taking of mortgages on land in Bermuda to
secure an amount in excess of $50,000 without the consent of the Minister of
Finance of Bermuda; (iii) the acquisition of securities created or issued by, or
any interest in, any local company or business, other than certain types of
Bermuda government securities or securities of another "exempted company,
exempted partnership or other corporation or partnership resident in Bermuda but
incorporated abroad; or (iv) the carrying on of business of any kind in Bermuda,
except in so far as may be necessary for the carrying on of its business outside
Bermuda or under a license granted by the Minister of Finance of Bermuda.

There is a statutory remedy under Section 111 of the Companies Act
1981 which provides that a shareholder may seek redress in the Bermuda courts as
long as such shareholder can establish that the Company's affairs are being
conducted, or have been conducted, in a manner oppressive or prejudicial to the
interests of some part of the shareholders, including such shareholder. However,
this remedy has not yet been interpreted by the Bermuda courts.

The Bermuda government actively encourages foreign investment in
"exempted" entities like the Company that are based in Bermuda but do not
operate in competition with local business. In addition to having no
restrictions on the degree of foreign ownership, the Company is subject neither
to taxes on its income or dividends nor to any exchange controls in Bermuda. In
addition, there is no capital gains tax in Bermuda, and profits can be
accumulated by the Company, as required, without limitation. There is no income
tax treaty between the United States and Bermuda pertaining to the taxation of
income other than applicable to insurance enterprises.

E. TAXATION

The Company is incorporated in Bermuda. Under current Bermuda law, the
Company is not subject to tax on income or capital gains, and no Bermuda
withholding tax will be imposed upon payments of dividends by the Company to its
shareholders. No Bermuda tax is imposed on holders with respect to the sale or
exchange of Common Shares. Furthermore, the Company has received from the
Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection
Act 1966, as amended, an assurance that, in the event that Bermuda enacts any
legislation imposing any tax computed on profits or income, including any
dividend or capital gains withholding tax, or computed on any capital asset,
appreciation, or any tax in the nature of an estate, duty or inheritance tax,
then the imposition of any such tax shall not be applicable. The assurance
further provides that such taxes, and any tax in the nature of estate duty or
inheritance tax, shall not be applicable to the Company or any of its
operations, nor to the shares, debentures or other obligations of the Company,
until March 2016.

There are no provisions of any reciprocal tax treaty between Bermuda
and the United States affecting withholding.

F. DIVIDENDS AND PAYING AGENTS

Not Applicable

G. STATEMENT BY EXPERTS

Not Applicable

H. DOCUMENTS ON DISPLAY

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended. In accordance with these
requirements we file reports and other information with the Securities and
Exchange Commission. These materials, including this annual report and the
accompanying exhibits may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549 and at the Commission's Regional Offices at 7 World Trade
Center, Suite 1300, New York, New York 10048 and 500 West Madison Street, Suite
1400, Northwestern Atrium Center, Chicago, Illinois 60661. You may obtain
information on the operation of the public reference room by calling 1 (800)
SEC-0330, and you may obtain copies at prescribed rates from the Public
Reference Section of the Commission at its principal office in Washington, D.C.
20549. The SEC maintains a website (http://www.sec.gov.) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. In addition, documents referred to in
this annual report may be inspected at the Company's headquarters at
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, Bermuda.

I. SUBSIDIARY INFORMATION

Not Applicable

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

The Company is exposed to market risk from changes in interest rates
primarily resulting from the floating rate of the Company's borrowings. The
Company uses interest rate swaps to manage such interest rate risk. The Company
has not entered into any financial instruments for speculative or trading
purposes.

The Company's borrowings under the Credit Facility at December 31,
2001 of $125,397,399 bear interest at a floating rate which is reset quarterly
based on the underlying London interbank eurocurrency market. Interest payments
are made quarterly, and the Credit Facility expires August 27, 2004. The fair
value of the Credit Facility at December 31, 2001 is equal to the carrying
amount of the facility at the same date.

The Company has entered into an interest rate swap transaction to
hedge the interest rate variability on the Credit Facility. The swap has a
notional amount equal to the outstanding principal under the Credit Facility and
the swap expires on the same date as that of the Credit Facility. At December
31, 2001, the pay-fixed interest rate of the swap was 6.74% and the
receive-variable rate was 2.82%. As a hedge against the Credit Facility, the
swap effectively resulted in a fixed borrowing rate to the Company of 7.14% at
December 31, 2001. Periodic cash settlements under the swap agreement occur
quarterly corresponding with the interest payments under the Credit Facility.
The fair value of the interest rate swap agreement was an unfavorable $9,552,504
at December 31, 2001 calculated by taking into account the cost of entering into
an interest rate swap to offset the existing swap.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not Applicable

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS

Not Applicable

ITEM 15. RESERVED

ITEM 16. RESERVED

PART III

ITEM 17. FINANCIAL STATEMENTS

Not Applicable

ITEM 18. FINANCIAL STATEMENTS

The following financial statements listed below and set forth on pages
F-1 through F-13 together with the independent auditors' report of Deloitte &
Touche AB thereon, are filed as part of this annual report:

Index to Financial Statements

Page

Independent Auditors' Report F-1

Consolidated Financial Statements:

