UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 20-F/A

(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

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                  For the fiscal year ended December 31, 2005
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                                       OR

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

                                       OR

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

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Date of event requiring this shell company report
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                         For the transition period from
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                         Commission file number 0-22704
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                          KNIGHTSBRIDGE TANKERS LIMITED
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             (Exact name of Registrant as specified in its charter)
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                          KNIGHTSBRIDGE TANKERS LIMITED
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                 (Translation of Registrant's name into English)
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                                     Bermuda
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                 (Jurisdiction of incorporation or organisation)
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       Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
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                    (Address of principal executive offices)
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Securities registered or to be registered pursuant to section 12(b) of the Act

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

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                         Common Shares, $0.01 Par Value
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                                (Title of Class)
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Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.

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                                      None
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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.

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                    17,100,000 Common Shares, $0.01 Par Value
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Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.

                                                                [_] Yes   [X] No

If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.

                                                                [_] Yes   [X] No

Note - Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
from their obligations under those Sections.

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.

                                                                [X] Yes   [_] No

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [_]   Accelerated filer [_]    Non-accelerated filer [X]

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

                                                         [_] Item 17 [X] Item 18


                                Explanatory Note

This Amendment No. 1 to the annual report on Form 20-F ("Amendment No. 1") is
being filed for the sole purpose of correcting certain inadvertent typographical
errors on the cover page of the Company's 20-F filed on June 15, 2006.


<PAGE>

                             Index to the Form 20-F

                                                                            PAGE
PART I
Item 1.        Identity of Directors, Senior Management and Advisers ........  1
Item 2.        Offer Statistics and Expected Timetable ......................  1
Item 3.        Key Information...............................................  1
Item 4.        Information on the Company....................................  9
Item 4. A      Unresolved Staff Comments..................................... 23
Item 5.        Operating and Financial Review and Prospects.................. 23
Item 6.        Directors, Senior Management and Employees.................... 30
Item 7.        Major Shareholders and Related Party Transactions............. 32
Item 8.        Financial Information......................................... 33
Item 9.        The Offer and Listing......................................... 34
Item 10.       Additional Information........................................ 35
Item 11.       Quantitative and Qualitative Disclosures about Market Risk.... 39
Item12.        Description of Securities other than Equity Securities........ 39

PART II

Item 13.       Defaults, Dividend Arrearages and Delinquencies............... 40
Item 14.       Material Modifications to the Rights of Security Holders
               and Use of Proceeds........................................... 40
Item 15.       Controls and Procedures....................................... 40
Item16A.       Audit Committee Financial Expert.............................. 40
Item 16B.      Code of Ethics................................................ 40
Item16C.       Principal Accountant Fees..................................... 41
Item16D.       Exemptions from the Listing Standards for Audit Committees ... 41
Item16E.       Purchase of Equity Securities by the Issuer and Affiliated
               Purchasers ................................................... 41

PART III

Item 17.       Financial Statements.......................................... 42
Item 18.       Financial Statements.......................................... 42
Item 19.       Exhibits...................................................... 42
<PAGE>

            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,"  "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.

<PAGE>

                                     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,  which we refer to as the Company or  Knightsbridge,  with
respect to the fiscal  years ended  December 31,  2005,  2004 and 2003,  and the
selected  consolidated  balance  sheet data of the Company  with  respect to the
fiscal  years  ended  December  31,  2005 and 2004  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, 2002 and 2001 and the selected consolidated balance sheet data with
respect to the fiscal years ended  December  31,  2003,  2002 and 2001 have 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.

<TABLE>
<CAPTION>
                                                                   Fiscal Year Ended December 31,
                                                       2005           2004          2003           2002          2001
<S>                                              <C>            <C>           <C>            <C>           <C>
(in thousands of $, except share data and ratios)
Income Statement Data:
Total operating revenues                            100,179        135,695        75,246         40,276        61,534
Total operating expenses                             51,778         42,441        18,457         18,398        18,393
Net operating income                                 48,401         93,254        56,789         21,878        43,141
Net income                                           43,967         85,839        47,461         12,552        33,915
Earnings  per common share
- basic and diluted                                    2.57           5.02          2.78           0.73          1.98
Cash dividends paid                                  77,805         77,805        46,854         30,951        33,858

Balance Sheet Data (at end of year):
Cash and cash equivalents                            12,634         31,653         6,312            228           278
Restricted cash                                      10,000         10,000             -              -             -
Vessels, net                                        285,070        301,500             -              -             -
Vessels under capital lease, net                          -              -       319,408        337,001       354,594
Total assets                                        323,159        365,554       348,443        347,825       366,204
Short-term debt and current portion of               11,200         11,309         8,400              -             -
long-term debt
Long-term debt                                      109,200        120,400       116,997        125,397       125,397
Stockholders' equity                                195,033        228,871       215,527        208,639       229,077
Share capital                                       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

Cash Flow Data
Cash provided by operating activities                70,128        106,588        52,940         30,899        72,535
Cash used in investing activities                         -         (9,310)            -              -             -
Cash used in financing activities                   (89,147)       (71,937)      (46,854)       (30,951)      (72,504)

Other Financial Data
Equity to assets ratio (percentage) (1)                60.4%          62.6%         61.9%          60.0%         62.6%
Debt to equity ratio (2)                                0.6            0.6           0.6            0.6           0.6
Price earnings ratio (3)                                9.4            6.7           4.5           20.5           8.1
</TABLE>

Notes:

1.   Equity to assets ratio is calculated as total stockholders'  equity divided
     by total assets.
2.   Debt to equity ratio is calculated as total  interest  bearing  current and
     long-term liabilities,  including obligations under capital leases, divided
     by stockholders' equity.
3.   Price earnings  ratio is calculated  using the closing year end share price
     divided by basic Earnings per Share.

B.   CAPITALIZATION AND INDEBTEDNESS

Not Applicable

C.   REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable

D.   RISK FACTORS

We are  engaged  in  transporting  crude  oil and oil  products.  The  following
summarizes some of the risks that may materially affect our business,  financial
condition or results of operations. Please note: In this section, "we", "us" and
"our" all refer to the Company and its subsidiaries.

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

Our  charters  with Shell  International  Petroleum  Company  Limited,  or Shell
International,  expired in the first quarter of 2004.  Historically,  the tanker
industry has been highly cyclical,  with volatility in  profitability  and asset
values  resulting from changes in the supply of and demand for tanker  capacity.
If the tanker market is depressed in the future, our earnings and available cash
flow may decrease.  The charter rates payable under time charters or in the spot
market 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:

     o    demand  for oil and  production  of crude  oil and  refined  petroleum
          products;
     o    changes in oil production and refining capacity;
     o    global and regional economic and political conditions;
     o    the distance oil and oil products are to be moved by sea;
     o    environmental and other regulatory developments; and
     o    changes  in  seaborne  and other  transportation  patterns,  including
          changes  in the  distances  over  which  cargo is  transported  due to
          geographic  changes in where commodities are produced,  oil is refined
          and cargoes are used.

The factors that influence the supply of tanker capacity include:

     o    the number of newbuilding deliveries;
     o    the scrapping rate of older vessels;
     o    port or canal congestion;
     o    the number of vessels that are out of service:
     o    national  or  international  regulations  that may  effectively  cause
          reductions in the carrying  capacity of vessels or early  obsolescence
          of tonnage; and
     o    changes in global crude oil production.

If the  number of new ships  delivered  exceeds  the  number  of  tankers  being
scrapped  and lost,  tanker  capacity  will  increase.  If the  supply of tanker
capacity  increases  and the  demand  for  tanker  capacity  does  not  increase
correspondingly,  the  charter  rates  paid  for our  tankers  could  materially
decline.

The  international  tanker  industry has experienced  historically  high charter
rates and vessel  values in the recent past and there can be no  assurance  that
these historically high charter rates and vessel values will be sustained

Charter rates in the tanker industry  recently have been near  historically high
levels. We anticipate that future demand for our vessels, and in turn our future
charter rates,  will be dependent upon continued  economic growth in the world's
economy as well as seasonal  and  regional  changes in demand and changes in the
capacity of the  world's  fleet.  We believe  that these  charter  rates are the
result of continued  economic growth in the world economy that exceeds growth in
global vessel capacity.  There can be no assurance that economic growth will not
stagnate or decline  leading to a decrease in vessel values and charter rates. A
decline in charter rates could have a material  adverse  effect on our business,
financial condition, results of operation and ability to pay dividends.

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.  Among the factors which
could lead to such a decrease are:

     o    increased crude oil production from non-Arabian Gulf areas;
     o    increased refining capacity in the Arabian Gulf area;
     o    increased  use of  existing  and  future  crude oil  pipelines  in the
          Arabian Gulf area;
     o    a decision by Arabian  Gulf  oil-producing  nations to increase  their
          crude oil  prices or to  further  decrease  or limit  their  crude oil
          production;
     o    armed conflict in the Arabian Gulf and political or other factors; and
     o    the development and the relative costs of nuclear power,  natural gas,
          coal and other alternative sources of energy.

Some of our vessels  operate on a spot  charter  basis and any  decrease in spot
charter rates in the future may adversely affect our earnings

Beginning in 2004, some of our vessels operate on a spot charter basis. Although
spot  chartering is common in the tanker  industry,  the spot charter  market is
highly competitive and spot charter rates may fluctuate significantly based upon
tanker and oil supply and demand. The successful operation of our vessels in the
spot charter market depends upon, among other things,  obtaining profitable spot
charters and minimizing, to the extent possible, time spent waiting for charters
and time spent  traveling  unladen to pick up cargo.  We cannot  assure you that
future spot charters will be available at rates sufficient to enable our vessels
trading in the spot market to operate  profitably.  In addition,  bunkering,  or
fuel,  charges that account for a substantial  portion of the operating costs of
our spot chartered  vessels,  and generally reflect  prevailing oil prices,  are
subject to sharp fluctuations.

The value of our vessels may fluctuate  and  adversely  affect our liquidity and
may result in breaches under our financial arrangements and sales of our vessels
at a loss.

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. While we have refinanced our previous secured debt during 2004, declining
tanker  values could affect our ability to raise cash by limiting our ability to
refinance vessels in the future and thereby  adversely impact our liquidity.  If
we determine at any time that a tanker's future limited useful life and earnings
require us to impair its value on our financial statements, that could result in
a charge against our earnings and the reduction of our shareholders' equity. Due
to the cyclical  nature of the tanker market,  if for any reason we sell tankers
at a time  when  tanker  prices  have  fallen,  the sale may be at less than the
tanker's  carrying amount on our financial  statements,  with the result that we
would also incur a loss and a reduction in earnings.  Based on the closing price
for our common shares on May 2, 2006, taking into account our total indebtedness
of $112.3 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 was $106.3 million. The market value of a similar vessel may
be significantly lower than the implied value of our vessels.

An increase in the supply of vessel  capacity  without an increase in demand for
vessel  capacity  would likely cause charter rates and vessel values to decline,
which could have a material adverse effect on our revenues and profitability

The supply of vessels  generally  increases  with  deliveries of new vessels and
decreases  with the scrapping of older  vessels,  conversion of vessels to other
uses, such as floating production and storage facilities, and loss of tonnage as
a result of casualties.  Currently  there is significant  new building  activity
with  respect to  virtually  all sizes and classes of vessels.  If the amount of
tonnage delivered exceeds the number of vessels being scrapped,  vessel capacity
will  increase.  If the supply of vessel  capacity  increases and the demand for
vessel  capacity does not, the charter rates paid for our vessels as well as the
value of our vessels could materially  decline.  Such a decline in charter rates
and vessel  values would likely have a material  adverse  effect on our revenues
and profitability.

Our  operating  results  from our tankers are subject to seasonal  fluctuations,
which may adversely affect our operating results and ability to pay dividends

We operate  our tankers in markets  that have  historically  exhibited  seasonal
variations in demand and, therefore,  charter rates. This seasonality may result
in quarter-to-quarter  volatility in our operating results. The tanker sector is
typically  stronger  in the fourth and first  quarters of the  calendar  year in
anticipation  of increased oil  consumption of oil and petroleum in the northern
hemisphere during the winter months. As a result,  our revenues from our tankers
may be weaker  during the fiscal  quarters  ended June 30 and September 30, and,
conversely,  revenues may be stronger in fiscal  quarters  ended December 31 and
March 31. This  seasonality  could materially  affect our operating  results and
cash available for dividends in the future.

We operate in the highly competitive  international tanker market and we may not
be able to  effectively  compete  which would  negatively  affect our results of
operations

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.  Following  the  expiration of the Shell  International  charters in
2004, we 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.

Future  distributions  to shareholders  are dependent on tanker rates and future
charter arrangements

The Company has historically paid distributions to shareholders. For the periods
for which the Company's vessels were under charters to Shell International,  the
base rate  charterhire  was  sufficient to pay a distribution  of  approximately
$1.80 per share per year. The Company paid higher  distributions when additional
charterhire  was received  from Shell  International.  The Company  expects that
charterhire  paid for time  charters or in the spot market now that the charters
to Shell International have expired will be sufficient sources of income for the
Company to continue to pay ordinary recurring  expenses  including  installments
due under its financing facility.  The Company also expects that it will be able
to continue to make  distributions  to its shareholder  under the new employment
regime for its  vessels.  These  distributions  are  expected to be a minimum of
$1.00  dollar  per share per year.  However,  the  amounts  distributed  will be
dependent  on spot market  rates and any future  charter  arrangements  that the
Company enters into.

Compliance  with  environmental  laws or  regulations  may adversely  affect our
operations

The shipping industry in general,  our business and the operation of our tankers
in particular, are affected by a variety of governmental regulations in the form
of  numerous  international  conventions,  national,  state and  local  laws and
national and  international  regulations in force in the  jurisdictions in which
such  tankers  operate,  as well as in the  country or  countries  in which such
tankers are registered. These regulations include:

     o    the U.S. Oil  Pollution  Act of 1990,  or OPA,  which  imposes  strict
          liability  for the  discharge of oil into the 200-mile  United  States
          exclusive  economic  zone, the  obligation to obtain  certificates  of
          financial  responsibility  for vessels trading in United States waters
          and the  requirement  that  newly  constructed  tankers  that trade in
          United States waters be constructed with double-hulls;

     o    the  International  Convention  on Civil  Liability  for Oil Pollution
          Damage of 1969 entered into by many  countries  (other than the United
          States)  relating to strict  liability for pollution  damage caused by
          the discharge of oil;

     o    the  International  Maritime   Organization,   or  IMO,  International
          Convention  for the Prevention of Pollution from Ships with respect to
          strict technical and operational requirements for tankers;

     o    the IMO  International  Convention  for the  Safety  of Life at Sea of
          1974, or SOLAS, with respect to crew and passenger safety;

     o    the International Convention on Load Lines of 1966 with respect to the
          safeguarding  of  life  and  property  through   limitations  on  load
          capability for vessels on international voyages; and

     o    the U.S. Marine Transportation Security Act of 2002.

More stringent  maritime safety rules are being imposed worldwide as a result of
the oil spill in  November  2002  relating to the loss of the m.t.  Prestige,  a
26-year  old  single-hull  tanker  owned by a company  not  affiliated  with us.
Additional laws and regulations may also be adopted that could limit our ability
to do business or increase the cost of our doing  business and that could have a
material  adverse  effect on our  operations.  In  addition,  we are required by
various governmental and quasi-governmental  agencies to obtain certain permits,
licenses and certificates with respect to our operations. In the event of war or
national emergency,  our tankers may be subject to requisition by the government
of the flag flown by the tanker without any guarantee of  compensation  for lost
profits.  We believe our tankers are  maintained in good condition in compliance
with present regulatory requirements, are operated in compliance with applicable
safety/environmental  laws and  regulations  and are insured against usual risks
for such amounts as our management  deems  appropriate.  The tankers'  operating
certificates and licenses are renewed periodically during each tanker's required
annual survey.  However,  government regulation of tankers,  particularly in the
areas of safety and environmental impact may change in the future and require us
to  incur  significant  capital  expenditures  on our  ships  to  keep  them  in
compliance.

Shipping is an inherently risky business and we may not have adequate insurance

There  are a  number  of risks  associated  with the  operation  of  ocean-going
vessels,  including mechanical failure,  collision, human error, war, terrorism,
property loss,  cargo loss or damage and business  interruption due to political
circumstances in foreign countries,  hostilities and labor strikes. Any of these
events may result in loss of revenues, increased costs and decreased cash flows.
In addition,  following the  terrorist  attack in New York City on September 11,
2001, and the military  response of the United States,  the likelihood of future
acts of terrorism may increase, and our vessels may face higher risks of attack.
Future hostilities or other political instability, as shown by the attack on the
Limburg in Yemen in October 2002,  could affect our trade patterns and adversely
affect  our  operations  and our  revenues,  cash  flows and  profitability.  In
addition,  the operation of any vessel is subject to the inherent possibility of
marine disaster,  including oil spills and other environmental  mishaps, and the
liabilities arising from owning and operating vessels in international trade.