Consolidated Balance Sheets as of F-2
December 31, 2001 and 2000

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

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

Consolidated Statements of Cash Flows F-5
for the years ended December 31, 2001, 2000 and 1999

Consolidated Statements of Changes in F-6
Shareholders' Equity for the years ended
December 31, 2001, 2000 and 199

Notes to Consolidated Financial Statements F-7

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
Knightsbridge Tankers Limited

We have audited the accompanying consolidated balance sheets of Knightsbridge
Tankers Limited and subsidiaries (the "Company") as of December 31, 2001 and
2000 and the related consolidated statements of operations, comprehensive
income, cash flows and shareholders' equity for each of the years in the
three-year period ended December 31, 2001. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of Knightsbridge Tankers
Limited and subsidiaries as of December 31, 2001 and 2000 and the results of
their operations and their cash flows for each of the years in the three- year
period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, in 2001 the
Company changed its method of accounting for derivative instruments and hedging
activities to conform to Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities."

Deloitte & Touche AB
Stockholm, Sweden
May 10, 2002

KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, 2001 AND 2000
(in U.S. Dollars)

2001 2000
ASSETS

Current assets
Cash and cash equivalents 278,268 247,370
Charter hire receivable 10,515,600 31,116,700
Prepaid expenses 15,342 16,573
----------- -----------

Total current assets 10,809,210 31,380,643

Vessels under capital lease, net 354,593,912 372,186,772
Capitalized financing fees and expenses, net 800,882 1,172,426
----------- -----------

TOTAL ASSETS 366,204,004 404,739,841
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Accrued expenses and other current
liabilities 2,176,885 2,124,154
----------- -----------

Total current liabilities 2,176,885 2,124,154

Credit facility 125,397,399 125,397,399
Interest rate swap agreement at fair value 9,552,504 -
----------- -----------

Total liabilities 137,126,788 127,521553

Commitments and contingencies

Shareholders' equity
Common shares, par value $0.01 per share:
Authorized and outstanding 17,100,000 171,000 171,000
Contributed capital surplus account 238,458,720 273,809,543
Accumulated other comprehensive income (loss)
Net unrealized loss on derivative instrument (9,552,504) -
Retained earnings - 3,237,745
----------- -----------
Total shareholders' equity 229,077,216 277,218,288
----------- -----------

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 366,204,004 404,739,841
=========== ===========

See accompanying notes to consolidated financial statements.

KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(in U.S. Dollars)

2001 2000 1999

Charterhire revenue $ 61,534,335 $ 76,335,975 $ 40,275,925

Operating expenses:
Depreciation of vessels under
capital leases 17,592,860 17,592,860 17,592,860
Management fee 750,000 750,000 750,000
Administration expenses 50,919 57,357 91,022
--------------- ------------- ------------
Net operating income 43,140,556 57,935,758 21,842,043

Interest income 205,374 185,476 401,087
Interest expense (9,008,839) (8,933,869) (9,249,110)
Other financial expenses (421,659) (463,620) (421,544)
--------------- ------------- ------------
Net income $ 33,915,432 $ 48,723,745 $ 12,572,476
=============== ============= =============

Earnings per common share
- basic and diluted $1.98 $2.85 $0.74

Weighted average number of
shares outstanding 17,100,000 17,100,000 17,100,000

See accompanying notes to consolidated financial statements.

KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(in U.S. Dollars)

2001 2000 1999

Net income $ 33,915,432 $ 48,723,745 $ 12,572,476

Other comprehensive income (loss):
Cumulative effect of change in accounting for
derivative instruments and hedging activities (3,496,905) - -
Net unrealized loss on derivative
instrument during the year (6,055,599) - -
------------ ------------ ------------
Total other comprehensive income (loss) (9,552,504) - -
------------ ------------ ------------
Comprehensive income $ 24,362,928 $ 48,723,745 $ 12,572,476
============ ============ ============

See accompanying notes to consolidated financial statements.

KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(in U.S. Dollars)

2001 2000 1999

Cash flows from operating activities

Net income $ 33,915,432 $ 48,723,745 $ 12,572,476

Items to reconcile net income to net cash
provided by operating activities:
Depreciation 17,592,860 17,592,860 17,592,860
Amortization of capitalized financing
fees and expenses 371,544 371,543 371,543

Changes in operating assets and liabilities:
Charter hire receivable and prepaid expenses 20,602,331 (19,262,068) 6,819,292
Accrued expenses and other
current liabilities 52,731 (81,867) (94,547)
------------ ------------ ----------
Net cash provided by
operating activities 72,534,898 47,344,213 37,261,624

Cash flows from financing activities

Repayments of loan - (1,681,538) (6,726,153)
Distributions to shareholders (72,504,000) (45,486,000) (30,779,999)
----------- ----------- -----------

Net cash used in financing
activities (72,504,000) (47,167,538) (37,506,152)

Net increase (decrease) in cash
and cash equivalents 30,898 176,675 (244,528)
Cash and cash equivalents at beginning of year 247,370 70,695 315,223
----------- ----------- -----------
Cash and cash equivalents at end of year $ 278,268 $ 247,370 $ 70,695
=========== =========== ===========
Supplemental cash flow information:

Interest paid $ 8,955,981 $ 9,065,736 $ 9,254,563

See accompanying notes to consolidated financial statements.