We cannot assure investors that we will adequately  insure against all risks and
we may not be able to obtain adequate insurance coverage at reasonable rates for
our fleet in the future and the  insurers  may not pay  particular  claims.  For
example,  a  catastrophic  spill could exceed our insurance  coverage and have a
material adverse effect on our financial condition.  In addition,  we may not be
able to procure adequate insurance coverage at commercially  reasonable rates in
the future and we cannot  guarantee that any  particular  claim will be paid. In
the past, new and stricter  environmental  regulations  have led to higher costs
for insurance covering  environmental  damage or pollution,  and new regulations
could lead to similar increases or even make this type of insurance unavailable.
Furthermore,  even if insurance coverage is adequate to cover our losses, we may
not be able to timely obtain a  replacement  ship in the event of a loss. We may
also be  subject to calls,  or  premiums,  in amounts  based not only on our own
claim records but also the claim records of all other members of the  protection
and indemnity associations through which we receive indemnity insurance coverage
for tort  liability.  Our  payment of these calls  could  result in  significant
expenses  to us that  could  reduce  our cash  flows  and place  strains  on our
liquidity and capital resources.

Our  revenues  may be adversely  affected if we do not  successfully  employ our
tankers

Following the  expiration of the Shell  International  charters in 2004, we have
determined to deploy our tankers  between spot market  voyage  charters and time
charters.  Currently,  three of our tankers are contractually  committed to time
charters,  with the remaining terms of these charters  expiring on dates between
2007 and 2009. Although these time charters generally provide reliable revenues,
they also  limit the  portion of our fleet  available  for spot  market  voyages
during an upswing in the tanker industry  cycle,  when spot market voyages might
be more profitable.

The spot charter  market is highly  competitive,  and spot market voyage charter
rates may fluctuate  dramatically  based on tanker and oil supply and demand and
other factors. We cannot assure you that future spot market voyage charters will
be available at rates that will allow us to operate our tankers profitably.

Rising fuel prices may adversely affect our profits

Fuel is a  significant,  if not the largest,  operating  expense for many of our
shipping operations when our vessels are not under period charter. The price and
supply of fuel is  unpredictable  and  fluctuates  based on events  outside  our
control, including geopolitical developments, supply and demand for oil and gas,
actions by OPEC and other oil and gas producers, war and unrest in oil producing
countries and regions,  regional production patterns and environmental concerns.
As a  result,  an  increase  in the  price  of fuel  may  adversely  affect  our
profitability.

Our vessels may suffer damage and we may face unexpected drydocking costs, which
could affect our cash flow and financial condition

If our vessels  suffer  damage,  they may need to be  repaired  at a  drydocking
facility. The costs of drydock repairs are unpredictable and can be substantial.
We may have to pay  drydocking  costs that our  insurance  does not  cover.  The
inactivity of these vessels while they are being repaired and  repositioned,  as
well as the actual  cost of these  repairs,  would  decrease  our  earnings.  In
addition,  space at  drydocking  facilities  is  sometimes  limited  and not all
drydocking  facilities are conveniently  located. We may be unable to find space
at a suitable  drydocking  facility or we may be forced to move to a  drydocking
facility that is not conveniently located to our vessels' positions. The loss of
earnings  while our  vessels  are  forced to wait for  space or to  relocate  to
drydocking facilities that are farther away from the routes on which our vessels
trade would decrease our earnings.

Incurrence of expenses or liabilities may reduce or eliminate distributions

Our policy has been to pay out available cash, less reserves for  contingencies,
as  distributions  to  stockholders,  and we currently  intend to continue  that
policy.  However,  we could incur other expenses or contingent  liabilities that
would  reduce  or  eliminate  the  cash  available  for  distribution  by  us as
dividends. Our loan agreement prohibits the declaration and payment of dividends
if we are in default under such loan agreement. 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.

Arrests of our tankers by maritime  claimants could cause a significant  loss of
earnings for the related off hire period

Crew members, suppliers of goods and services to a vessel, shippers of cargo and
other  parties  may  be  entitled  to a  maritime  lien  against  a  vessel  for
unsatisfied debts,  claims or damages.  In many  jurisdictions,  a maritime lien
holder may enforce  its lien by  "arresting"  or  "attaching"  a vessel  through
foreclosure proceedings.  The arrest or attachment of one or more of our tankers
could result in a significant loss of earnings for the related off-hire period.

In addition, in jurisdictions where the "sister ship" theory of liability
applies, a claimant may arrest both the vessel which is subject to the
claimant's maritime lien and any "associated" vessel, which is any vessel owned
or controlled by the same owner. In countries with "sister ship" liability laws,
claims might be asserted against us, any of our subsidiaries or our tankers for
liabilities of other vessels that we own.

Governments  could  requisition  our vessels during a period of war or emergency
without adequate compensation, 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.  This amount could be materially less than
the charterhire that would have been payable  otherwise.  In addition,  we would
bear all risk of loss or damage to a vessel under requisition for hire.

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

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

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

As a result of the September 11, 2001 terrorist  attacks and subsequent  events,
there has been considerable uncertainty in the world financial markets. The full
effect of these events, as well as concerns about future terrorist  attacks,  on
the financial  markets is not yet known, but could include,  among other things,
increased volatility in the price of securities.  These uncertainties could also
adversely affect our ability to obtain additional  financing on terms acceptable
to us or at all.  Future  terrorist  attacks  may  also  negatively  affect  our
operations  and  financial  condition  and  directly  impact our  vessels or our
customers.  Future terrorist attacks could result in increased volatility of the
financial  markets in the  United  States and  globally  and could  result in an
economic  recession in the United States or the world. Any of these  occurrences
could have a material  adverse  impact on our operating  results,  revenue,  and
costs.

Increased  inspection  procedures and tighter  import and export  controls could
increase costs and disrupt our business

International shipping is subject to various security and customs inspection and
related procedures in countries of origin and destination. Inspection procedures
can result in the  seizure of contents of our  vessels,  delays in the  loading,
offloading  or  delivery  and the  levying  of  customs  duties,  fines or other
penalties against us.

It is possible that changes to  inspection  procedures  could impose  additional
financial  and legal  obligations  on us.  Furthermore,  changes  to  inspection
procedures  could also impose  additional costs and obligations on our customers
and may,  in certain  cases,  render  the  shipment  of  certain  types of cargo
uneconomical  or  impractical.  Any  such  changes  or  developments  may have a
material  adverse  effect  on our  business,  financial  condition,  results  of
operations and ability to pay dividends.

Because we are a foreign  corporation,  you may not have the same  rights that a
shareholder in a U.S. corporation may have

We are a Bermuda corporation. Our Memorandum of Association and Bye-Laws and the
Bermuda Companies Act 1981, as amended,  govern our affairs.  Investors may have
more  difficulty  in  protecting  their  interests  in the  face of  actions  by
management,  directors or controlling  shareholders than would shareholders of a
corporation  incorporated in a United States  jurisdiction.  Under Bermuda law a
director  generally  owes a  fiduciary  duty  only  to the  company;  not to the
company's shareholders.  Our shareholders may not have a direct course of action
against our directors. In addition, Bermuda law does not provide a mechanism for
our shareholders to bring a class action lawsuit under Bermuda law. Further, our
Bye-Laws  provide for the  indemnification  of our directors or officers against
any liability  arising out of any act or omission  except for an act or omission
constituting fraud, dishonesty or illegality.

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

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

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

Under the United States Internal  Revenue Code of 1986, or the Code, 50 per cent
of the gross shipping income of a vessel owning or chartering corporation,  such
as ourselves and our subsidiaries,  that is attributable to transportation  that
begins or ends, but that does not both begin and end, in the United  States,  is
characterized as United States source shipping income and such income is subject
to a 4  per  cent  United  States  federal  income  tax  without  allowance  for
deduction,  unless that corporation qualifies for exemption under Section 883 of
the Code.

We expect that we and each of our  subsidiaries  will qualify for this statutory
tax exemption and we will take this  position for United States  federal  income
tax return reporting purposes.  However,  there are factual circumstances beyond
our control  that could cause us to lose the benefit of this tax  exemption  and
thereby  become subject to United States federal income tax on our United States
source income. Therefore, we can give no assurances on our tax--exempt status or
that of any of our subsidiaries.

If we or our subsidiaries are not entitled to this statutory tax exemption under
Section 883 for any taxable  year, we or our  subsidiaries  would be subject for
those years to a 4 per cent United  States  federal  income tax on United States
sources shipping  income.  The imposition of this taxation could have an adverse
effect on our business.

Investor  confidence  and the market  price of our common stock may be adversely
impacted if we are unable to comply with Section 404 of the  Sarbanes-Oxley  Act
of 2002.

We will become subject to Section 404 of the  Sarbanes-Oxley  Act of 2002, which
will  require us to include in our annual  report on Form 20-F our  management's
report on, and assessment of the  effectiveness  of, our internal  controls over
financial reporting.  In addition,  our independent registered public accounting
firm will be required to attest to and report on management's  assessment of the
effectiveness  of  our  internal  controls  over  financial   reporting.   These
requirements  will first  apply to our annual  report for the fiscal year ending
December  31,  2006.  If we fail to achieve  and  maintain  the  adequacy of our
internal  controls over financial  reporting,  we will not be in compliance with
all of the  requirements  imposed by Section  404.  Any  failure to comply  with
Section 404 could result in an adverse reaction in the financial marketplace due
to a loss of investor confidence in the reliability of our financial statements,
which ultimately could harm our business and could negatively  impact the market
price of our common stock.  We believe the total cost of our initial  compliance
and the  future  ongoing  costs of  complying  with  these  requirements  may be
substantial.

ITEM 4.   INFORMATION ON THE COMPANY

A.   HISTORY AND DEVELOPMENT OF THE COMPANY

Knightsbridge Tankers Limited 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.  References herein to the Company include
the Company and all of its subsidiaries, unless otherwise indicated. The Company
was  incorporated for the purpose of the  acquisition,  disposition,  ownership,
leasing and  chartering  of, through  wholly-owned  subsidiaries  (the "Original
Subsidiaries"),  five very large crude oil carriers (the "Vessels"). The Company
used the net proceeds of its initial  public  offering and bank debt to fund the
purchase by the Original  Subsidiaries of the Vessels.  Upon their purchase from
their  previous  owners on  February  27,  1997 until  March  2004,  the Company
chartered its Vessels to Shell  International on long-term "hell and high water"
bareboat  charters (the  "Charters").  The term of each of these  Charters was a
minimum of seven  years,  with an option for Shell  International  to extend the
period for each Vessel's Charter for an additional seven year term, to a maximum
of approximately 14 years per Charter.  Shell  International  did not extend the
bareboat  charters  for any of the  Vessels  for a  second  seven  year  period.
Consequently,  the Charters  expired for all five Vessels,  in  accordance  with
their terms,  during March 2004 and the Vessels were redelivered to the Company.
Following the redelivery,  the Company has entered into a five year time charter
for one of its vessels  while two of the  Company's  vessels have each been time
chartered for a period of three years.  The Company's  remaining two vessels are
trading on the spot market and since April 2005 have  participated  in a pooling
arrangement with Frontline Ltd., or Frontline,  a Bermuda based tanker owner and
operator  listed on the New York Stock  Exchange,  London Stock Exchange and the
Oslo Stock Exchange.

At the 2005 Annual  General  Meeting of the Company, the  Shareholders  approved
amending its Bye-Laws to remove restrictive  provisions that limited the Company
to the  transactions  described  above  and  related  activities  including  the
ownership of subsidiaries  engaged in the acquisition,  disposition,  ownership,
leasing and chartering of the Vessels  following the termination of the Charters
in 2004,  and  engaging  in  activities  necessary,  suitable or  convenient  to
accomplish,  or in connection  with or incidental to, the  foregoing,  including
refinancing its original debt obligation  related to its initial public offering
(the "Credit  Facility").  The Company expects that its only source of operating
revenue,  from which the Company may pay  distributions  to  shareholders of its
common  shares,   par  value  $0.01  per  share,  will  be  cash  payments  from
subsidiaries to the Company.

In connection with the purchase of the original Vessels, the Company had entered
into conditional sale arrangements  with a third party banking  institution (the
"UK Lessor").  Under the arrangements (the "Conditional Sale Agreements"),  each
of the Company's  vessel-owning  subsidiaries agreed with the UK Lessor that the
UK Lessor was entitled to purchase the Vessels from the subsidiaries, by payment
of the  purchase  price in  installments  over a period  of  twenty-five  years,
subject to certain conditions described below. For the duration of the Charters,
the vessels were leased back to the Company's subsidiaries. The lease agreements
did not encumber or obligate the Company's  current or future cash flows and had
no effect on the Company's financial position.

The UK Lessor's  obligation  under each  Conditional  Sale  Agreement to pay the
first  instalment  of the  purchase  price for the  vessel  was  subject  to the
following  conditions:  (i)  the  UK  Lessor  had  not  terminated  the  related
Conditional Sale Agreement prior to the Vessel being delivered by the subsidiary
or a  representative  of the UK Lessor;  (ii) the Company's  subsidiary  had not
terminated the Agreement prior to giving notice of delivery of the Vessel; (iii)
the UK Lessor had received notice of delivery of the Vessel from the subsidiary;
(iv) the UK Lessor had  received  an  invoice  for the first  instalment  of the
purchase price; (v) the  representations and warranties by the subsidiary in the
Conditional Sale Agreement (regarding capital expenditures of the subsidiary and
the purchase price of the vessel)  continued to be true; and (vi) the Vessel had
not  suffered a loss.  Upon  termination  of the  Charters in 2004,  each of the
Company's  subsidiaries  had the right as the UK Lessor's sales agent to arrange
for the  disposition  of the  Conditional  Sale Agreement (and the right to take
title to the related Vessel),  or to arrange for the sale of the related Vessel,
for an amount equal to the fair market value of that Vessel.  In connection with
the termination of the Charters,  the Company's  subsidiaries arranged for newly
formed  subsidiaries  (the "New  Subsidiaries") to purchase the Conditional Sale
Agreements  from  the UK  Lessor  by way  of  novation  for  fair  market  value
consideration, thereby transferring the right to take title to the Vessels under
the  Conditional  Sale  Agreements to the Company's  New  Subsidiaries.  The New
Subsidiaries  took title to the Vessels  during the first half of March 2004 and
the Conditional  Sale  Agreements are no longer in effect.  There was no gain or
loss  booked  by  the  Company  on the  transaction  as the  fair  market  value
consideration  was  deemed  equal  to the  Vessel  book  value  at the  date  of
acquisition.

Each  Vessel was  registered  in the  Republic  of the  Marshall  Islands by the
relevant New Subsidiary. The Company also repaid its existing loans, on March 2,
2004, and together with the New  Subsidiaries  entered into a new loan agreement
(the "Loan  Agreement")  with The Royal  Bank of  Scotland  plc (the  "Lender"),
pursuant to which the Company  borrowed $140.0 million in the form of five loans
of $28 million each in respect of a Vessel (together,  the "Loan").  The Company
is obligated to repay the Loan in  twenty-eight  quarterly  installments of $2.8
million and a final  installment  of $61.6 million on the last payment date. The
Loan  Agreement  provides for payment of interest on the  outstanding  principal
balance of the Loan,  quarterly  in arrears,  at the annual rate of LIBOR plus a
margin. If a New Subsidiary sells or disposes of the related Vessel, the Company
will be obligated to make a loan  prepayment  which will be applied  against the
principal  balance of the Loan  relating to the Vessel.  The Loan  Agreement  is
secured by, among other things, a guarantee from each New Subsidiary, a mortgage
on each Vessel and an  assignment  of any charter with respect to a Vessel.  The
failure by the Company to make payments due and payable under the Loan Agreement
could  result in the  acceleration  of all  principal  and  interest on the Loan
Agreement,  the  enforcement  by the  Lender of its rights  with  respect to the
security therefore,  and the consequent forfeiture by the Company of one or more
of the Vessels.  The Loan Agreement also provides for other customary  events of
default.

The Loan  Agreement  contains a number of covenants made by the Company and each
of the New Subsidiaries  that,  among other things,  restrict the ability of the
Company to incur  additional  indebtedness,  pay  dividends if the Company is in
default,  create liens on assets or dispose of assets. In addition,  the Company
and the relevant New Subsidiary is subject to additional  covenants  pursuant to
the Loan Agreement pertaining primarily to the maintenance and operation of each
of the Vessels.

B.   BUSINESS OVERVIEW

We are an international  tanker company and our primary business activity is the
international  seaborne  transportation of crude oil. Our fleet consists of five
double-hull  VLCCs,  one of which was built in 1996 and four of which were built
in 1995.