KNIGHTSBRIDGE TANKERS LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(in U.S. Dollars)

2001 2000 1999

SHARE CAPITAL
Balance at beginning of year 171,000 171,000 171,000
Shares issued - - -
Shares bought back - - -
- -------------------------------------------------------------------------------------------
Balance at end of year 171,000 171,000 171,000
- -------------------------------------------------------------------------------------------

CONTRIBUTED CAPITAL SURPLUS ACCOUNT
Balance at beginning of year 273,809,543 273,809,543 292,017,066
Distributions to shareholders (35,350,823) - (18,207,523)
- -------------------------------------------------------------------------------------------
Balance at end of year 238,458,720 273,809,543 273,809,543
- -------------------------------------------------------------------------------------------

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance at beginning of year - - -
Other comprehensive income (loss) (9,552,504) - -
- -------------------------------------------------------------------------------------------
Balance at end of year (9,552,504) - -
- -------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of year 3,237,745 - -
Net income 33,915,432 48,723,745 12,572,476
Distributions to shareholders (37,153,177) (45,486,000) (12,572,476)
- -------------------------------------------------------------------------------------------
Balance at end of year - 3,237,745 -
- -------------------------------------------------------------------------------------------
Total Stockholders' Equity 229,077,216 277,218,288 273,980,543
- -------------------------------------------------------------------------------------------

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

See accompanying notes to consolidated financial statements.

KNIGHTSBRIDGE TANKERS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

1. DESCRIPTION OF BUSINESS

GENERAL

Knightsbridge Tankers Limited (the "Company") was incorporated in Bermuda in
September, 1996, for the purpose of the acquisition, disposition, ownership,
leasing and chartering of five very large crude oil carriers (the "Vessels"),
and certain related activities. The Vessels are owned through wholly-owned
subsidiaries (the "Subsidiaries").

The Company charters the Vessels to Shell International Petroleum Company
Limited (the "Charterer") on long-term "hell and high water" bareboat charters
(the "Charters"). The obligations of the Charterer under these charters are
jointly and severally guaranteed by Shell Petroleum N.V. and The Shell Petroleum
Company Limited (the "Charter Guarantors"). The Charter and the Charter
Guarantors are all companies of the Royal Dutch/Shell Group of Companies. The
term of each of these Charters is a minimum of seven years, with an option for
the Charterer to extend the period for each Vessel's Charter for an additional
seven-year term, to a maximum of approximately 14 years per Charter.

The daily charterhire rate payable under each Charter is comprised of two
primary components: (i) the base rate, which is a fixed minimum rate of
charterhire equal to $22,069 per Vessel per day, payable quarterly in arrears
("Base Rate"), and (ii) additional hire, which is additional charterhire
(determined and paid quarterly in arrears) that will equal the excess, if any,
of a weighted average of the daily time charter rates for three round-trip trade
routes traditionally served by VLCCs, less an agreed amount of $10,500 during
the initial term of the Charters, and $14,900 for any extended term,
representing daily operating costs over the Base Rate.

OWNERSHIP AND MANAGEMENT OF THE COMPANY

In February, 1997, the Company offered and sold to the public 16,100,000 common
shares, par value $0.01 per share, at an initial offering price of $20 per
share. Simultaneously, the Company sold 1,000,000 common shares at a price of
$20 per share to ICB International Limited ("ICB International"), an indirect
wholly-owned subsidiary of ICB Shipping Aktiebolag (publ) ("ICB"), a Swedish
publicly traded oil tanker owning and operating company. As of December 31,
2000, ICB International owned approximately 0.84% of the outstanding Common
Shares.

ICB Shipping (Bermuda) Limited (the "Manager") manages the business of the
Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America. The consolidated
financial statements include the assets and liabilities of Knightsbridge Tankers
Limited and its wholly-owned subsidiaries. All intercompany balances and
transactions have been eliminated upon consolidation.

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.

REPORTING CURRENCY

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. The Company's subsidiaries
report 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
translation gains or losses are included in the consolidated statements of
operations.

REVENUE AND EXPENSE RECOGNITION

Revenues and expenses are recognised on the accrual basis. Revenues are
generated from the Charters and such revenues are recorded over the term of the
Charters as service is provided.

COMPREHENSIVE INCOME

Comprehensive income is defined as the change in the Company's equity during the
year from transactions and other events and circumstances from nonowner sources.
Comprehensive income of the Company includes not only net income but also
unrealized losses on derivative instruments used in cash flow hedges of future
variable-rate interest payments on the Company's debt. Such items are reported
as accumulated other comprehensive income (loss), a separate component of
shareholders' equity, until such time as the amounts are included in net income.

LEASES

In connection with the original Vessels purchase transaction, the Company
entered into a conditional sale/leaseback transaction with a third party banking
institution. The lease agreements do not encumber or obligate the Company's
current or future cash flows and has no effect on the Company's financial
position. The leasebacks have been classified as capital leases by the Company.
Accordingly, during the term of the leases, the Vessels will remain on the
Company's consolidated balance sheet and the relevant subsidiaries will retain
title to the related Vessel.