Expired Long-Term Charters

Pursuant  to  the  Charters,   Shell  International  paid  a  daily  charterhire
commencing on the Delivery Date at a rate  comprised of two primary  components:
(i) the Base Rate,  a fixed  minimum  rate of  charterhire  equal to $22,069 per
Vessel per day,  payable  quarterly in arrears,  and (ii)  Additional  Hire,  an
additional charterhire equal to 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,  representing  daily operating costs
over the Base Rate

New Operations

Each of the Vessels is now owned by a New  Subsidiary  and has been  renamed and
reflagged  in the  Marshall  Islands and is  currently  deployed  either on time
charters or in the spot market, operating on routes between the Arabian Gulf and
the Far East,  Northern  Europe,  the Caribbean  and the Louisiana  Offshore Oil
Port. The following chart provides  information on the current deployment of our
Vessels:

Vessel Name                           Employment            Expiration Date

Camden                                Time charter          March, 2009
Chelsea                               Spot market/Pool      n/a
Mayfair                               Spot Market/Pool      n/a
TI Ningbo (formerly Hampstead)        Time charter          April, 2007
TI Qingdao (formerly Kensington)      Time charter          April, 2007

We believe that  operating our Vessels  between time charter and the spot market
will enable us to take  advantage  of higher  charter  rates in the spot market,
while maintaining stability through long-term charters.

Management Agreement

Upon  expiration  of the  Charters in 2004,  we amended our  agreement  with ICB
Shipping  (Bermuda)  Limited (the  "Manager")  pursuant to which the Manager now
assumes  operational  responsibility for the Vessels and has agreed to recharter
the  Vessels,  subject  to the  approval  of the Board of  Directors.  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  during  the  period of the
Charters,  the Manager was  entitled to a  Management  Fee equal to $750,000 per
annum.  In view of the  change  in the  structure  of  operations  such that the
Company now performs certain  operational  responsibilities  with respect to the
Vessels since the termination of the Charters, the Management Fee was reduced to
$630,000  per year in the first  quarter of 2004 and  subsequently  increased to
$1,150,000  in the first  quarter of 2006.  The Company is now  responsible  for
paying its own administrative expenses including such items as audit fees, legal
and  professional  fees,  registrars  fees,  and directors and officers fees and
expenses.  The Company believes that these management 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.

Upon the  expiration  of the  Charters in 2004 and the  Company's  shareholders'
decision to  continue  the Company in  business  and not sell the  Vessels,  the
Manager became obligated under the Management  Agreement to attempt to recharter
each  Vessel on an  arms-length  basis  upon  such  terms as the  Manager  deems
appropriate,  subject to the  approval  of the  Board.  The  Manager  receives a
commission  equal to 1.25% of the gross  freight  earned from such  rechartering
(which is the  standard  industry  commission).  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.

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 Frontline.  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.  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.

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.

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.

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.

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.  However,  in the
last three years the industry  has  experienced  new  historic  highs for tanker
values.  Notwithstanding the aging of the world tanker fleet and the adoption of
new  environmental  regulations  which will result in a phase-out of many single
hull tankers,  significant deliveries of new VLCCs would adversely affect market
conditions.

Seasonality

Historically,  oil trade and therefore  charter  rates,  increased in the winter
months  and  eased  in the  summer  months  as  demand  for oil in the  Northern
Hemisphere  rose in  colder  weather  and fell in  warmer  weather.  The  tanker
industry in general is less  dependent on the seasonal  transport of heating oil
than a decade ago as new uses for oil and oil products have developed, spreading
consumption more evenly over the year.

Competition

The market for  international  seaborne  crude oil  transportation  services  is
highly fragmented and competitive.  Seaborne crude oil  transportation  services
generally are provided by two main types of operators: major oil company captive
fleets (both private and  state-owned)  and  independent  ship owner fleets.  In
addition, several owners and operators pool their vessels together on an ongoing
basis,  and  such  pools  are  available  to  customers  to the same  extent  as
independently  owned and operated fleets. Many major oil companies and other oil
trading  companies,  the primary charterers of the vessels owned by the Company,
also operate their own vessels and use such vessels not only to transport  their
own crude oil but also to  transport  crude oil for third  party  charterers  in
direct  competition with independent  owners and operators in the tanker charter
market.  Competition for charters is intense and is based upon price,  location,
size,  age,   condition  and  acceptability  of  the  vessel  and  its  manager.
Competition  is also  affected  by the  availability  of other  size  vessels to
compete in the trades in which the Company engages.

Risk of Loss and 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. We bear all risks associated with
the operation of the Vessels,  including,  without limitation, any total loss of
one or more Vessels.

The Manager is  responsible  for  arranging  for the insurance of our vessels in
line with standard  industry  practice.  In accordance  with that  practice,  we
maintain hull and machinery and war risks  insurance,  which include the risk of
actual or constructive total loss, and protection and indemnity  insurance.  Our
protection  and  indemnity  insurance,  or  P&I  insurance,  covers  third-party
liabilities and other related expenses from, among other things, injury or death
of crew,  passengers  and other third parties,  claims arising from  collisions,
damage to cargo and other third-party  property,  and pollution arising from oil
or other  substances.  Our current P&I  insurance  coverage for pollution is the
maximum  commercially  available  amount of $1.0 billion per tanker per incident
and is provided by mutual  protection  and indemnity  associations.  Each of the
Vessels is entered in a protection and indemnity  association  which is a member
of  the  International  Group  of  Protection  and  Indemnity  Mutual  Assurance
Associations.  The 12 protection  and indemnity  associations  that comprise the
International  Group insure  approximately 90% of the world's commercial tonnage
and have  entered  into a  pooling  agreement  to  reinsure  each  association's
liabilities.  Each protection and indemnity  association has capped its exposure
to this  pooling  agreement  at $5.2  billion.  As a member  of  protection  and
indemnity associations,  which are, in turn, members of the International Group,
we are subject to calls payable to the  associations  based on its claim records
as well as the claim records of all other members of the individual associations
and members of the pool of protection and indemnity associations  comprising the
International Group.

We believe that our current insurance coverage is adequate to protect us against
the  accident-related  risks involved in the conduct of our business and that we
maintain  appropriate  levels of  environmental  damage and pollution  insurance
coverage,  consistent  with standard  industry  practice.  However,  there is no
assurance that all risks are  adequately  insured  against,  that any particular
claims  will be paid or  that  we  will be able to  procure  adequate  insurance
coverage at commercially reasonable rates in the future.

Inspection by Classification Societies

Every  commercial  vessel's hull and machinery is "classed" by a  classification
society  authorised  by its  country of  registry.  The  classification  society
certifies that the vessel has been built and  maintained in accordance  with the
rules of such  classification  society and complies  with  applicable  rules and
regulations  of the  country of  registry  of the  vessel and the  international
conventions  to which  that  country  is a  member.  Our  Vessels  have all been
certified  as  "in  class."  Each  vessel  is  inspected  by a  surveyor  of the
classification  society every year, every two and a half years and every four to
five years. Should any defects be found, the classification  surveyor will issue
a  "recommendation"  for  appropriate  repairs  which  have  to be  made  by the
shipowner within the time limit prescribed.

Environmental and Other Regulation

Government  regulation  significantly affects the ownership and operation of our
tankers. Our fleet is subject to international conventions,  national, state and
local laws and  regulations  in force in the  countries in which our Vessels may
operate or are registered.

A variety of  governmental  and  private  entities  subject  our vessels to both
scheduled and  unscheduled  inspections.  These entities  include the local port
authorities  (U.S.  Coast Guard,  harbor master or  equivalent),  classification
societies,  flag state  administration  (country of  registry)  and  charterers,
particularly  terminal  operators and oil  companies.  Certain of these entities
require us to obtain permits, licenses and certificates for the operation of our
tankers.  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.

We believe that the heightened level of environmental and quality concerns among
insurance  underwriters,   regulators  and  charterers  is  leading  to  greater
inspection  and  safety  requirements  on all  vessels  and may  accelerate  the
scrapping of older vessels  throughout  the industry.  Increasing  environmental
concerns  have  created  a demand  for  vessels  that  conform  to the  stricter
environmental standards. We are required to maintain operating standards for all
of our Vessels that will  emphasize  operational  safety,  quality  maintenance,
continuous  training of our  officers  and crews and  compliance  with U.S.  and
international  regulations.  We believe that the  operation of our vessels is in
substantial  compliance  with  applicable  environmental  laws and  regulations;
however, because such laws and regulations are frequently changed and may impose
increasingly  stricter  requirements,  such  future  requirements  may limit our
ability to do business, increase our operating costs, force the early retirement
of our vessels,  and/or  affect their  resale  value,  all of which could have a
material adverse effect on our financial condition and results of operations.

Environmental Regulation

     International Maritime Organization (IMO)

The International Maritime Organization,  or IMO, (the United Nations agency for
maritime  safety and the prevention of marine  pollution by ships),  has adopted
the International  Convention for the Prevention of Marine Pollution from Ships,
1973,  as modified  by the  Protocol of 1978  relating  thereto,  which has been
updated  through  various  amendments,  or the "MARPOL  Convention".  The MARPOL
Convention relates to environmental standards including oil leakage or spilling,
garbage  management,  as well as the handling  and disposal of noxious  liquids,
harmful substances in packaged forms,  sewage and air emissions.  In March 1992,
the IMO adopted  regulations  that set forth pollution  prevention  requirements
applicable to tankers,  which became effective in July 1993. These  regulations,
which have been adopted by over 150 nations, including many of the jurisdictions
in which our tankers  operate,  provide for,  among other  things,  phase-out of
single hull tankers and more stringent inspection  requirements;  including,  in
part, that:

     o    tankers   between  25  and  30  years  old  must  be  of   double-hull
          construction or of a mid-deck design with  double-sided  construction,
          unless: (1) they have wing tanks or double--bottom spaces not used for
          the  carriage  of oil,  which  cover at least 30% of the length of the
          cargo tank  section of the hull or bottom;  or (2) they are capable of
          hydrostatically  balanced loading (loading less cargo into a tanker so
          that in the  event of a  breach  of the  hull,  water  flows  into the
          tanker, displacing oil upwards instead of into the sea);

     o    tankers 30 years old or older must be of double-hull  construction  or
          mid-deck design with double- sided construction; and

     o    all tankers are subject to enhanced inspections.

Also, under IMO regulations,  a tanker must be of double hull  construction or a
mid-deck design with double-sided construction, or be of another approved design
ensuring the same level of protection against oil pollution, if the tanker:

     o    is the  subject  of a  contract  for a major  conversion  or  original
          construction on or after July 6, 1993;

     o    commences a major  conversion or has its keel laid on or after January
          6, 1994; or

     o    completes a major conversion or is a newbuilding delivered on or after
          July 6, 1996.

In April 2001, the IMO accelerated  its existing  timetable for the phase-out of
single-  hull oil  tankers.  that became  effective  in  September  2002.  These
regulations  require the  phase-out  of most single- hull oil tankers by 2015 or
earlier,  depending  on the age of the  tanker  and  whether  it has  segregated
ballast tanks.  Under the regulations,  the flag state  administration may allow
for some newer  single  hull ships  registered  in its country  that  conform to
certain  technical   specifications   to  continue   operating  until  the  25th
anniversary of their delivery.  Any port state, however, may deny entry of those
single hull tankers that are allowed to operate until their 25th  anniversary to
ports or offshore terminals.

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

     ------------------------------     ------------------------------
     Category of Oil Tankers            Date or Year
     ------------------------------     ------------------------------

     Category  1  oil   tankers  of     April  5,   2005   for   ships
     20,000 deadweight  tonnage, or     delivered  on April 5, 1982 or
     dwt, and above  carrying crude     earlier;  or  2005  for  ships
     oil,  fuel oil,  heavy  diesel     delivered after April 5, 1982
     oil  or  lubricating   oil  as
     cargo,  and of 30,000  dwt and
     above   carrying  other  oils,
     which do not  comply  with the
     requirements  for protectively
     located   segregated   ballast
     tanks

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

     Category  2 - oil  tankers  of     April  5,   2005   for   ships
     20,000 dwt and above  carrying     delivered  on April 5, 1977 or
     crude  oil,  fuel  oil,  heavy     earlier    2005   for    ships
     diesel oil or lubricating  oil     delivered  after April 5, 1977
     as cargo,  and of  30,000  dwt     but before January 1, 1978
     and above carrying other oils,
     which  do   comply   with  the     2006 for  ships  delivered  in
     protectively           located     1978 and 1979
     segregated     ballast    tank
     requirements                       2007 for  ships  delivered  in
                                        1980 and 1981
     and
                                        2008 for  ships  delivered  in
     Category  3 - oil  tankers  of     1982
     5,000  dwt and  above but less
     than the tonnage specified for     2009 for  ships  delivered  in
     Category 1 and 2 tankers.          1983

                                        2010 for  ships  delivered  in
                                        1984 or later
     ------------------------------     ------------------------------

Under the revised regulations,  the flag state administration may allow for some
newer single hull oil tankers  registered in its country that conform to certain
technical  specifications  to  continue  operating  until  the  earlier  of  the
anniversary  of the  date  of  delivery  of  the  vessel  in  2015  or the  25th
anniversary of their delivery.  Any port state, however, may deny entry of those
single hull oil tankers  that are allowed to operate  until the earlier of their
anniversary  date of  delivery  in 2015 or their  25th  anniversary  to ports or
offshore terminals.

The MEPC, in October 2004,  adopted a unified  interpretation  to regulation 13G
that clarified the date of deliver for tankers that have been  converted.  Under
the  interpretation,  where an oil tanker has undergone a major  conversion that
has resulted in the  replacement  of the  fore-body,  including the entire cargo
carrying section,  the major conversion  completion date of the oil tanker shall
be deemed to be the date of delivery of the ship, provided that:

     o    the oil tanker conversion was completed before July 6, 1996;

     o    the  conversion  included the  replacement of the entire cargo section
          and fore-body and the tanker complies with all the relevant provisions
          of MARPOL Convention applicable at the date of completion of the major
          conversion; and

     o    the  original  delivery  date  of  the  oil  tanker  will  apply  when
          considering  the 15  years  of age  threshold  relating  to the  first
          technical  specifications  survey to be completed in  accordance  with
          MARPOL Convention.

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

     o    crude oils having a density at 15(0)C higher than 900 kg/m3;

     o    fuel oils having  either a density at 15(0)C higher than 900 kg/ m3 or
          a kinematic viscosity at 50(0)C higher than 180 mm2/s;

     o    bitumen, tar and their emulsions.

Under the  regulation  13H, the flag state  administration  may allow  continued
operation  of oil  tankers  of 5,000 dwt and  above,  carrying  crude oil with a
density at 15(0)C  higher than 900 kg/m3 but lower than 945 kg/m3,  that conform
to  certain   technical   specifications   and,  in  the  opinion  of  the  such
administration, the ship is fit to continue such operation, having regard to the
size, age,  operational area and structural  conditions of the ship and provided
that the  continued  operation  shall not go  beyond  the date on which the ship
reaches 25 years after the date of its delivery.  The flag state  administration
may also allow  continued  operation  of a single hull oil tanker of 600 dwt and
above but less than 5,000 dwt,  carrying HGO as cargo, if, in the opinion of the
such administration,  the ship is fit to continue such operation,  having regard
to the  size,  age,  operational  area and  structural  conditions  of the ship,
provided  that the  operation  shall  not go  beyond  the date on which the ship
reaches 25 years after the date of its delivery.

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

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

The IMO has also negotiated international  conventions that impose liability for
oil pollution in international  waters and a signatory's  territorial waters. In
September 1997, the IMO adopted Annex VI to the International Convention for the
Prevention of Pollution from Ships to address air pollution from ships. Annex VI
was ratified in May 2004 and became  effective in May 2005. Annex VI sets limits
on sulfur oxide and nitrogen  oxide  emissions  from ship exhausts and prohibits
deliberate emissions of ozone depleting substances, such as chlorofluorocarbons.
Annex VI also includes a global cap on the sulfur content of fuel oil and allows
for  special  areas to be  established  with more  stringent  controls on sulfur
emissions.  Compliance with these  regulations could require the installation of
expensive emission control systems and could have an adverse financial impact on
the  operation  of  our  vessels.  Additional  or  new  conventions,   laws  and
regulations may be adopted that could adversely affect our ability to manage our
ships.

The operation of our vessels is also affected by the  requirements  set forth in
the  IMO's  Management  Code  for the Safe  Operation  of  Ships  and  Pollution
Prevention,  or ISM  Code.  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.  The
Manager  will rely upon the safety  management  system  that the Manager and its
third party technical managers have developed.

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  or  by  an  appointed
classification  society,  under the ISM Code.  All of our Vessels have  obtained
safety management certificates.

Non  compliance  with the ISM Code and other IMO  regulations  may  subject  the
ship-owner 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
EU authorities  have indicated that vessels not in compliance  with the ISM Code
will be prohibited  from trading in U.S. and European  Union ports,  as the case
may be.

Many countries have ratified and currently  follow the liability plan adopted by
the IMO and set out in the  International  Convention on Civil Liability for Oil
Pollution  Damage of 1969, or the 1969 Convention.  Under this  convention,  and
depending  on whether the country in which the damage  results is a party to the
1992  Protocol  to the  International  Convention  on  Civil  Liability  for Oil
Pollution  Damage, a vessel's  registered owner is strictly liable for pollution
damage caused in the territorial  waters of a contracting  state by discharge of
persistent oil,  subject to certain complete  defenses.  Under an amendment that
became  effective in November 2003 for vessels of 5,000 to 140,000 gross tons (a
unit of measurement for the total enclosed spaces within a vessel), liability is
limited  to  approximately  $ 6.5  million  plus  approximately  $913  for  each
additional  gross ton over  5,000.  For  vessels  of over  140,000  gross  tons,
liability is limited to  approximately  129.9  million.  As the 1969  Convention
calculates  liability in terms of basket currencies,  these figures are based on
currency exchange rates on March 20, 2006. Under the 1969 Convention,  the right
to limit  liability is forfeited where the spill is caused by the owner's actual
fault;  under the 1992 Protocol,  a shipowner  cannot limit  liability where the
spill is caused by the owner's intentional or reckless conduct.  Vessels trading
in jurisdictions  that are parties to these conventions must provide evidence of
insurance  covering the liability of the owner. In jurisdictions  where the 1969
Convention has not been adopted, including the United States various legislative
schemes or common law govern,  and  liability is imposed  either on the basis of
fault or in a manner similar to that convention.  We believe that our protection
and indemnity  insurance will cover the liability  under the plan adopted by the
IMO.

     The United States Oil Pollution Act of 1990

The United States Oil Pollution  Act of 1990, or OPA,  established  an extensive
regulatory  and  liability   regime  for  the  protection  and  cleanup  of  the
environment from oil spills.  OPA affects all owners and operators whose vessels
trade in the United States,  its territories and  possessions,  or whose vessels
operate in United States waters,  which includes the United States'  territorial
sea and its two hundred nautical mile exclusive  economic zone.  Although OPA is
primarily directed at oil tankers and product tankers,  it applies to discharges
by non-tanker ships,  including drybulk carriers,  of fuel oil, or bunkers, used
to power such vessels.

Under OPA,  vessel owners,  operators and bareboat  charterers are  "responsible
parties"  and are  jointly,  severally  and  strictly  liable  (unless the spill
results  solely from the act or omission of a third  party,  an act of God or an
act of war) for all  containment  and clean-up  costs and other damages  arising
from  discharges or threatened  discharges of oil from their vessels,  including
bunkers. OPA defines these other damages broadly to include:

     o    natural resources damages and the costs of assessment thereof;

     o    real and personal property damages;

     o    net loss of taxes, royalties, rents, fees and other lost revenues;

     o    lost  profits or  impairment  of earning  capacity  due to property or
          natural resources damage; and

     o    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.

Title VII of the Coast Guard and  Maritime  Transportation  Act of 2004,  or the
CGMTA,  recently  amended OPA to require  the owner or operator of any  non-tank
vessel of 400 gross  tons or more,  that  carries  oil of any kind as a fuel for
main propulsion,  including  bunkers,  to prepare and submit a response plan for
each  vessel on or before  August 8, 2005.  Previous  law was limited to vessels
that carry oil in bulk as cargo.  The vessel  response  plans  include  detailed
information  on actions to be taken by vessel  personnel  to prevent or mitigate
any discharge or  substantial  threat of such a discharge of ore from the vessel
due to operational activities or casualties.

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 per  discharge
(subject to possible adjustment for inflation). These limits of liability do not
apply,  if an incident was directly  caused by  violation of  applicable  United
States  federal  safety,   construction  or  operating  regulations,   or  by  a
responsible  party"s  gross  negligence  or  willful   misconduct,   or  if  the
responsible  party fails or refuses to report the incident or to  cooperate  and
assist  in  connection  with oil  removal  activities.  Legislation  pending  in
Congress would increase  liability  limits for single hull tankers to $3,000 per
gross ton and for double hull tankers to $1,900 per gross ton. In addition,  the
Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA,
which applies to the discharge of hazardous  substances (other than oil) whether
on land or at sea, contains a similar liability regime and provides for cleanup,
removal and natural resource  damages.  Liability under CERCLA is limited to the
greater of $300 per gross ton or $5.0 million for vessels not carrying hazardous
substances  as  cargo  or  residue,  unless  the  incident  is  caused  by gross
negligence,  willful misconduct, or a violation of certain regulations, in which
case liability is unlimited.  We believe that we are in  substantial  compliance
with OPA,  CERCLA and all  applicable  state  regulations in the ports where our
tankers call.

OPA requires  owners and operators of vessels to establish and maintain with the
U.S.  Coast Guard  evidence of financial  responsibility  sufficient to meet the
limit of their  potential  strict  liability under OPA. The U.S. Coast Guard has
enacted regulations requiring evidence of financial responsibility in the amount
of $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 and CERCLA.  We have provided  requisite
guarantees and received  certificates of financial  responsibility from the U.S.
Coast Guard for each of our Vessels required to have one.

We insure each of our vessels with pollution  liability insurance in the maximum
commercially  available  amount  of  $1  billion  per  vessel  per  incident.  A
catastrophic spill could exceed the insurance coverage available, in which event
there could be a material adverse effect on our business.

Under OPA, with certain 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,  from 1995 to 2015,  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:

     o    discharging at the LOOP; or

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

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

     o    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";

     o    describe crew training and drills; and

     o    identify a  qualified  individual  with full  authority  to  implement
          cleanup actions.

We have obtained  vessel response plans approved by the U.S. Coast Guard for our
Vessels  operating  in U.S.  waters.  In  addition,  the U.S.  Coast  Guard  has
announced it intends to propose  similar  regulations  requiring  certain tanker
vessels to prepare response plans for the release of hazardous substances.

     Additional U.S. Environmental Requirements

The U.S.  Clean Air Act of 1970,  as amended by the Clean Air Act  Amendments of
1977 and 1990, or the CAA, requires the U.S. Environmental Protection Agency, or
EPA, to  promulgate  standards  applicable  to  emissions  of  volatile  organic
compounds and other air  contaminants.  Our vessels are subject to vapor control
and  recovery   requirements  for  certain  cargoes  when  loading,   unloading,
ballasting,  cleaning and conducting  other  operations in regulated port areas.
Our vessels  that  operate in such port areas are  equipped  with vapor  control
systems that satisfy these  requirements.  The CAA also requires states to draft
State  Implementation  Plans, or SIPs, designed to attain national  health-based
air quality standards in primarily major  metropolitan  and/or industrial areas.
Several SIPs  regulate  emissions  resulting  from vessel  loading and unloading
operations  by  requiring  the  installation  of  vapor  control  equipment.  As
indicated  above,  our  vessels  operating  in covered  port  areas are  already
equipped with vapor control systems that satisfy these requirements.  Although a
risk exists that new regulations could require significant capital  expenditures
and otherwise increase our costs, we believe, based on the regulations that have
been  proposed  to date,  that no material  capital  expenditures  beyond  those
currently  contemplated  and no  material  increase  in costs  are  likely to be
required.

The Clean Water Act, or the CWA,  prohibits  the  discharge  of oil or hazardous
substances  into navigable  waters and imposes  strict  liability in the form of
penalties  for any  unauthorized  discharges.  The CWA also imposes  substantial
liability for the costs of removal,  remediation and damages. State laws for the
control  of  water   pollution  also  provide   varying   civil,   criminal  and
administrative  penalties  in the case of a discharge  of petroleum or hazardous
materials into state waters.  The CWA complements  the remedies  available under
the more recent OPA and CERCLA,  discussed above.  Under current  regulations of
the EPA,  vessels are not  required to obtain CWA permits for the  discharge  of
ballast water in U.S. ports. However, as a result of a recent U.S. federal court
decision,  vessel owners and operators may be required to obtain CWA permits for
the discharge of ballast  water,  or they will face  penalties for failing to do
so. Although the EPA is likely to appeal this decision,  we do not know how this
matter  is  likely  to be  resolved  and we  cannot  assure  you that any  costs
associated with compliance with the CWA's  permitting  requirements  will not be
material to our results of operations.

The National  Invasive  Species Act, or NISA, was enacted in 1996 in response to
growing  reports of harmful  organisms  being  released into U.S.  ports through
ballast  water taken on by ships in foreign  ports.  NISA  established a ballast
water management program for ships entering U.S. waters.  Under NISA,  mid-ocean
ballast  water  exchange  is  voluntary,  except for ships  heading to the Great
Lakes,  Hudson Bay, or vessels  engaged in the foreign  export of Alaskan  North
Slope crude oil. However,  NISA's exporting and record-keeping  requirements are
mandatory for vessels bound for any port in the United States.  Although ballast
water  exchange is the primary  means of compliance  with the act's  guidelines,
compliance  can also be achieved  through the retention of ballast water onboard
the  ship,  or the  use  of  environmentally  sound  alternative  ballast  water
management  methods  approved by the U.S. Coast Guard. If the mid-ocean  ballast
exchange is made mandatory  throughout the United States,  or if water treatment
requirements or options are instituted,  the costs of compliance  could increase
for ocean carriers.

Our operations  occasionally generate and require the transportation,  treatment
and disposal of both hazardous and non-hazardous  wastes that are subject to the
requirements  of the U.S.  Resource  Conservation  and Recovery Act, or RCRA, or
comparable state, local or foreign requirements.  In addition, from time to time
we arrange for the  disposal  of  hazardous  waste or  hazardous  substances  at
offsite  disposal  facilities.  If such materials are improperly  disposed of by
third  parties,  we might  still be liable for clean up costs  under  applicable
laws.

Several of our vessels  currently carry cargoes to U.S. waters  regularly and we
believe  that  all of our  vessels  are  suitable  to meet  OPA and  other  U.S.
environmental  requirements  and that  they  would  also  qualify  for  trade if
chartered to serve U.S. ports.

     European Union Tanker Restrictions

In July 2003, the European  Union adopted  regulations  that  accelerate the IMO
single hull tanker  phase-out  timetable.  Under the regulation no oil tanker is
allowed to operate under a flag of a EU member state,  nor shall any oil tanker,
irrespective  of its flag, be allowed to enter into ports or offshore  terminals
under the jurisdiction of a EU member state after the anniversary of the date of
delivery of the ship in the year specified in the following  table,  unless such
tanker is a double hull oil tanker.

     ------------------------------     ------------------------------
     Category of Oil Tankers            Date or Year
     ------------------------------     ------------------------------

     Category  1  oil   tankers  of     2003 for  ships  delivered  in
     20,000 dwt and above  carrying     1980 or earlier
     crude  oil,  fuel  oil,  heavy     2004 for  ships  delivered  in
     diesel oil or lubricating  oil     1981
     as cargo,  and of  30,000  dwt     2005 for  ships  delivered  in
     and above carrying other oils,     1982 or later
     which do not  comply  with the
     requirements  for protectively
     located   segregated   ballast
     tanks

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

     Category  2 - oil  tankers  of     2003 for  ships  delivered  in
     20,000 dwt and above  carrying     1975 or earlier
     crude  oil,  fuel  oil,  heavy
     diesel oil or lubricating  oil     2004 for  ships  delivered  in
     as cargo,  and of  30,000  dwt     1976
     and above carrying other oils,
     which  do   comply   with  the     2005 for  ships  delivered  in
     protectively           located     1977
     segregated     ballast    tank
     requirements                       2006 for  ships  delivered  in
                                        1978 and 1979
     and
                                        2007 for  ships  delivered  in
     Category  3 - oil  tankers  of     1980 and 1981
     5,000  dwt and  above but less
     than the tonnage specified for     2008 for  ships  delivered  in
     Category 1 and 2 tankers.          1982

                                        2009 for  ships  delivered  in
                                        1983

                                        2010 for  ships  delivered  in
                                        1984 or later

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

Furthermore,  under the  regulation,  all oil  tankers of 5,000 dwt or less must
comply with the double hull  requirements no later than the anniversary  date of
delivery of the ship in the year 2008. The  regulation,  however,  provides that
oil tankers operated  exclusively in ports and inland navigation may be exempted
from the double hull  requirement  provided that they are duly  certified  under
inland water legislation.

The European Union, following the lead of certain European Union nations such as
Italy and Spain, as of October 2003, has also banned all single- hull tankers of
600 dwt and above carrying HGO, regardless of flag, from entering or leaving its
ports or  offshore  terminals  or  anchoring  in areas  under its  jurisdiction.
Commencing in 2005, certain single- hull tankers above 15 years of age will also
be  restricted  from  entering  or  leaving  European  Union  ports or  offshore
terminals and anchoring in areas under European Union jurisdiction.

The  European  Union  is  also  considering  legislation  that  would:  (1)  ban
manifestly  sub-standard  vessels  (defined as those over 15 years old that have
been  detained by port  authorities  at least twice in a six month  period) from
European  waters  and create an  obligation  of port  states to inspect  vessels
posing a high risk to maritime safety or the marine environment; and (2) provide
the  European  Union with  greater  authority  and control  over  classification
societies,  including  the ability to seek to suspend or revoke the authority of
negligent societies.  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.

Vessel Security Regulations

Since the terrorist  attacks of September 11, 2001, there have been a variety of
initiatives  intended to enhance  vessel  security.  On November 25,  2002,  the
Maritime  Transportation  Security Act of 2002,  or MTSA,  came into effect.  To
implement  certain  portions  of the MTSA,  in July 2003,  the U.S.  Coast Guard
issued regulations requiring the implementation of certain security requirements
aboard  vessels  operating in waters subject to the  jurisdiction  of the United
States.  Similarly, in December 2002, amendments to the International Convention
for the Safety of Life at Sea or SOLAS,  created a new chapter of the convention
dealing specifically with maritime security. The new chapter came into effect in
July 2004 and imposes various detailed security  obligations on vessels and port
authorities, most of which are contained in the newly created International Ship
and Port Facilities Security Code, or ISPS Code. Among the various  requirements
are:

     o    on-board  installation of automatic  information  systems,  or AIS, to
          enhance vessel-to-vessel and vessel-to-shore communications;

     o    on-board installation of ship security alert systems;

     o    the development of vessel security plans; and

     o    compliance with flag state security certification requirements.

The U.S. Coast Guard regulations,  intended to align with international maritime
security standards,  exempt non-U.S.  vessels from MTSA vessel security measures
provided  such  vessels  have  on  board  a valid  International  Ship  Security
Certificate  that  attests  to  the  vessel's  compliance  with  SOLAS  security
requirements  and the  ISPS  Code.  We have  implemented  the  various  security
measures addressed by the MTSA, SOLAS and the ISPS Code.

C.   ORGANIZATIONAL STRUCTURE

See Exhibit 8.1 for a list of our subsidiaries.

D.   PROPERTY, PLANT AND EQUIPMENT

We  operate  a modern  fleet of five  tankers.  The  Vessels  meet all  material
existing regulatory requirements affecting the Vessels and their operations. The
name, dwt, hull type, flag and date of original delivery from the Builder's yard
are set forth below.

                Approximate
Vessel name     dwt             Hull type     Flag                 Year Built

Camden          298,000         Double        Marshall Islands     1995
Chelsea         298,000         Double        Marshall Islands     1995
Mayfair         298,000         Double        Marshall Islands     1995
TI Qingdao      298,000         Double        Marshall Islands     1995
TI Ningbo       298,000         Double        Marshall Islands     1996

The Vessels are modern,  high-quality  double hull tankers designed for enhanced
safety and reliability.

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

ITEM 4A.  UNRESOLVED STAFF COMMENTS

None


ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Operating Results

Overview

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

In February 1997, the Company's  five Original  Subsidiaries  each purchased one
VLCC.  From their  purchase  in  February  1997 until  March  2004,  the Company
chartered the Vessels to Shell  International on long-term "hell and high water"
bareboat charters (the  "Charters").  The Charters expired for all five Vessels,
in accordance with their terms,  in March 2004 and the Vessels were  redelivered
to the Company.  Following the  redelivery,  the Company has entered into a five
year time charter for one of the Vessels while two of the Company's Vessels have
each been  time  chartered  for a period  of three  years  each.  The  Company's
remaining  two  Vessels  are  trading  on the spot  market  and since the second
quarter of 2005 have participated in a pooling arrangement with Frontline.

The daily  charterhire rate payable by Shell  International was 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) that would 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,  representing  daily  operating  costs over the Base Rate. The current
five year time charter agreement  provides revenue of approximately  $31,000 per
day for the duration of the charter,  while the three year time charters provide
a rate of $30,000 per day plus a 50:50 profit sharing  arrangement  for earnings
in excess of $30,000 per day calculated by reference to the Baltic International
Trading Route, or BITR, Index.