The Company has subleased the Vessels to a third party in the form of bareboat
charters. Such Charters are classified as operating leases by the Company.

CASH AND CASH EQUIVALENTS

For the purposes of the consolidated statements of cash flows, all demand and
time deposits and highly liquid, low risk investments with maturities of three
months or less at the date of purchase are considered equivalent to cash.

CHARTER HIRE RECEIVABLE

There is a concentration of credit risk in that all revenues are due solely from
the Charterer.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Interest rate swap agreements are contractual agreements between the Company and
other parties to exchange the net difference between a fixed and variable
interest rate periodically over the life of the contract without the exchange of
the underlying principal amount of the agreement. The interest rate swaps were
executed as integral elements of the Company's original financing transactions
and risk management policies to achieve specific interest rate management
objectives. At the time of obtaining its original financing, the Company entered
into pay-fixed, receive-floating interest rate swap agreements to hedge its
exposure to future cash flow variability resulting from variable interest rates
on the Company's debt. The Company has not entered into any derivative contracts
for speculative or trading purposes.

On January 1, 2001 the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivatives Instruments and Hedging
Activities," as amended. SFAS No. 133 requires that all derivative instruments
be recorded on the balance sheet at their fair value. Changes in the fair value
of each derivative is recorded each period in current earnings or other
comprehensive income, depending on whether the derivative is designated as part
of a hedge transaction and, if it is, the type of hedge transaction.

Upon the adoption of SFAS No. 133 the Company recorded the fair value of its
interest rate swap agreements which were designated as cash flow hedges against
future variable-rate interest payments on the Company's debt. The amount
recorded as a transition derivative liability was $3,496,905 and an equal amount
was recorded as accumulated other comprehensive income (loss), which is a
component of shareholders' equity. Subsequent to adopting SFAS No. 133 on
January 1, 2001, the derivative liability has been adjusted to its current fair
value with equal adjustments to accumulated other comprehensive income (loss)
reflecting the effectiveness of the cash flow hedge. The adoption of SFAS No.
133 had no impact upon the Company's consolidated net income for the year ended
December 31, 2001.

Prior to the change in accounting principle referred to in the preceding
paragraph, settlement hedge accounting was used by the Company whereby the fair
values of the interest rate swap agreements were not recorded on the balance
sheet. As the swap agreements effectively altered the interest-rate
characteristics of the hedged debt, the interest rate differential between the
swap agreeements and the underlying hedged debt was accrued as interest rates
changed and recognized as an adjustment to interest expense.

VESSELS AND DEPRECIATION

Vessels are stated at cost less accumulated depreciation. Depreciation is
calculated based on cost, using the straight-line method, over the useful life
of each vessel. The useful life of each vessel is deemed to be 25 years.

CAPITALIZED FINANCING FEES AND EXPENSES

Costs relating to the Credit Facility are capitalized and amortized over the
term of the Credit Facility which is seven years.

EARNINGS PER SHARE

Earnings per share are based on the weighted average number of common shares
outstanding for the period presented. For all periods presented, the Company had
no potentially dilutive securities outstanding and therefore basic and dilutive
earnings per share are the same.

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 and fair
value less estimated costs to sell.

DISTRIBUTIONS TO SHAREHOLDERS

Distributions to shareholders are applied first to retained earnings. When
retained earnings are not sufficient, distributions are applied to the
contributed capital surplus account.

NEW ACCOUNTING STANDARDS

In December 1999, the U.S. Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements". SAB 101, as amended, summarizes certain of the SEC's views in
applying generally accepted accounting principles to revenue recognition in the
financial statements. The adoption of SAB 101 in the fourth quarter of fiscal
2000 by the Company did not have a material effect on the Company'sconsolidated
financial position or results of operations.

3. VESSELS UNDER CAPITAL LEASE

2001 2000
(in US Dollars)
Cost $439,821,545 $439,821,545
Accumulated depreciation (85,227,633) (67,634,773)
------------ ------------

Net book value at end of year $354,593,912 $372,186,772
------------ ------------

4. CAPITALIZED FINANCING FEES AND EXPENSES

Capitalized financing fees and expenses are amortised on a straight-line basis
over the life of the Credit Facility. The capitalized financing fees and
expenses are comprised of the following amounts:

2001 2000

(in US Dollars)
Capitalized financing fees and expenses $ 2,600,804 $ 2,600,804
Accumulated amortization (1,799,922) (1,428,378)
------------ ------------

Net book value at end of year $ 800,882 $ 1,172,426
------------ ------------

5. CREDIT FACILITY AND RELATED INTEREST RATE SWAP AGREEMENT

The Company has entered into a Credit Facility with a syndicate of international
lenders, pursuant to which the Company borrowed $145.6 million in the form of
two term loans (the "Loans", or the "Primary Loan" and the "Amortizing Loan").
Of such amount, $125.4 million was in respect of the Primary Loan, and $20.2
million was in respect of the Amortizing Loan.