The calculated  spot market related rates for the period up until the redelivery
of the  Vessels  in 2004,  and for the year ended  December  31,  2003,  were as
follows:

(in $ per day)              2004              2003
First Quarter             90,513            61,713
Second Quarter                 -            53,186
Third Quarter                  -            25,063
Fourth Quarter                 -            59,688


Factors Affecting Our 2005 and Future Results

The  principal  factors that have  affected our 2005 results of  operations  and
financial  position and are expected to affect our future  results of operations
and financial position include:

     o    the earnings of our vessels in the charter market;

     o    vessel operating expenses including drydocking;

     o    administrative expenses;

     o    depreciation; and

     o    interest expense.


Prior to March 2004, we derived our  historical  earnings from the Charters with
Shell  International.  In the future our Vessels may be operated  under bareboat
charters,  time  charters,  voyage  charters and contracts of  affreightment.  A
bareboat charter is a contract for the use of a vessel for a specified period of
time where the charterer pays  substantially  all of the vessel voyage costs and
operating  costs.  A time  charter is a  contract  for the use of a vessel for a
specific period of time during which the charterer pays substantially all of the
vessel  voyage costs but the vessel  owner pays the  operating  costs.  A voyage
charter is a contract for the use of a vessel for a specific voyage in which the
vessel owner pays  substantially  all of the vessel  voyage costs and  operating
costs.  A contract  of  affreightment  is a form of voyage  charter in which the
owner  agrees  to carry a  specific  type and  quantity  of cargo in two or more
shipments   over  an  agreed  period  of  time.   Accordingly,   for  equivalent
profitability,  charter income under a voyage charter would be greater than that
under a time charter to take account of the owner's payment of the vessel voyage
costs. In order to compare vessels trading under different types of charters, it
is standard industry practice to measure the revenue  performance of a vessel in
terms of average daily time charter  equivalent  earnings,  or TCEs.  For voyage
charters, this is calculated by dividing net operating revenues by the number of
days  on  charter.   Days  spent  technical   offhire  are  excluded  from  this
calculation.

The  tanker  industry  has  historically  been  highly  cyclical,   experiencing
volatility in  profitability,  vessel values and freight  rates.  In particular,
freight  and  charter  rates are  strongly  influenced  by the  supply of tanker
vessels and the demand for oil transportation  services.  We are exposed to such
volatility  with our  Vessels  operating  on the spot  market and it affects the
profit sharing arrangement that we have for our Vessels on time charter.

Operating  costs are the  direct  costs  associated  with  running a vessel  and
include  crew costs,  vessel  supplies,  repairs and  maintenance,  drydockings,
lubricating oils and insurance. We bear the operating costs for our Vessels that
are  operating on the spot market and for the three Vessels that have been fixed
under time charters.

Administrative  expenses are composed of general  corporate  overhead  expenses,
including audit fees,  directors fees and expenses,  registrars  fees,  investor
relations  and  publication  expenses,  legal  and  professional  fees and other
general administrative expenses.

Depreciation,  or the periodic  cost charged to our income for the  reduction in
usefulness and long-term value of our vessels,  is also related to the number of
vessels we own. We  depreciate  the cost of our  vessels,  less their  estimated
residual value, over their estimated useful life on a straight-line basis.

Interest  expense depends on our overall  borrowing  levels and will change with
prevailing  interest rates,  although the effect of these changes may be reduced
by interest rate swaps or other derivative instruments. As at December 31, 2005,
all of our debt was floating  rate debt.  We may enter into  interest  rate swap
arrangements if we believe it is advantageous to do so.

Although  inflation  may have an impact on our  vessel  operating  expenses  and
corporate overheads,  management does not consider inflation to be a significant
risk to direct costs in the current and  foreseeable  economic  environment.  In
addition,  in a shipping  downturn,  costs  subject to inflation  can usually be
controlled  because  shipping  companies  typically  monitor  costs to  preserve
liquidity  and  encourage  suppliers  and service  providers  to lower rates and
prices in the event of a downturn.

Market Overview

For the third year in a row the tanker market was very profitable,  even if 2005
could not compete with 2004.  The extreme  volatility  witnessed in rates during
2004 was experienced to a smaller extent in 2005. According to industry reports,
the TCEs for a modern VLCC ranged  between  lows of $24,000 per day and highs of
$130,000 in 2005.

Lack of spare oil  production  capacity  drove crude oil prices to above $70 per
barrel and dampened the extremely  strong growth in oil  consumption of close to
4.0 per  cent in 2004 to 1.3 per  cent in 2005  according  to the  International
Energy Agency  ("IEA").  China  continued its rapid economic growth in 2005 with
GDP increasing 9.8 per cent though its annual growth in oil demand was down from
15.4 per cent in 2004 to 2.4 per cent in 2005. The  hurricanes  Katrina and Rita
which hit the U.S.  Gulf in August  and  September  were each among the top five
most  powerful  storms of all time and lead to damages to  production  platforms
which caused additional  ton-miles for the last quarter of 2005. It is estimated
that  hurricanes  reduced U.S.  production by 0.4 million barrels per day, as an
average over the year.  Geopolitical tension in Nigeria,  Venezuela,  Iraq, Iran
and other  parts of the Middle  East seems to have had  limited  effect on their
production as OPEC members  increased  their  production by 3.2 per cent in 2005
compared to total world supply which increased 1.3 per cent.

The world VLCC fleet  increased  by 4.7 per cent in 2005 from 444 vessels to 465
vessels.  Only one VLCC was scrapped during 2005 while eight were  converted.  A
total of 30 VLCCs were delivered during the year. The total order book for VLCCs
was at 92 vessels at the end of 2005, of which 35 were ordered  during the year.
The order book at the year end 2005 for VLCCs  represented  19.8 per cent of the
existing fleet.

A summary of average TCEs for our fleet is as follows:

(in $ per day)       2005       2004       2003       2002       2001
VLCCs              47,111     68,698     51,731     32,569     44,217

Net voyage revenues, a non-GAAP measure, provides more meaningful information to
us than voyage revenues,  the most directly comparable GAAP measure.  Net voyage
revenues are also widely used by investors  and analysts in the tanker  shipping
industry for comparing  financial  performance between companies and to industry
averages.  The  following  table  reconciles  our net voyage  revenues to voyage
revenues in 2005 and 2004.

(in thousands of $)                       2005       2004
Voyage revenues                         57,854     63,812
Voyage expenses and commission          16,459     14,240
----------------------------------------------------------
Net voyage revenues                     41,395     49,572
----------------------------------------------------------

Critical Accounting Policies and Estimates

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

Revenue Recognition

Revenues are generated from freight billings,  time charter and bareboat charter
hires.  Time charter and bareboat charter revenues are recorded over the term of
the charter as service is  provided.  Under a voyage  charter the  revenues  and
associated voyage costs are recognized  rateably over the estimated  duration of
the voyage. The operating results of voyages in progress at a reporting date are
estimated and recognized pro-rata on a per day basis. Probable losses on voyages
are  provided  for in full at the time such  losses  can be  estimated.  Amounts
receivable or payable arising from profit sharing arrangements are accrued based
on the estimated results of the voyage recorded as at the reporting date.

Vessels, Depreciation and Impairment

Prior to the  termination of the capital leases with the UK Lessor,  the cost of
our  Vessels  were  depreciated  on a  straight-line  basis  over  the  Vessels'
remaining economic useful lives. When the capital leases were terminated and the
Vessels  were  transferred  to new wholly owned  subsidiaries,  our estimate for
depreciation  was revised to include an estimate for the  residual  value of the
Vessels at the end of their useful life. As a result,  the Vessels are now being
depreciated based on cost less estimated  residual value over their useful life.
Management  estimates the useful life of the  Company's  Vessels to be 25 years.
This is a common  life  expectancy  applied  in the  shipping  industry.  If the
estimated  economic useful life is incorrect,  or  circumstances  change and the
estimated  economic  useful life has to be  revised,  an  impairment  loss could
result in future periods and/or annual depreciation  expense could be increased.
Our  Vessels  are  reviewed  for  impairment   whenever  events  or  changes  in
circumstances  indicate  that  their  carrying  amount  may not be  recoverable.
Factors we  consider  important  that could  affect  recoverability  and trigger
impairment include significant  underperformance  relative to expected operating
results,  new regulations that change the estimated useful economic lives of our
Vessels and significant  negative  industry or economic trends. In assessing the
recoverability  of the Vessels' carrying amounts when an indicator of impairment
is present,  we must make  assumptions  regarding  estimated  future cash flows.
These assumptions  include  assumptions about the spot market rates for Vessels,
the  revenues  the  Vessel  could earn under  time  charter,  voyage  charter or
bareboat charter,  the operating costs of our Vessels and the estimated economic
useful life of our Vessels.  In making these assumptions,  the Company refers to
historical  trends and performance as well as any known future  factors.  If our
review  indicates  impairment,  an impairment  charge is recognized based on the
difference  between  carrying  value and fair  value.  Fair  value is  typically
established using an average of three independent valuations.

Recently Issued Accounting Standards

In December  2004, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial Accounting Standards 153 Exchanges of Nonmonetary Assets,
an amendment of APB Opinion No. 29 ("SFAS  153").  APB Opinion No. 29 Accounting
for Nonmonetary Transactions ("APB 29") provides that accounting for nonmonetary
transactions  should be measured based on the fair value of the assets exchanged
but  allows  certain  exceptions  to this  principle.  SFAS 153 amends APB 29 to
eliminate the exception for nonmonetary  exchanges of similar  productive assets
and replaces it with a general  exception  for exchanges of  nonmonetary  assets
that don't have  commercial  substance.  A nonmonetary  exchange has  commercial
substance  if the  future  cash  flows of the  entity  are  expected  to  change
significantly as a result of the exchange. SFAS 153 is effective for nonmonetary
asset  exchanges  occurring in fiscal periods  beginning after June 15, 2005 and
shall  be  applied  prospectively.  Adoption  of SFAS 153 has not  affected  the
Company's results to date.

In May 2005,  the FASB issued  Statement of Financial  Accounting  Standards 154
Accounting  Changes and Error  Corrections,  a replacement of APB Opinion No. 20
and FAS 3 ("SFAS 154"). SFAS 154 replaces APB Opinion No. 20 Accounting  Changes
and  FAS  3  Reporting  Accounting  Changes  in  Interim  Financial  Statements.
Previously,  most changes in accounting  principle were  recognised by including
the cumulative effect of changing to the new accounting  principle in net income
for the period of the change. SFAS 154 requires  retrospective  application of a
change in accounting  principle to prior periods unless it is  impracticable  to
determine  either the  period-specific  effects or the cumulative  effect of the
change to any period.  When it is impracticable to determine the period-specific
effects of an  accounting  change,  SFAS 154  requires  that the new  accounting
principle  be  applied  to the  balances  of assets  and  liabilities  as of the
beginning  of  the  earliest  period  for  which  retrospective  application  is
practicable and that a  corresponding  adjustment be made to the opening balance
of retained earnings (or other  appropriate  components of equity or net assets)
for that period rather than being reported in an income  statement.  SFAS 154 is
applicable for all  accounting  changes and  corrections of errors  occurring in
fiscal years  beginning after December 15, 2005. The Company will apply SFAS 154
from January 1, 2006 on a prospective basis as required.

Results of Operations

Year ended December 31, 2005 compared with year ended December 31, 2004

Operating revenues

(in thousands of $)                        2005           2004         Change
Time charter revenues                    42,325         42,113           0.5%
Bareboat charter revenues                     -         29,770            n/a
Voyage charter revenues                  57,854         63,812        (9.3) %
------------------------------------------------------------------------------
Total operating revenues                100,179        135,695        (26.2)%
------------------------------------------------------------------------------

In March 2004, our long-term bareboat Charters with Shell International  expired
and the Vessels  commenced trading under new employment  regimes.  Following the
expiration  of the  Charters,  three of our Vessels have been  contracted  under
medium-term  time  charters,  two of which include market related profit sharing
arrangements  and the  remaining  two Vessels are trading in the spot market and
have been participating in a pooling  arrangement with two similar vessels since
the second  quarter of 2005.  Under the pooling  agreement  revenues  and voyage
expenses  of the  vessels  operating  in pool  arrangements  are  pooled and the
resulting net pool revenues,  calculated on a time charter equivalent basis, are
allocated to the pool participants according to an agreed formula. Pool revenues
of $36.8 are included in voyage charter revenues for the year ended December 31,
2005.

The decrease in total operating revenues in 2005 compared to 2004 is a result of
a combination of the new  employment  regimes for our Vessels and the lower spot
market rates  experienced  by the  industry.  The  decrease in bareboat  charter
revenue from 2004 is explained by the  expiration of the Charters.  Time charter
revenues were stable and reflect a full year of trading for three of our Vessels
in 2005,  compared with only nine months in 2004, offset by lower profit sharing
revenues in 2005 due to the weaker spot market.  The decrease in voyage  charter
revenues  in 2005 also  reflects a full years  trading  for two of our  Vessels,
offset by the weaker spot market.

Operating expenses

(in thousands of $)                       2005            2004          Change
Voyage expenses and commission          16,459          14,240           15.6%
Ship operating expenses                 17,211           9,868           74.4%
Administrative expenses                    988           1,114         (11.3)%
Depreciation                            17,120          17,219          (0.6)%
-------------------------------------------------------------------------------
Total operating expenses                51,778          42,441           22.0%
-------------------------------------------------------------------------------

The two  Vessels  that trade in the spot market  generated  94.1 per cent of the
voyage expenses and commission as  substantially  all of the vessel voyage costs
associated  with time charters are covered by the charterer.  Under the bareboat
charters  that ended March  2004,  all ship  operating  costs were paid by Shell
International.  Following the  redelivery of the Vessels we are now  responsible
for the Vessels' operating expenses.  The increase in ship operating expenses in
2005 is a result of a full year of expenses in 2005,  compared  with nine months
in 2004,  plus the fact that four of our five Vessels were drydocked in 2005. In
addition to direct  drydocking costs of approximately  $2.2 million,  additional
repairs  and  maintenance  costs of $3.1  million  were  incurred  during  these
drydocking.

In 2005, the decrease in administration  costs relates to shareholder and public
relations  and legal fees  which  were high in 2004 due to the costs  associated
with the termination of the Charters and shareholder  meetings.  The significant
portions of administration  costs for the Company are directors' fees, directors
and officers  insurance,  shareholder and public relations,  management fees and
audit fees.

Interest income and expenses

(in thousands of $)                     2005            2004          Change
Interest income                          959             449          113.6%
Interest expense                      (5,310)         (7,877)         (32.6)%
-----------------------------------------------------------------------------
Net interest expense                  (4,351)         (7,428)         (41.4)%
-----------------------------------------------------------------------------

The  significant  increase  in  interest  income  during 2005 is a result of the
increased  use of short term  deposits  as a result of strong cash flows in late
2004 and early 2005. Since March 2004 the Company has not paid out all available
cash as dividends, as cash reserves are being held to fund future operations.

Interest  expense  consists of interest  paid in relation to the $140.0  million
loan facility,  swap interest expense and the amortization of deferred financing
charges  incurred in connection with the debt. The decrease in interest  expense
in 2005 is primarily  due to the  expiration  of an interest rate swap in August
2004 which had effectively  fixed interest at a rate of 6.74 per cent per annum.
Swap interest expense was $4.5 million in 2004. Following the expiration of this
swap our debt is all  floating  rate at LIBOR plus a margin.  The benefit of the
expiration  of the  swap has  been  partially  offset  as  LIBOR  has  gradually
increased during 2005. In 2005 loan interest was calculated at a rate of LIBOR +
one per cent margin up to March 30, 2005 and the debt was  renegotiated to LIBOR
+ 0.7 per cent for periods thereafter.

Year ended December 31, 2004 compared with year ended December 31, 2003

Operating revenues

(in thousands of $)                     2004            2003          Change
Time charter revenues                 42,113               -             n/a
Bareboat charter revenues             29,770          75,246         (60.4)%
Voyage charter revenues               63,812               -             n/a
-----------------------------------------------------------------------------
Total operating revenues             135,695          75,246           52.6%
-----------------------------------------------------------------------------


Total operating revenues increased significantly in 2004 as a result of the very
strong tanker market compared to 2003. The decrease in bareboat  charter revenue
from  2003 is  explained  by the  expiration  of the  Charters  in  March  2004.
Following  the  expiration  of the  Charters,  our two Vessels  operating  under
medium-term   time  charters   which  include   market  related  profit  sharing
arrangements  and the two Vessels trading in the spot market  benefited from the
strong  market and this is  reflected in both time  charters and voyage  charter
revenues.

Operating expenses

(in thousands of $)                     2004            2003          Change
Voyage expenses and commission        14,240               -             n/a
Ship operating expenses                9,868               -             n/a
Administrative expenses                1,114             864           28.9%
Depreciation                          17,219          17,593          (2.1)%
-----------------------------------------------------------------------------
Total operating expenses              42,441          18,457          129.9%
-----------------------------------------------------------------------------

The two Vessels  trading in the spot market in 2004  accounted for 83.7 per cent
of the voyage expenses and commission. Ship operating expenses increased in 2004
due the Vessels new employment  regime  following the expiration of the Charters
and the Company becoming responsible for payment of operating expenses.

In February 2004 we amended our agreement  with the Manager.  The management fee
was reduced to $0.63 million per annum from $0.75 million per annum.  We are now
responsible to pay for our administrative expenses, which in years prior to 2004
these were covered by the Manager. Of the $0.63 million, 39 per cent is included
in administrative expenses while the remainder is classified as a ship operating
expense.  In  2004  we  incurred  administration  costs  related  to  insurance,
directors' fees,  shareholder and public  relations,  legal fees, audit fees and
other professional  services.  The significant  portion of administration  costs
relates to directors'  fees,  shareholder and public  relations,  and management
fees at $0.19, $0.55, and $0.28 million respectively.

In March 2004, the capital leases were  terminated and Vessels were  transferred
to new vessel owning subsidiaries and classified as owned vessels.  Depreciation
for owned  vessels  is  calculated  based on the  stated  costs  less  estimated
residual  value  on a  straight-line  basis  over  the  estimated  useful  life.
Depreciation  for vessels under capital lease was calculated based on the stated
costs on a straight-line basis over the estimated useful life.

Interest income and expenses

(in thousands of $)                  2004            2003          Change
Interest income                       449              55            716%
Interest expense                  (7,877)         (9,334)         (15.6)%
--------------------------------------------------------------------------
Net interest expense              (7,248)         (9,279)         (21.9)%
--------------------------------------------------------------------------

The increase in interest  income in 2004 reflects the increased  cash balance in
2004 due to the increase in operating  revenues in the year and the higher level
of cash reserves being retained by the Company to fund operations.

Interest expense consists of interest paid in relation to the primary loans made
to us under the Credit  Facility  net of the  hedging  effects of the  Company's
interest  rate swap  agreement,  interest  paid in  relation  to the new  $140.0
million loan facility,  and also the amortisation of deferred  financing charges
incurred in connection with the drawdown of debt.  Interest expense decreased in
2004 with the refinancing of the $125.4 million Credit Facility and the maturity
of the interest rate swap which effectively fixed interest at a rate of 6.74 per
cent per annum.  Under the new $140.0  million  loan  facility,  in 2004 we paid
interest at a rate of LIBOR + one per cent margin.

Liquidity and Capital Resources

The  Company  operates  in a capital  intensive  industry  and has  historically
financed its purchase of tankers  through a  combination  of equity  capital and
borrowings from commercial banks. Our ability to generate adequate cash flows on
a short and medium term basis depends  substantially on the trading  performance
of our Vessels in the market. Market rates for charters of our Vessels have been
volatile historically.  Periodic adjustments to the supply of and demand for oil
tankers  causes the  industry  to be  cyclical  in nature.  We expect  continued
volatility  in market  rates for our  Vessels in the  foreseeable  future with a
consequent effect on our short and medium term liquidity.

During the term of the Charters, the Company had fixed base rate charterhire for
all of its  Vessels.  In each  quarter  where the spot market  related  rate was
higher than the base rate,  the spot market  related rate was paid.  The Company
had a fixed  management  fee  and its  administrative  expenses  were  comprised
principally  of  directors'  and  officers'  liability  insurance.  Due  to  the
expiration of the Charters and the change in the  Company's  operations in 2004,
the Company's  revenues are more exposed to fluctuations in earnings in the spot
market.  These  fluctuations  may  increase  or  decrease  revenues  compared to
revenues  under the Charters  depending on prevailing  spot market  rates.  This
applies to the two Vessels  trading in the spot market and the two Vessels  that
are on medium term time charters that include 50:50 profit sharing  arrangements
for  earnings in excess of $30,000 per day  calculated  by reference to the BITR
Index.

The Company's  operating expenses have increased following the expiration of the
Charters in early 2004 as vessel operating  expenses are now the  responsibility
of the Company.  Administrative  expenses have also increased  since  accordance
with the  terms of the  Company's  Management  Agreement  with the  Manager,  as
amended, the Company became responsible for such costs from February 1, 2004.

At December 31, 2005 we estimated the cash  breakeven  average daily TCE rate of
$18,723 for our VLCCs.  This  represents the daily rate our Vessels must earn to
cover  payment of budgeted  operating  costs  (including  corporate  overheads),
estimated interest and scheduled loan principal  repayments.  These rates do not
take into  account  loan balloon  repayments  at maturity.  Based on the current
strength of the tanker  market,  the Company  believes  that working  capital is
sufficient for the Company's present requirements.

Short-term  liquidity  requirements of the Company relate to servicing our debt,
payment of operating costs, funding working capital requirements and maintaining
cash  reserves  against   fluctuations  in  operating  cash  flows.  Sources  of
short-term liquidity include cash balances, restricted cash balances, short-term
investments  and receipts  from our  customers.  Revenues from time charters are
generally  received monthly or fortnightly in advance while revenues from voyage
charters are received upon completion of the voyage.

The Company's  funding and treasury  activities are conducted  within  corporate
policies to maximize investment returns while maintaining  appropriate liquidity
for the Company's requirements.  Cash and cash equivalents are held primarily in
U.S. dollars.

Long-term liquidity  requirements of the Company include funding the replacement
of Vessels and the repayment of long-term debt balances.  The Company's  sources
of capital have been the proceeds of its initial public offering, bank loans and
the finance leases. The Company has had sufficient sources of income through the
payment of charterhire by Shell International during the term of the Charters to
pay  ordinary  recurring  expenses  that are not  borne by the  Manager  and the
Company  expects that  charterhire  paid for time charters or in the spot market
now that the Charters have expired will be sufficient  sources of income for the
Company to continue to pay ordinary recurring  expenses  including  installments
due under  the Loan  Agreement.  However,  there  can be no  assurance  that the
Company will be able to pay or refinance  its  borrowings  when the Loan becomes
due, or that it will not incur extraordinary expenses.

As of  December  31,  2005,  2004,  and  2003,  the  Company  had  cash and cash
equivalents of $12.6 million, $31.7 million and $6.3 million,  respectively.  As
of December 31, 2005,  2004, and 2003, the Company had restricted  cash balances
of $10.0  million,  $10.0 million and $nil  respectively.  The  restricted  cash
balance is a result of a minimum  liquidity  balance  which we are  required  to
maintain at all times in  conjunction  with our new $140.0 million loan facility
with the Royal Bank of Scotland.

During the year ended  December  31, 2005 we paid total cash  dividends of $77.8
million.  In the first quarter of 2006, we declared a cash dividend of $1.00 per
share for a total cash payment of $17.1 million.

In March 2004, the Company refinanced its Credit Facility of $125.4 million with
the Loan of $140.0  million,  incurring  expenses  of $0.01  million on the debt
extinguishment.  The Credit Facility did not have principal installments and was
due for  repayment in its entirety in August 2004.  At the time of entering into
the Credit  Facility,  the Company  entered into an interest rate swap agreement
that provided for a fixed rate payment of 6.74% on notional  principal of $125.4
million,  which  matured in August  2004.  The Company is obligated to repay the
Loan  in  twenty-eight  quarterly  installments  of  $2.8  million  and a  final
installment  of $61.6  million  on the last  payment  date.  The Loan  Agreement
provides  for payment of interest on the  outstanding  principal  balance of the
Loan,  quarterly  in  arrears at the  annual  rate of LIBOR  plus a margin.  The
Company has not entered into any interest rate swap agreements in respect to the
variable rate on the Loan Agreement.

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 revenues 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.

Tabular disclosure of contractual obligations

At December 31 2005, the Company had the following contractual obligations:

<TABLE>
<CAPTION>
                                                                Payment due by period
                                      Less than 1
                                              year   1 - 3 years    3 - 5 years    After 5 years      Total
                                     -------------  -------------  -------------  ---------------  -----------
<S>                                        <C>            <C>            <C>              <C>         <C>
(In thousands of $)
Long-term debt obligations                 11,200         22,400         22,400           64,400      120,400
                                     -------------  -------------  -------------  ---------------  -----------
Total contractual cash obligations         11,200         22,400         22,400           64,400      120,400
                                     -------------  -------------  -------------  ---------------  -----------
</TABLE>

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 the Company.

The Company

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

Ola Lorentzon         56    Director and Chairman
Tor Olav Tr0im        43    Director, Chief Executive Officer and Vice-Chairman
Douglas C. Wolcott    74    Director and Audit Committee member
David M. White        65    Director and Audit Committee Chairman
Timothy J. Counsell   47    Director
Kate Blankenship      41    Chief Financial Officer and Secretary

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

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

Kate Blankenship      41    Director and Chairman
Inger M. Klemp        43    Director and Vice-Chairman
Cora Lee Starzomski   33    Director
Oscar Spieler         45    Chief Executive Officer of Frontline Management AS

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  is also a  director  of  Consafe
Offshore  AB and Erik  Thun AB.  Mr.  Lorentzon  was the  Managing  Director  of
Frontline  Management  AS, a  subsidiary  of  Frontline,  from  April 2000 until
September  2003. Mr.  Lorentzon was a director of the United Kingdom  Protection
and Indemnity  Club until 2002.  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 Tr0im has been a director, Vice-Chairman and Chief Executive Officer of
the Company since May 26, 2000. Mr. Tr0im has been a director of Frontline since
July 1, 1996.  Since May 2001,  Mr.  Tr0im has served as a director of Golar LNG
Limited,  a Bermuda  company  listed on the Oslo Stock  Exchange  and the NASDAQ
National  Market.  He is a director of Aktiv Inkasso ASA, a Norwegian Oslo Stock
Exchange  listed  company,  and Golden Ocean Group  Limited,  a Bermuda  company
listed on the Oslo Stock  Exchange.  He is also Chief  Executive  Officer  and a
director of Ship Finance  International  Limited a Bermuda company listed on the
New York Stock Exchange and is a director of SeaDrill Limited, a Bermuda company
listed on the Oslo Stock  Exchange.  Prior to his service with  Frontline,  from
January 1992, Mr. Tr0im served as Managing Director and a member of the board of
Directors of DNO AS, a Norwegian oil company.

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.

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. Mr.
Counsell  is a partner of the law firm of  Appleby  Spurling  Hunter,  Bermudian
counsel to the Company and has been with that firm since 1990.

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.  Mrs.  Blankenship
served as the Chief Accounting  Officer and Secretary of Frontline  between 1994
and  October  2005.  Mrs.  Blankenship  also  serves as a director  of Golar LNG
Limited, Ship Finance International  Limited,  SeaDrill Limited and Golden Ocean
Group  Limited.  She is a member of the  Institute of Chartered  Accountants  in
England and Wales.

Inger M. Klemp has served as Chief Financial Officer of Frontline  Management AS
since June 1, 2006. Mrs. Klemp has served as Vice President  Finance from August
2001  until she was  promoted.  From 1992 to 2001 Mrs.  Klemp  served in various
positions in Color Group ASA, a Norwegian  cruise ferry  operator.  From 1989 to
1992 Mrs.  Klemp  served as  Assistant  Vice  President in Nordea Bank Norge ASA
(previously Christiania Bank).

Cora Lee  Starzomski has been a director of the Manager since December 2004. Ms.
Starzomski is a Chief  Accountant  with  Frontline  having joined the company in
November  2001.  She is a member of the  Institute of Chartered  Accountants  in
Canada.

Oscar Spieler has served as Chief Executive  Officer of Frontline  Management AS
since  October 2003,  and prior to that time as Technical  Director of Frontline
Management AS since November  1999.  From 1995 until 1999, Mr. Spieler served as
Fleet Manager for Bergesen,  a major  Norwegian gas tanker and VLCC owner.  From
1986 to 1995, Mr. Spieler worked with the Norwegian  classification society DNV,
working both with shipping and offshore assets.

B.   COMPENSATION

The Company incurred directors' fees for 2005 of $255,000 in aggregate. In 2004,
the Company  incurred  directors'  fees of $190,000  in  aggregate.  No separate
compensation was paid to the Company's officers.

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.

Board practices and exemptions from Nasdaq corporate governance rules

We have  certified  to Nasdaq that our  corporate  governance  practices  are in
compliance with, and are not prohibited by, the laws of Bermuda.  Therefore,  we
are exempt from many of Nasdaq's corporate  governance  practices other than the
requirements  regarding  the  disclosure  of  a  going  concern  audit  opinion,
submission of a listing agreement,  notification of material non-compliance with
Nasdaq corporate  governance  practices and the establishment and composition of
an audit committee and a formal written audit committee  charter.  The practices
that we follow in lieu of Nasdaq's corporate governance rules are as follows:

     o    Our  board of  directors  is  currently  comprised  by a  majority  of
          independent directors.  Under Bermuda law, we are not required to have
          a majority of independent directors and cannot assure you that we will
          continue to do so.

     o    In  lieu  of  holding  regular  meetings  at  which  only  independent
          directors are present,  our entire board of directors may hold regular
          meetings as is consistent with Bermuda law.

     o    In  lieu  of  an  audit  committee   comprised  of  three  independent
          directors,  our audit  committee has two members,  which is consistent
          with Bermuda law. Both members of the audit  committee  currently meet
          the Nasdaq requirement of independence.

     o    In lieu of a nomination committee comprised of independent  directors,
          our board of directors is responsible for identifying and recommending
          potential   candidates  to  become  board  members  and   recommending
          directors for  appointment  to board  committees.  There is nothing to
          prohibit   Shareholders   identifying   and   recommending   potential
          candidates  to become board  members,  but  pursuant to the  bye-laws,
          directors are elected by the  shareholders  in duly convened annual or
          special general meetings.

     o    In  lieu  of  a  compensation   committee   comprised  of  independent
          directors,  our board of directors is responsible for establishing the
          executive  officers'  compensation  and  benefits.  Under Bermuda law,
          compensation  of  the  executive   officers  is  not  required  to  be
          determined by an independent committee.

     o    In  lieu  of  obtaining  an   independent   review  of  related  party
          transactions  for conflicts of interests,  consistent with Bermuda law
          requirements,  our bye-laws do not prohibit any director  from being a
          party to, or otherwise  interested in, any  transaction or arrangement
          with the  Company  or in which the  Company is  otherwise  interested,
          provided that the director makes proper disclosure of same as required
          by the bye-laws and Bermuda law.

     o    Prior to the  issuance of  securities,  we are  required to obtain the
          consent of the Bermuda Monetary  Authority as required by Bermuda law.
          We have obtained blanket consent from the Bermuda  Monetary  Authority
          for the issue and transfer of the Company's  securities  provided that
          such securities remain listed.

     o    Pursuant to Nasdaq corporate governance rules and as a foreign private
          issuer,  we are not  required  to solicit  proxies  or  provide  proxy
          statements  to Nasdaq.  Bermuda law does not  require  that we solicit
          proxies or provide proxy statements to Nasdaq. Consistent with Bermuda
          law and as provided in our  bye-laws,  we are also  required to notify
          our  shareholders  of meetings no less than 5 days before the meeting.
          Our bye-laws also provide that  shareholders  may designate a proxy to
          act on their behalf.

Other than as noted above, we are in full  compliance with all other  applicable
Nasdaq corporate governance standards.

D.   EMPLOYEES

The  Company  has  not had any  employees  since  inception  as the  Manager  is
responsible for the management and administration of the Company.

E.   SHARE OWNERSHIP

As of June 1, 2006,  none of the  directors or officers of the Company owned any
Common Shares of the Company.

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

The  Company  is not aware of any person who owns more than five per cent of the
Company's outstanding common shares as of June 1, 2006.

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

Prior to the  termination  of the  Charters,  the  Company's  policy  was 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.  Subsequent to the
redelivery of our Vessels from Shell  International,  our policy continues to be
to make quarterly  distributions to shareholders based on the Company's earnings
and cash flow. These  distributions are expected to be a minimum of $1.00 dollar
per share per year.  However,  the amount and timing of dividends will depend on
the  Company's  earnings,   financial  condition,  cash  position,  Bermuda  law
affecting the payment of distributions and other factors. The Company may not be
able to make  distributions  in quarters  where  earnings are low and where cash
flow is insufficient. The Company's financing may also restrict distributions in
certain circumstances.

There can be no  assurance  that the Company will not have  expenses,  including
extraordinary  expenses,  which  could  include  costs  of  claims  and  related
litigation expenses 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  Republic  of  Liberia  (the  jurisdiction  of
organization of the New  Subsidiaries)  or the Republic of the Marshall  Islands
(the jurisdiction in which the Vessels are registered).

In  2005,  2004 and  2003,  the  Company  paid the  following  distributions  to
shareholders.

RECORD DATE                PAYMENT DATE               AMOUNT PER SHARE

2005
February 14, 2005          March 11, 2005                 $1.75
May 17, 2005               June 1, 2005                   $1.50
August 12, 2005            September 6, 2005              $0.80
November 11, 2005          December 5, 2005               $0.50

2004
January 23, 2004           February 10, 2004              $0.80
May 24, 2004               June 7, 2004                   $2.00
August 13, 2004            August 27, 2004                $0.75
November 15, 2004          November 29, 2004              $1.00

2003
January 27, 2003           February 7, 2003               $0.45
April 25, 2003             May 8, 2003                    $1.19
July 25, 2003              August 8, 2003                 $0.65
October 25, 2003           November 10, 2003              $0.45

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 five most recent  fiscal years 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.