The Credit Facility is secured by, among other things, a pledge by the Company
of 100% of the issued and outstanding capital stock of the Subsidiaries, a
guarantee from each Subsidiary, a mortgage on each Vessel, assignments of the
Charters and the Charter Guaranties and an assignment of the rights to take
title to the Vessels and the proceeds from the sale or any novation thereof.

The Credit Facility provides for payment of interest on the outstanding
principal balance of the Loans quarterly, in arrears, at a floating interest
rate based on the rate in the London interbank eurocurrency market.

During 2000, the final portion of the Amortizing Loan was repaid. The
outstanding Credit Facility of $125.4 million as of December 31, 2001 consists
of the Primary Loan and is repayable in its entirely during the year ending
December 31, 2004. The variable rate on the Primary Loan was 2.82% at December
31, 2001.

At the time of entering into the Credit Facility, the Company entered into an
interest rate swap agreement with Goldman Sachs Capital Markets, L.P., an
affiliate of Goldman, Sachs & Co., to hedge the future variable rate interest
payments on the Primary Loan. The cash flow hedge effectively fixes the
Company's interest rate obligations on the Primary Loan at the rate of
approximately 7.14% per annum. The terms of the interest rate swap agreement
outstanding at December 31, 2001 are as follows:

Notional amount $125,397,399
Trade date February 6, 1997
Effective date February 27, 1997
Termination date August 27, 2004
Pay-fixed rate 6.74%
Receive-variable rate 2.43%

The fair value of the interest rate swap agreement was an unfavorable $9,552,504
at December 31, 2001 calculated by taking into account the cost of entering into
an interest rate swap to offset the existing swap. The Company's accounting
policy applied to the interest rate swap agreement changed effective January 1,
2001 and is described in more detail in Note 2. The credit risk under the swap
agreement is not considered to be significant due to the counterparty's high
credit rating.

6. LEASES

The minimum future revenues, in the form of operating lease rentals, to be
received on the Charters as of December 31, 2001 is as follows:

Year ending December 31:
2002 $40,275,925
2003 40,275,925
2004 6,400,010
-----------
Total minimum lease rentals $86,951,860
-----------

7. TAXATION

The Company is incorporated in 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.

8. RELATED PARTY TRANSACTION

On February 12, 1997, the Company entered into a management agreement with ICB
under which ICB provides certain administrative, management and advisory
services to the Company for an amount of $750,000 per year. The management
agreement will terminate in 2012 unless earlier termination is approved.

ITEM 19. EXHIBITS

Number Description of Exhibit
- -------- ---------------------------------------------------

1 Underwriting Agreement among Knightsbridge Tankers Limited (the
"Company"), Cedarhurst Tankers LDC ("Cedarhurst"), Hewlett Tankers LDC
("Hewlett"), Inwood Tankers LDC ("Inwood"), Lawrence Tankers LDC
("Lawrence") and Woodmere Tankers LDC ("Woodmere") (each of
Cedarhurst, Hewlett, Inwood, Lawrence and Woodmere a "Subsidiary" and
collectively the "Subsidiaries"), Lazard Freres & Co. LLC and Goldman,
Sachs & Co., as representatives for the U.S. underwriters (the
"Representatives"), ICB Shipping (Bermuda) Limited (the "Manager") and
ICB International Ltd. ("ICB International")**

3.1 Memorandum of Association of the Company (Exhibit 3.1)*

3.2 Bye-Laws of the Company (Exhibit 3.2)*

3.2.1 Execution version of Bareboat Charter dated February 12, 1997 between
Woodmere and Shell International Petroleum Company Limited ("SIPC")
relating to the M.T. Myrina.**

3.2.2 Execution version of Bareboat Charter dated February 12, 1997 between
Hewlett and SIPC relating to the M.T. Megara.**

3.2.3 Execution version of Bareboat Charter dated February 12, 1997 between
Inwood and SIPC relating to the M.T. Murex.**

3.2.4 Execution version of Bareboat Charter dated February 12, 1997 between
Lawrence and SIPC relating to the M.T. Macoma.**

3.2.5 Execution version of Bareboat Charter dated February 12, 1997 between
Cedarhurst and SIPC relating to the M.T. Magdala.**

3.3.1 Execution version of Charter Guaranty dated February 12, 1997 made by
Shell Petroleum N.V. ("SPNV") and The Shell Petroleum Company Limited
("SPCo") (collectively the "Guarantors") in favor of Woodmere relating
to the M.T. Myrina.**

3.3.2 Execution version of Charter Guaranty dated February 12, 1997 made by
the Guarantors in favor of Hewlett relating to the M.T. Megara.**

3.3.3 Execution version of Charter Guaranty dated February 12, 1997 made by
the Guarantors in favor of Inwood relating to the M.T. Murex.**

3.3.4 Execution version of Charter Guaranty dated February 12, 1997 made by
the Guarantors in favor of Lawrence relating to the M.T. Macoma.**

3.3.5 Execution version of Charter Guaranty dated February 12, 1997 made by
the Guarantors in favor of Cedarhurst relating to the M.T. Magdala.**

3.3.6 Execution version of Pooling Agreement dated February 27, 1997 among
the Subsidiaries as owners, and Shell International Trading and
Shipping Company Limited on behalf of SIPC (collectively the
"Charterers") relating to the fleet spares.**

3.4 Execution version of Charter Guaranty dated February 12, 1997 made by
the Guarantors in favor of the Company.**

3.5 Execution version of Management Agreement dated February 12, 1997
between the Manager and the Company (incorporated by reference from
Exhibit 10.5 of the Registration Statement).**

3.6.1 Memorandum of Agreement dated October 24, 1996 among Ocala Shipping
Limited ("Ocala"), the Charterers and Shell Tankers (UK) Limited
("STUK"), as buyer, relating to the M.T. Myrina (incorporated by
reference from Exhibit 10.6 of the Registration Statement).**

3.6.2 Memorandum of Agreement dated October 24, 1996 among Kerbela Shipping
Corp. ("Kerbela") the Charterers and STUK relating to the M.T. Megara
(incorporated by reference from Exhibit 10.7 of the Registration
Statement).**

3.6.3 Memorandum of Agreement dated October 24, 1996 among Trevose Shipping
Corp. ("Trevose"), the Charterers and STUK relating to the M.T. Murex
(incorporated by reference from Exhibit 10.8 of the Registration
Statement).**

3.6.4 Memorandum of Agreement dated October 24, 1996 among Tourmaline
Shipping Limited ("Tourmaline"), the Charterers and STUK relating to
the M.T. Macoma (incorporated by reference from Exhibit 10.9 of the
Registration Statement).**

3.6.5 Memorandum of Agreement dated October 24, 1996 among Fluid Navigation
Ltd. ("Fluid"), the Charterers and STUK relating to the M.T. Magdala
(incorporated by reference from Exhibit 10.10 of the Registration
Statement).**

3.7.1 Assignment Agreement dated November 25, 1996 from STUK and Shell
International Trading & Shipping Company Limited to the Company and
the Subsidiaries relating to the relevant Memorandum of Agreement
(incorporated by reference from Exhibit 10.11 of the Registration
Statement).**

3.7.2 Assignment of Rights dated February 27, 1997 between Ocala as seller
and Woodmere as buyer relating to the M.T. Myrina.**

3.7.3 Assignment of Rights dated February 27, 1997 between Kerbela as seller
and Hewlett as buyer regarding the M.T. Megara.**

3.7.4 Assignment of Rights dated February 27, 1997 between Trevose as seller
and Inwood as buyer regarding the M.T. Murex.**

3.7.5 Assignment of Rights dated February 27, 1997 between Tourmalene as
seller and Lawrence as buyer regarding the M.T. Macoma.**

3.7.6 Assignment of Rights dated February 27, 1997 between Fluid as seller
and Cedarhurst as buyer regarding the M.T. Magdala.**

3.8.1 Execution version of Letter Agreement dated February 6, 1997 among the
Company, SIPC, ICB International, the Subsidiaries and the Manager
(incorporated by reference from Exhibit 10.12.1 of the Registration
Statement).**

3.8.2 Execution version of Letter Agreement dated February 6, 1997 among the
Company, the Manager, ICB International, SIPC and the Guarantors
(incorporated by reference from Exhibit 10.12.2 of the Registration
Statement).**

3.9 U.K. Finance Lease Transaction Offer Letter dated November 12, 1996
made by National Westminster Bank Plc in favor of the Company and SIPC
(incorporated by reference from Exhibit 10.13 of the Registration
Statement).**

3.10.1 Conditional Sale Agreement dated November 25, 1996 between NatWest
Leasing (GB) Limited ("NLL") and Woodmere relating to the M.T. Myrina
(incorporated by reference from Exhibit 10.14 of the Registration
Statement).**

3.10.2 Conditional Sale Agreement dated November 25, 1996 between NLL and
Hewlett relating to the M.T. Megara (incorporated by reference from
Exhibit 10.15 of the Registration Statement).**

3.10.3 Conditional Sale Agreement dated November 25, 1996 between NLL and
Inwood relating to the M.T. Murex (incorporated by reference from
Exhibit 10.16 of the Registration Statement).**

3.10.4 Conditional Sale Agreement dated November 25, 1996 between NLL and
Lawrence relating to the M.T. Macoma (incorporated by reference from
Exhibit 10.17 of the Registration Statement).**

3.10.5 Conditional Sale Agreement dated November 25, 1996 between NLL and
Cedarhurst relating to the M.T. Magdala (incorporated by reference
from Exhibit 10.18 of the Registration Statement).**

3.11.1 Execution version of Charterparty by way of Demise dated February 12,
1997 between NLL as lessor and Woodmere as leasee relating to the M.T.
Myrina.**

3.11.2 Execution version of Charterparty by Way of Demise dated February 12,
1997 between NLL as lessor and Hewlett as leasee relating to the M.T.
Megara.**

3.11.3 Execution version of Charterparty by Way of Demise dated February 12,
1997 between NLL as lessor and Inwood as leasee relating to the M.T.
Murex.**

3.11.3(a) Amendment Agreement to the Charterparty by Way of Demise dated
February 27, 1997 among NLL, Inwood and SIPC.**

3.11.4 Execution version of Charterparty by Way of Demise dated February 12,
1997 between NLL as lessor and Lawrence as leasee relating to the M.T.
Macoma.**