FISCAL YEAR ENDED DECEMBER 31              HIGH                         LOW

2005                                     $47.50                      $23.76
2004                                     $39.25                      $12.52
2003                                     $17.56                       $8.45
2002                                     $18.85                      $11.51
2001                                     $27.80                      $14.32

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.

FISCAL YEAR ENDED DECEMBER 31, 2005        HIGH                         LOW

First quarter                            $41.74                      $28.00
Second quarter                           $47.50                      $35.98
Third quarter                            $43.37                      $35.95
Fourth quarter                           $37.05                      $23.76

FISCAL YEAR ENDED DECEMBER 31, 2004        HIGH                         LOW

First quarter                            $21.29                      $12.52
Second quarter                           $29.67                      $16.65
Third quarter                            $33.26                      $24.50
Fourth quarter                           $39.25                      $29.06


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.

Month                                      HIGH                         LOW

May 2006                                 $27.02                      $22.50
April 2006                               $28.80                      $24.53
March 2006                               $26.55                      $23.98
February 2006                            $28.29                      $25.00
January 2006                             $26.90                      $23.90
December 2005                            $29.91                      $23.76


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).

At the 2005 Annual  General  Meeting of the Company  the  shareholders  voted to
amend the Company's Bye-Laws 83 and 85 by removing the restrictions that limited
the  Company's  business  activities.   The  changes  to  the  Bye-Laws  removed
restrictions  on the  Company's  activities  such as  rechartering  the Vessels,
refinancing  or replacing the credit  facility,  acting in  connection  with the
Management  Agreement,  offering  Common Shares and listing them,  enforcing its
rights in connection  with the  Charters,  the Credit  Facility,  the UK Finance
Leases, the Management Agreement and other agreements into which the Company and
its  subsidiaries  entered  at the  time of its  initial  public  offering,  and
leasing,  selling or  otherwise  disposing  of the  Vessels  (or  Vessel  owning
subsidiaries)  on  termination  of the Charters or  subsequent  charters.  These
amended  Bye-Laws of the Company as adopted by shareholders on June 27, 2005 are
filed as Exhibit 4.2 to this Annual Report.

C.   MATERIAL CONTRACTS

On March 2, 2004, the Company,  as borrower,  and the New  Subsidiaries,  as new
owners,  entered into the Loan Agreement with The Royal Bank of Scotland plc, as
lender (the "Lender"), pursuant to which the Company borrowed $140.0 million, in
the form of five loans of $28 million each in respect of a Vessel (together, the
"Loan").  The Company is obligated to repay the Loan in  twenty-eight  quarterly
instalments of $2.8 million and a final  instalment of $61.6 million on the last
payment  date.  The Loan  Agreement  provides  for  payment of  interest  on the
outstanding  principal balance of the Loan,  quarterly in arrears, at the annual
rate of 1% plus LIBOR up to March 2005 and 0.7% plus LIBOR thereafter.  If a New
Subsidiary  sells  or  disposes  of the  related  Vessel,  the  Company  will be
obligated to make a loan prepayment  which will be applied against the principal
balance of the Loan  relating to the Vessel.  The Loan  Agreement is secured by,
among other things,  a guarantee  from each New  Subsidiary,  a mortgage on each
Vessel and an assignment of any charter with respect to a Vessel. The failure by
the Company to make  payments  due and payable  under the Loan  Agreement  could
result in the  acceleration of all principal and interest on the Loan Agreement,
the  enforcement  by the  Lender of its  rights  with  respect  to the  security
therefore,  and the  consequent  forfeiture by the Company of one or more of the
Vessels. The Loan Agreement also provides for other customary events of default.

The Loan  Agreement  contains a number of covenants made by the Company and each
of the New Subsidiaries  that,  among other things,  restrict the ability of the
Company to incur  additional  indebtedness,  pay  dividends if the Company is in
default,  create liens on assets or dispose of assets. In addition,  the Company
and the relevant New Subsidiary is subject to additional  covenants  pursuant to
the Loan Agreement pertaining primarily to the maintenance and operation of each
of the Vessels.


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

Bermuda 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.

United States Taxation

The  following  discussion  is based upon the  provisions  of the U.S.  Internal
Revenue Code of 1986,  as amended  (the  "Code"),  existing  and  proposed  U.S.
Treasury  Department  regulations,  administrative  rulings,  pronouncements and
judicial decisions,  all as of the date of this Annual Report.  Unless otherwise
noted,  references to the "Company"  include the  Company's  Subsidiaries.  This
discussion  assumes  that we do not  have an  office  or  other  fixed  place of
business in the United States.

Taxation of the Company's Shipping Income: In General

The  Company  anticipates  that it will  derive  substantially  all of its gross
income from the use and operation of vessels in international  commerce and that
this income will  principally  consist of freights  from the  transportation  of
cargoes,  hire or lease  from time or voyage  charters  and the  performance  of
services  directly  related  thereto,  which the Company  refers to as "shipping
income."

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

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

Based upon the Company's anticipated shipping operations,  the Company's vessels
will operate in various  parts of the world,  including  to or from U.S.  ports.
Unless exempt from U.S.  taxation under Section 883 of the Code ("Section 883"),
the  Company  will be subject to U.S.  federal  income  taxation,  in the manner
discussed  below, to the extent its shipping  income is considered  derived from
sources within the United States.

Final regulations interpreting Section 883 were promulgated by the U.S. Treasury
Department  in  August  2003,   which  the  Company  refers  to  as  the  "final
regulations." The final regulations became effective for calendar year taxpayers
such as the Company and its subsidiaries beginning with the calendar year 2005.


Application of Code Section 883

Under the  relevant  provisions  of Section 883, the Company will be exempt from
U.S. taxation on its U.S. source shipping income if:

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


     (ii) It can  satisfy  any  one of the  following  two (2)  stock  ownership
          requirements for more than half the days during the taxable year:

          o    the Company's  stock is "primarily  and  regularly"  traded on an
               established  securities  market located in the United States or a
               qualified  foreign  country,  which the Company  refers to as the
               "Publicly-Traded Test"; or

          o    more than 50 per cent of the Company's  stock, in terms of value,
               is  beneficially   owned  by  any  combination  of  one  or  more
               individuals  who are residents of a qualified  foreign country or
               foreign  corporations  that  satisfy the country of  organization
               requirement  and the  Publicly-Traded  Test,  which  the  Company
               refers to as the "50 per cent Ownership Test."

The  U.S.   Treasury   Department  has  recognized   Bermuda,   the  country  of
incorporation of the Company as a qualified  foreign country.  In addition,  the
U.S.  Treasury  Department has recognized  Liberia and the Cayman  Islands,  the
countries  of  incorporation  of  certain  of  the  Company's  subsidiaries,  as
qualified  foreign  countries.  Accordingly,  the Company and its vessel  owning
subsidiaries satisfy the country of organization requirement.

Therefore,  the Company's eligibility to qualify for exemption under Section 883
is wholly  dependent  upon  being  able to  satisfy  one of the stock  ownership
requirements.

For the 2005 tax year, the Company satisfied the Publicly-Traded  Test since, on
more than half the days of the taxable year,  the Company's  stock was primarily
and regularly traded on the Nasdaq National Market.

Taxation in Absence of Internal Revenue Code Section 883 Exemption

To the extent the  benefits of Section 883 are  unavailable  with respect to any
item of U.S. source income, the Company's U.S. source shipping income,  would be
subject to a 4 per cent tax imposed by Section 887 of the Code on a gross basis,
without the benefit of  deductions.  Since under the  sourcing  rules  described
above,  no more  than 50 per  cent of the  Company's  shipping  income  would be
treated as being derived from U.S.  sources,  the maximum effective rate of U.S.
federal  income tax on the  Company's  shipping  income would never exceed 2 per
cent under the 4 per cent gross basis tax regime.

Gain on Sale of Vessels

Regardless of whether the Company  qualifies for exemption under Section 883, it
will not be  subject  to U.S.  federal  income  taxation  with  respect  to gain
realized on a sale of a vessel, provided the sale is considered to occur outside
of the United States under U.S.  federal income tax  principles.  In general,  a
sale of a vessel will be  considered  to occur  outside of the United States for
this  purpose  if title to the  vessel,  and risk of loss  with  respect  to the
vessel,  pass to the buyer outside of the United States. It is expected that any
sale of a vessel by the  Company  will be  considered  to occur  outside  of the
United States.

PFIC Status

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  was a passive  foreign  investment  company  ("PFIC")  through its 2003
taxable year.  Beginning  with its 2004 taxable year, the Company ceased to be a
PFIC as a result  of the  expiration  of the  Shell  International  charters  on
February  27,  2004.  The  Company  was not a PFIC for U.S.  federal  income tax
purposes in the 2005 taxable year and does not anticipate being a PFIC in future
years,  although there is no assurance that this will be the case. Assuming that
the Company is not a PFIC, dividends paid by the Company to a non-corporate U.S.
shareholder  will  generally be treated as "qualified  dividend  income" that is
taxable to such  shareholders  at  preferential  U.S.  federal  income tax rates
(currently  through  2010)  provided  that the  non-corporate  U.S.  shareholder
satisfies certain holding period and other  requirements.  Any dividends paid by
the Company which are not eligible for these preferential rates will be taxed as
ordinary income to a U.S. shareholder.

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 100 F Street, N.E., Room 1580,  Washington,  D.C. 20549 and at 500
West Madison Street, Suite 1400, Northwestern Atrium Center,  Chicago,  Illinois
60661    and    are    also    available    on   our    website    located    at
www.knightsbridgetankers.com. 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 does
not currently utilise 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 its loan facility at December 31, 2005 of $120.4
million  (December 31, 2004:  $131.6 million) bear interest at an annual rate of
LIBOR plus a margin of 0.7 per cent.  A one per cent  change in  interest  rates
would  increase  or  decrease  interest  expense by $1.2  million per year as of
December 31, 2005.  The fair value of the loan facility at December 31, 2005 was
equal to the carrying amount of the facility at the same date.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable

<PAGE>

                                     PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

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


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

Not Applicable


ITEM 15.  CONTROLS AND PROCEDURES

(a)  Disclosure of Controls and Procedures

As of  December  31,  2005 the  Company  carried  out an  evaluation,  under the
supervision  and with the  participation  of the Company's  manager ICB Shipping
(Bermuda)  Limited,  of the  effectiveness  of the design and  operation  of the
Company's  disclosure  controls  and  procedures  pursuant to Exchange  Act Rule
13a-14.  Based  upon  that  evaluation,  the  principal  executive  officer  and
principal financial officer concluded that the Company's disclosure controls and
procedures  are  effective  in  alerting  them  timely to  material  information
relating to the Company  required to be included in the  Company's  periodic SEC
filings.

(b)  Management's Annual Report on Internal Control over Financial Reporting

Not Applicable

(c)  Attestation report of the registered public accounting firm

Not Applicable

(d)  Changes in Internal Controls over Financial Reporting

There  have been no  changes  in  internal  controls  over  financial  reporting
(identified in connection with management's evaluation of such internal controls
over financial  reporting)  that occurred during the year covered by this annual
report that has  materially  affected,  or is  reasonably  likely to  materially
affect, the Company's internal controls over financial reporting.

ITEM 16 A. AUDIT COMMITTEE FINANCIAL EXPERT

The  Company's  Board of  Directors  has  determined  that the  Company's  Audit
Committee  has one Audit  Committee  Financial  Expert.  Mr.  David  White is an
independent director and is the Audit Committee Financial Expert.


ITEM 16 B. CODE OF ETHICS

The Company has adopted a Code of Ethics that applies to all entities controlled
by the Company and all employees, directors, officers and agents of the Company,
including  representatives  and agents of the  Company's  manager,  ICB Shipping
(Bermuda) Limited.  The Code of Ethics has previously been filed as Exhibit 11.1
to the Company's  Annual Report on Form 20-F for the fiscal year ended  December
31 2003, filed with the Securities and Exchange  Commission on June 2, 2004, and
is hereby incorporated by reference into this Annual Report.

The  Company  has  posted  a copy  of its  Code  of  Ethics  on its  website  at
www.knightsbridgetankers.com.  The Company  will  provide  any  person,  free of
charge,  a copy of its Code of Ethics  upon  written  request  to the  Company's
registered office.


ITEM 16 C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our principal accountant for 2005 and 2004 was Moore Stephens P.C. The following
table sets forth for the two most recent  fiscal  years the fees paid or accrued
for  audit  and  services  provided  by our  principal  accounts  in  each  year
respectively.

     (in $)                               2005             2004

     Audit Fees (a)                     96,540          100,000
     Audit-Related Fees (b)                  -                -
     Tax Fees (c)                            -            5,500
     All Other Fees (d)                      -                -
     Total                              96,540          105,500

(a)  Audit Fees
Audit  fees  represent  professional  services  rendered  for the  audit  of the
Company's  annual  financial  statements and services  provided by the principal
accountant in connection with statutory and regulatory filings or engagements.

(b)  Audit -Related Fees
Audit-related  fees consisted of assurance and related services  rendered by the
principal  accountant  related to the  performance of the audit or review of the
Company's  financial  statements  which have not been reported  under Audit Fees
above.

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

(d)  All Other Fees
All other fees include  services other than audit fees,  audit-related  fees and
tax fees set forth above.

The Company's Audit Committee has adopted  pre-approval  policies and procedures
in  compliance  with  paragraph  (c)(7)(i) of Rule 2-01 of  Regulation  S-X that
require  the Audit  Committee  to approve  the  appointment  of the  independent
auditor of the Company  before such  auditor is engaged and approve  each of the
audit and non-audit  related  services to be provided by such auditor under such
engagement by the Company.  All services  provided by the  principal  auditor in
2005 were approved by the Audit Committee pursuant to the pre-approval policy.

ITEM 16 D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable

ITEM 16 E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not Applicable

<PAGE>

                                    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-14 are filed as part of this annual report:

Financial Statements for Knightsbridge Tankers Limited


Index to Consolidated Financial Statements
of Knightsbridge Tankers Limited                                             F-1

Report of Independent Registered Public Accounting Firm                      F-2

Report of Independent Registered Public Accounting Firm                      F-3

Consolidated Statements of Operations                                        F-4
for the years ended December 31, 2005, 2004 and 2003

Consolidated Balance Sheets as of                                            F-5
December 31, 2005 and 2004

Consolidated Statements of Cash Flows                                        F-6
for the years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 2005, 2004 and 2003                         F-7

Notes to Consolidated Financial Statements                                   F-8


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")**

4.1       Memorandum of Association of the Company*

4.2       Amended Bye-Laws of the Company  dated June 27, 2005.

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

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

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

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

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

4.3.1     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.**

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

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

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

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

4.3.6     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.**

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

4.5.1     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).**

4.5.2     Execution  version of  Amendment  No. 1 to  Management  Agreement  and
          Accession  Agreement dated [March 1, 2004] between the Manager and the
          Company.