3.11.5 Execution version of Charterparty by Way of Demise dated February 12,
1997 between NLL as lessor and Cedarhurst as leasee relating to the
M.T. Magdala.**

3.12.1 Execution version of Direct Support Agreement dated February 12, 1997
among NLL as lessor, SIPC and Woodmere as leasee.**

3.12.2 Execution version of Direct Support Agreement dated February 12, 1997
among NLL as lessor, SIPC and Hewlett as leasee.**

3.12.3 Execution version of Direct Support Agreement dated February 12, 1997
among NLL as lessor, SIPC and Inwood as leasee.**

3.12.4 Execution version of Direct Support Agreement dated February 12, 1997
among NLL as lessor, SIPC and Lawrence as leasee.**

3.12.5 Execution version of Direct Support Agreement dated February 12, 1997
among NLL as lessor, SIPC and Cedarhurst as leasee.**

3.13 Execution version of Lessor Direct Agreement dated February 12, 1997
among the Company as borrower, the Subsidiaries as leasees, NLL as
lessor and GSI.**

3.13(a) Amendment Agreement to the Lessor Direct Agreement dated February 27,
1997 among the Company as borrower, the Subsidiaries as leasees, NLL
as lessor and Royal Bank of Scotland Plc ("RBS") as agent.**

3.14.1 Execution version of Lessor Mortgage and Assignment dated February 12,
1997 from NLL as chargor to Woodmere as chargee.**

3.14.2 Execution version of Lessor Mortgage and Assignment dated February 12,
1997 from NLL as chargor to Hewlett as chargee.**

3.14.3 Execution version of Lessor Mortgage and Assignment dated February 12,
1997 from NLL as chargor to Inwood as chargee.**

3.14.4 Execution version of Lessor Mortgage and Assignment dated February 12,
1997 from NLL as chargor to Lawrence as chargee.**

3.14.5 Execution version of Lessor Mortgage and Assignment dated February 12,
1997 from NLL as chargor to Cedarhurst as chargee.**

3.15.1 Execution version of Deposit Agreement and Deposit Charge dated
February 12, 1997 between Woodmere as leasee and Midland Bank PLC as a
letter of credit issuing bank ("Midland").**

3.15.2 Execution version of Deposit Agreement and Deposit Charge dated
February 12, 1997 between Hewlett as leasee and Midland.**

3.15.3 Execution version of Deposit Agreement and Deposit Charge dated
February 12, 1997 between Inwood as leasee and Royal Bank of Canada
Europe Limited as a letter of credit issuing bank ("RBC").**

3.15.4 Execution version of Deposit Agreement and Deposit Charge dated
February 12, 1997 between Lawrence as leasee and National Australia
Bank Limited as a letter of credit issuing bank ("NAB").**

3.15.5 Execution version of Deposit Agreement and Deposit Charge dated
February 12, 1997 between Cedarhurst as leasee and NAB.**

3.16.1 Execution version of Irrevocable Standby Letter of Credit by Midland
in favor of Woodmere as leasee.**

3.16.2 Execution version of Irrevocable Standby Letter of Credit by Midland
in favor of Hewlett as leasee.**

3.16.3 Execution version of Irrevocable Standby Letter of Credit by RBC in
favor of Inwood as leasee.**

3.16.4 Execution version of Irrevocable Standby Letter of Credit by NAB in
favor of Lawrence as leasee.**

3.16.5 Execution version of Irrevocable Standby Letter of Credit by NAB in
favor of Cedarhurst as leasee.**

3.17.1 Execution version of Reimbursement Agreement dated February 12, 1997
between Woodmere as leasee and Midland.**

3.17.2 Execution version of Reimbursement Agreement dated February 12, 1997
between Hewlett as leasee and Midland.**

3.17.3 Execution version of Reimbursement Agreement dated February 12, 1997
between Inwood as leasee and RBC.**

3.17.4 Execution version of Reimbursement Agreement dated February 12, 1997
between Lawrence as leasee and NAB.**

3.17.5 Execution version of Reimbursement Agreement dated February 12, 1997
between Cedarhurst as leasee and NAB.**

3.18.1 Execution version of Residual Obligation Agreement dated February 12,
1997 between SIPC as obligor and Midland relating to Woodmere as
lessee.**

3.18.2 Execution version of Residual Obligation Agreement dated February 12,
1997 between SIPC as obligor and Midland relating to Hewlett as
lessee.**

3.18.3 Execution version of Residual Obligation Agreement dated February 12,
1997 between SIPC as obligor and RBC relating to Inwood as lessee.**

3.18.4 Execution version of Residual Obligation Agreement dated February 12,
1997 between SIPC as obligor and NAB relating to Lawrence as lessee.**

3.18.5 Execution version of Residual Obligation Agreement dated February 12,
1997 between SIPC as obligor and NAB relating to Cedarhurst as
lessee.**

3.19 Execution version of Term Loan Facility Agreement dated February 6,
1997 among the Company as borrower, the Subsidiaries as guarantors,
GSI as arranger and as agent, Goldman Sachs Capital Partners L.P. as
bank ("GSCP") and Goldman Sachs Capital Markets L.P. as swap
counterparty ("GSCM").**

3.19(a) Amendment Agreement to Term Loan Facility Agreement dated February 27,
1997 among the Company as borrower, the Subsidiaries as guarantors,
GSI as arranger and retiring agent, Goldman Sachs International Bank
as bank ("GSIB"), GSCM as swap counterparty and RBS as successor
agent.**

3.19(b) Side Letter to the Term Loan Facility Agreement dated February 27,
1997 among the Company, the Subsidiaries, SIPC, NLL and GSI.**

3.20.1 Vessel Mortgage dated February 27, 1997 granted by Woodmere in favor
of GSI relating to the M.T. Myrina.**

3.20.2 Vessel Mortgage dated February 27, 1997 granted by Hewlett in favor of
GSI relating to the M.T. Megara.**

3.20.3 Vessel Mortgage dated February 27, 1997 granted by Inwood in favor of
GSI relating to the M.T. Murex.**

3.20.4 Vessel Mortgage dated February 27, 1997 granted by Lawrence in favor
of GSI relating to the M.T. Macoma.**

3.20.5 Vessel Mortgage dated February 27, 1997 granted by Cedarhurst in favor
of GSI relating to the M.T. Magdala.**

3.21.1 Execution version of Floating Charge dated February 12, 1997 between
Woodmere as chargor and GSI as agent.**

3.21.2 Execution version of Floating Charge dated February 12, 1997 between
Hewlett as chargor and GSI as agent.**

3.21.3 Execution version of Floating Charge dated February 12, 1997 between
Inwood as chargor and GSI as agent.**

3.21.4 Execution version of Floating Charge dated February 12, 1997 between
Lawrence as chargor and GSI as agent.**

3.21.5 Execution version of Floating Charge dated February 12, 1997 between
Cedarhurst as chargor and GSI as agent.**

3.22 Execution version of Floating Charge dated February 12, 1997 between
the Company as chargor and GSI as agent.**

3.23 Execution version of Mortgage of Shares dated February 12, 1997
between the Company as chargor and GSI as agent.**

3.24 Execution version of Borrower Assignment dated February 12, 1997
between the Company as assignor and GSI as agent.**

3.25.1 Execution version of Guarantor (Subsidiary) Assignment dated February
12, 1997 between Woodmere as assignor and GSI as agent.**

3.25.2 Execution version of Guarantor (Subsidiary) Assignment dated February
12, 1997 between Hewlett as assignor and GSI as agent.**

3.25.3 Execution version of Guarantor (Subsidiary) Assignment dated February
12, 1997 between Inwood as assignor and GSI as agent.**

3.25.4 Execution version of Guarantor (Subsidiary) Assignment dated February
12, 1997 between Lawrence as assignor and GSI as agent.**

3.25.5 Execution version of Guarantor (Subsidiary) Assignment dated February
12, 1997 between Cedarhurst as assignor and GSI as agent.**

3.26 Execution version of ISDA Master Agreement dated February 6, 1997
between GSCM and the Company.**

3.27 Execution version of Intercreditor Agreement dated February 12, 1997
among the Company as borrower, the Subsidiaries as leasees
(collectively with the Company as Obligors), GSI as arranger and as
agent, GSCP as bank and GSCM as swap bank and SIPC, SPCo, SPNV and the
Manager, each as a subordinated creditor.**

3.27(a) Amendment Agreement dated February 27, 1997 to the Intercreditor
Agreement among the Company as borrower, the Subsidiaries as leasees
(collectively with the Company as Obligors), GSI as arranger, RBS as
agent, GSIB as bank, GSCM as swap bank and SIPC, SPCo, SPNV and the
Manager, each as a subordinated creditor.**

3.27(b) Finance Party Accession/Designation Agreement dated February 27, 1997
among the Company and the Subsidiaries as obligors, GSI as existing
party and arranger, RBS as new party, NLL as lessor, GSIB as bank,
GSCM as swap bank and SIPC, SPCo, SPNV and the Manager, each as a
subordinated creditor.**

3.28 Execution version of Multipartite Agreement dated February 12, 1997
among the Company as borrower, the Subsidiaries as guarantors, SIPC as
charterer, GSI as arranger and agent, GSCP as bank and GSCM as swap
bank.**

3.29 Execution version of Subordination Agreement dated February 12, 1997
among the Company, the Subsidiaries, ICB International, the Manager,
the Guarantors, SIPC and Goldman, Sachs & Co. as representative of the
U.S. Underwriters, and GSI as representative of the International
Underwriters.**

3.30 Execution version of Share Purchase Agreement dated February 12, 1997
between the Company and ICB International (incorporated by reference
from Exhibit 10.37 of the Company's Registration Statement on Form
F-1, filed December 13, 1996 (File No. 333-6170).

* Incorporated by reference to same Exhibit No. in the Company's
Registration Statement on Form F-1, filed December 13, 1996 (File No.
333-6170)

** Incorporated by reference to same Exhibit No. in the Company's Report
on Form 6-K, filed March 20, 1997 (File No. 0-29106)

SIGNATURES

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

KNIGHTSBRIDGE TANKERS LIMITED

By: /s/Ola Lorentzon
---------------------
Ola Lorentzon
Chairman

Dated: May 10, 2002

01655.0002 #324323