4.6.1     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).**

4.6.2     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).**

4.6.3     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).**

4.6.4     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).**

4.6.5     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).**

4.7.1     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).**

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

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

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

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

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

4.8.1     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).**

4.8.2     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).**

4.9       UK 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).**

4.10.1    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).**

4.10.2    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).**

4.10.3    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).**

4.10.4    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).**

4.10.5    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).**

4.11.1    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.**

4.11.2    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.**

4.11.3    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.**

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

4.11.4    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.**

4.11.5    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.**

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

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

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

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

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

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

4.13(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 The Royal Bank of Scotland Plc ("RBS") as agent.**

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

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

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

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

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

4.15.1    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").**

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

4.15.3    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").**

4.15.4    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").**

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4.19      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").**

4.19(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.**

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4.27      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.**

4.27(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.**

4.27(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.**

4.28      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.**

4.29      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.**

4.31      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).***

4.32.1    Execution  version of Novation  Agreement  dated March 3, 2004 between
          Inwood,  Calico Leasing (GB) Limited  ("Calico") and KTL Camden,  Inc.
          ("Camden"). ***

4.32.2    Execution  version of Novation  Agreement  dated March 3, 2004 between
          Lawrence, Calico and KTL Chelsea, Inc. ("Chelsea"). ***

4.32.3    Execution  version of Novation  Agreement  dated March 3, 2004 between
          Cedarhurst, Calico and KTL Mayfair, Inc. ("Mayfair"). ***

4.32.4    Execution  version of Novation  Agreement  dated March 3, 2004 between
          Hewlett, Calico and KTL Hampstead, Inc. ("Hampstead"). ***

4.32.5    Execution  version of Novation  Agreement  dated March 3, 2004 between
          Woodmere, Calico and KTL Kensington, Inc. ("Kensington"). ***

4.33.1    Execution  version of a Deed of Release  dated  March 3, 2004  between
          Inwood,  Calico and RBS relating to a Lessor  Mortgage and  Assignment
          dated February 27, 1997. ***

4.33.2    Execution  version of a Deed of Release  dated  March 3, 2004  between
          Lawrence,  Calico and RBS relating to a Lessor Mortgage and Assignment
          dated February 27, 1997. ***

4.33.3    Execution  version of a Deed of Release  dated  March 3, 2004  between
          Cedarhurst,   Calico  and  RBS  relating  to  a  Lessor  Mortgage  and
          Assignment dated February 27, 1997. ***

4.33.4    Execution  version of a Deed of Release  dated  March 3, 2004  between
          Hewlett,  Calico and RBS relating to a Lessor  Mortgage and Assignment
          dated February 27, 1997. ***

4.33.5    Execution  version of a Deed of Release  dated  March 3, 2004  between
          Woodmere,  Calico and RBS relating to a Lessor Mortgage and Assignment
          dated February 27, 1997. ***

4.34      Form of Loan  Agreement  between  the  Company  as  borrower,  the New
          Subsidiaries as new owners and RBS as lender. ***

4.35      Form of ISDA Master  Agreement dated March 3, 2004 between the Company
          and RBS. ***

4.36.1    Execution  version of General  Assignment  dated March 3, 2004 between
          Camden as owner and RBS as lender. ***

4.36.2    Execution  version of General  Assignment  dated March 3, 2004 between
          Chelsea as owner and RBS as lender. ***

4.36.3    Execution  version of General  Assignment  dated March 3, 2004 between
          Hampstead as owner and RBS as lender. ***

4.36.4    Execution  version of General  Assignment  dated March 3, 2004 between
          Kensington as owner and RBS as lender. ***

4.36.5    Execution  version of General  Assignment  dated March 3, 2004 between
          Mayfair as owner and RBS as lender. ***

4.37      Execution  version of Account  Security  Deed  between  the Company as
          borrower, each of Camden, Chelsea,  Hampstead,  Kensington and Mayfair
          as a new owner, and RBS as bank. ***

4.38      Execution version of Manager's  Undertaking by Frontline Management AS
          to RBS. ***

4.39      Execution  version of Master  Agreement  Security  Deed dated March 3,
          2004 between the Company and RBS. ***

4.40.1    Execution  version of First Preferred  Marshall Islands Mortgage dated
          March 15, 2004 between Camden as owner and RBS as mortgagee. ***

4.40.2    Execution  version of First Preferred  Marshall Islands Mortgage dated
          March 5, 2004 between Chelsea as owner and RBS as mortgagee. ***

4.40.3    Execution  version of First Preferred  Marshall Islands Mortgage dated
          March 11, 2004 between Hampstead as owner and RBS as mortgagee. ***

4.40.4    Execution  version of First Preferred  Marshall Islands Mortgage dated
          March 29, 2004 between Kensington as owner and RBS as mortgagee. ***

4.40.5    Execution  version of First Preferred  Marshall Islands Mortgage dated
          March 18, 2004 between Mayfair as owner and RBS as mortgagee. ***

4.41.1    Execution version of Deed of Release dated March 3, 2004 relating to a
          Floating  Charge  dated  February  12, 1997 between the Company as the
          chargor and RBS as the Agent. ***

4.41.2    Execution version of Deed of Release dated March 3, 2004 relating to a
          Floating  Charge dated February 12, 1997 between Camden as the chargor
          and RBS as the Agent. ***

4.41.3    Execution version of Deed of Release dated March 3, 2004 relating to a
          Floating Charge dated February 12, 1997 between Chelsea as the chargor
          and RBS as the Agent. ***

4.41.4    Execution version of Deed of Release dated March 3, 2004 relating to a
          Floating  Charge  dated  February  12, 1997  between  Hampstead as the
          chargor and RBS as the Agent. ***

4.41.5    Execution version of Deed of Release dated March 3, 2004 relating to a
          Floating  Charge dated  February 12, 1997  between  Kensington  as the
          chargor and RBS as the Agent. ***

4.41.6    Execution version of Deed of Release dated March 3, 2004 relating to a
          Floating Charge dated February 12, 1997 between Mayfair as the chargor
          and RBS as the Agent. ***

4.42.1    Execution  version of Deed of Release and  Reassignment  relating to a
          Guarantor  Assignment  dated  February  12,  1997 dated  March 3, 2004
          between Camden as the assignor and RBS as the Agent. ***

4.42.2    Execution  version of Deed of Release and Reassignment  dated March 3,
          2004  relating  to a  Guarantor  Assignment  dated  February  12, 1997
          between Chelsea as the assignor and RBS as the Agent. ***

4.42.3    Execution  version of Deed of Release and Reassignment  dated March 3,
          2004  relating  to a  Guarantor  Assignment  dated  February  12, 1997
          between Hampstead as the assignor and RBS as the Agent. ***

4.42.4    Execution  version of Deed of Release and Reassignment  dated March 3,
          2004  relating  to a  Guarantor  Assignment  dated  February  12, 1997
          between Kensignton as the assignor and RBS as the Agent. ***

4.42.5    Execution  version of Deed of Release and Reassignment  dated March 3,
          2004  relating  to a  Guarantor  Assignment  dated  February  12, 1997
          between Mayfair as the assignor and RBS as the Agent. ***

4.42.6    Execution  version of Deed of Release and Reassignment  dated March 3,
          2004 relating to a Borrower Assignment dated February 12, 1997 between
          the Company as the assignor and RBS as the Agent. ***

4.43      Execution version of Deed of Release dated March 3, 2004 relating to a
          Mortgage of Shares dated  February 12, 1997 between the Company as the
          assignor and RBS as the Agent. ***

4.44.1    Execution version of Daylight  Overdraft  Facility dated March 3, 2004
          between  Mayfair as borrower,  Cedarhurst as lessee,  each of Lawrence
          and the Company as shareholders and RBS as lender. ***

4.44.2    Execution version of Daylight  Overdraft  Facility dated March 3, 2004
          between  Kensington as borrower,  Woodmere as lessee,  each of Hewlett
          and the Company as shareholders and RBS as lender. ***

4.44.3    Execution version of Daylight  Overdraft  Facility dated March 3, 2004
          between  Chelsea as borrower,  Lawrence as lessee,  each of Inwood and
          the Company as shareholders and RBS as lender. ***

4.44.4    Execution version of Daylight  Overdraft  Facility dated March 3, 2004
          between Hampstead as borrower,  Hewlett as lessee,  each of Cedarhurst
          and the Company as shareholders and RBS as lender. ***

4.44.5    Execution version of Daylight  Overdraft  Facility dated March 3, 2004
          between Camden as borrower, Inwood as lessee, each of Woodmere and the
          Company as shareholders and RBS as lender. ***

8.1       List of subsidiaries of the Company.

11.1*     Code of Ethics,  incorporated  by  reference  to  Exhibit  11.1 of the
          Company's  Annual  Report  on Form  20-F  for the  fiscal  year  ended
          December 31, 2003.

31.1      Certification of the Principal Executive Officer

31.2      Certification of the Principal Financial Officer

32.1      Certifications  under Section 906 of the Sarbanes-Oxley act of 2002 of
          the Principal Executive Officer

32.2      Certifications  under Section 906 of the Sarbanes-Oxley act of 2002 of
          the Principal Financial Officer

----------
*    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)
***  Incorporated  by  reference  to same  Exhibit No. in the  Company's  Annual
     Report on Form 20-F for the fiscal year ended December 31, 2003.


<PAGE>

                                   SIGNATURES

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

KNIGHTSBRIDGE TANKERS LIMITED


By: /s/ Kate Blankenship
    ---------------------
Kate Blankenship
Chief Financial Officer

Dated: June 15, 2006
<PAGE>

Index to Consolidated Financial Statements of Knightsbridge Tankers Limited

Report of Independent Registered Public Accounting Firm                      F-2

Report of Independent Registered Public Accounting Firm                      F-3

Consolidated Statements of Operations                                        F-4
for the years ended December 31, 2005, 2004 and 2003

Consolidated Balance Sheets as of                                            F-5
December 31, 2005 and 2004

Consolidated Statements of Cash Flows                                        F-6
for the years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Changes in                                        F-7
Stockholders' Equity for the years ended December 31,
2005, 2004 and 2003

Notes to Consolidated Financial Statements                                   F-8

<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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, 2005 and
2004,  and  the  related  consolidated  statements  of  operations,  changes  in
stockholders'  equity,  and cash flows for the years ended December 31, 2005 and
2004 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 the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated financial statements are free of material misstatement. We were not
engaged to perform an audit of the  Company's  internal  control over  financial
reporting.  Our audit included  consideration of internal control over financial
reporting as a basis for designing audit  procedures that are appropriate in the
circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on the
effectiveness  of the  Company's  internal  control  over  financial  reporting.
Accordingly,  we express no such opinion. An audit 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, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of the
Company as of December 31, 2005 and 2004, and the consolidated  results of their
operations, and their cash flows for the years ended December 31, 2005 and 2004,
in conformity with U.S. generally accepted accounting principles.


MOORE STEPHENS, P. C.
Certified Public Accountants.

New York, New York
February 13, 2006

<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors of
Knightsbridge Tankers Limited

We have  audited  the  consolidated  statements  of  operations,  cash flows and
changes  in   shareholders'   equity  of   Knightsbridge   Tankers  Limited  and
subsidiaries  (the  "Company")  for the year  ended  December  31,  2003.  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 audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
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 audit  provides a  reasonable  basis for our
opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  consolidated  results of operations  and cash flows of
Knightsbridge  Tankers Limited and  subsidiaries for the year ended December 31,
2003 in conformity with accounting  principles  generally accepted in the United
States of America.



Deloitte & Touche AB
Stockholm, Sweden
May 17, 2004

<PAGE>
<TABLE>
Knightsbridge Tankers Limited
Consolidated Statements of Operations for the years ended
December 31, 2005, 2004 and 2003
(in thousands of $, except per share data)
<CAPTION>
                                                      2005             2004           2003

<S>                                                  <C>               <C>            <C>
Operating revenues
        Time charter revenues                         42,325           42,113              -
        Bareboat charter revenues                          -           29,770         75,246
        Voyage charter revenues                       57,854           63,812              -
--------------------------------------------------------------------------------------------
        Total operating revenues                     100,179          135,695         75,246
--------------------------------------------------------------------------------------------
Operating expenses
        Voyage expenses and commission                16,459           14,240              -
        Ship operating expenses                       17,211            9,868              -
        Administrative expenses                          988            1,114            864
        Depreciation and amortisation                 17,120           17,219         17,593
--------------------------------------------------------------------------------------------
        Total operating expenses                      51,778           42,441         18,457
--------------------------------------------------------------------------------------------
Net operating income                                  48,401           93,254         56,789
--------------------------------------------------------------------------------------------
Other income (expenses)
        Interest income                                  959              449             55
        Interest expense                             (5,310)          (7,877)        (9,334)
        Other financial items, net                      (83)               13           (49)
--------------------------------------------------------------------------------------------
        Net other (expenses)                         (4,434)          (7,415)        (9,328)
Net  income                                           43,967           85,839         47,461
--------------------------------------------------------------------------------------------
Earnings per share: basic and diluted                 $ 2.57           $ 5.02         $ 2.78
--------------------------------------------------------------------------------------------

See accompanying Notes that are an integral part of these Consolidated Financial Statements
</TABLE>

<PAGE>

Knightsbridge Tankers Limited
Consolidated Balance Sheets as of December 31, 2005 and 2004
(in thousands of $)

                                                        2005            2004
ASSETS
Current Assets
        Cash and cash equivalents                     12,634          31,653
        Restricted cash                               10,000          10,000
        Trade accounts receivable                      7,633          13,232
        Other receivables                              1,139             608
        Inventories                                    2,012           1,631
        Voyages in progress                            3,667           6,122
        Prepaid expenses and accrued income              645             416
--------------------------------------------------------------------------------
        Total current assets                          37,730          63,662
Vessels, net                                         285,070         301,500
Deferred charges                                         359             392
--------------------------------------------------------------------------------
        Total assets                                 323,159         365,554
--------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
        Short-term debt and current portion
          of long-term debt                           11,200          11,309
        Trade accounts payable                         1,974             465
        Accrued expenses                               3,300           2,730
        Other current liabilities                      2,452           1,779
--------------------------------------------------------------------------------
        Total current liabilities                     18,926          16,283
Long-term liabilities
        Long-term debt                               109,200         120,400
        Total liabilities                            128,126         136,683
--------------------------------------------------------------------------------
Stockholders' equity
        Share capital                                    171             171
        Contributed capital surplus account          194,862         220,059
        Retained earnings                                  -           8,641
--------------------------------------------------------------------------------
        Total stockholders' equity                   195,033         228,871
--------------------------------------------------------------------------------
        Total liabilities and stockholders' equity   323,159         365,554
--------------------------------------------------------------------------------


See accompanying Notes that are an integral part of these Consolidated Financial
Statements

<PAGE>
<TABLE>
Knightsbridge Tankers Limited
Consolidated Statements of Cash Flows for the years ended
December 31, 2005, 2004 and 2003
(in thousands of $)
<CAPTION>

                                                               2005             2004            2003
<S>                                                            <C>              <C>             <C>
Operating activities
Net income                                                     43,967           85,839          47,461
Adjustments to reconcile net income to net cash
provided by operating activities:
        Depreciation and amortisation                          17,120           17,219          17,593
        Amortisation of deferred charges                           66              110             372
        Changes in operating assets and liabilities:
          Trade accounts receivable                             5,599            9,393        (12,497)
          Other receivables                                     (531)            (608)               -
          Inventories                                           (381)          (1,631)               -
          Voyages in progress                                   2,455          (6,122)               -
          Prepaid expenses and accrued income                   (229)            (377)               -
          Trade accounts payable                                1,509              465               -
          Accrued expenses                                        570              521              11
          Other, net                                             (17)            1,779               -
------------------------------------------------------------------------------------------------------
        Net cash provided by operating activities              70,128          106,588          52,940
------------------------------------------------------------------------------------------------------
Investing activities
        Placement of restricted cash                                          (10,000)               -
        Compensation on vessel redelivery                           -              690               -
------------------------------------------------------------------------------------------------------
        Net cash used in investing activities                                  (9,310)               -
------------------------------------------------------------------------------------------------------
Financing activities                                                                                 -
        Proceeds from long-term debt                                -          140,000               -
        Repayments of long-term debt and credit facilities   (11,309)        (133,688)               -
        Debt fees paid                                           (33)            (444)               -
        Cash dividends paid                                  (77,805)         (77,805)        (46,854)
------------------------------------------------------------------------------------------------------
        Net cash used in financing activities                (89,147)         (71,937)        (46,854)
------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents         (19,019)           25,341           6,086
Cash and cash equivalents at beginning of year                 31,653            6,312             226
------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                       12,634           31,653           6,312
------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
        Interest paid                                           5,235            9,631           8,952

See accompanying Notes that are an integral part of these Consolidated Financial Statements
</TABLE>

<PAGE>
<TABLE>
Knightsbridge Tankers Limited
Consolidated  Statements of Changes in Stockholders'  Equity for the years ended
December 31, 2005, 2004 and 2003 (in thousands of $, except number of shares)

<CAPTION>
                                                                   2005             2004            2003
<S>                                                          <C>              <C>             <C>
NUMBER OF SHARES OUTSTANDING
Balance at beginning and end of year                         17,100,000       17,100,000      17,100,000
--------------------------------------------------------------------------------------------------------
SHARE CAPITAL
Balance at beginning of year                                        171              171             171
Shares issued                                                         -                -               -
Shares bought back and cancelled                                      -                -               -
--------------------------------------------------------------------------------------------------------
Balance at end of year                                              171              171             171
--------------------------------------------------------------------------------------------------------

CONTRIBUTED CAPITAL SURPLUS ACCOUNT
Balance at beginning of year                                    220,059          220,059         220,059
Distributions to shareholders                                  (25,197)                -               -
--------------------------------------------------------------------------------------------------------
Balance at end of year                                          194,862          220,059         220,059
--------------------------------------------------------------------------------------------------------

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance at beginning of year                                          -          (5,310)        (11,590)
Other comprehensive income (loss)                                     -                -           6,280
De-designation of interest rate swap                                  -            5,310
--------------------------------------------------------------------------------------------------------
Balance at end of year                                                -                -         (5,310)
--------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
Balance at beginning of year                                      8,641              607               -
Net income                                                       43,967           85,839          47,461
Dividends paid                                                 (52,608)         (77,805)        (46,854)
--------------------------------------------------------------------------------------------------------
Balance at end of year                                                -            8,641             607
--------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                      195,033          228,871         215,527
--------------------------------------------------------------------------------------------------------

COMPREHENSIVE INCOME (LOSS)
Net income                                                       43,967           85,839          47,461
  Unrealised gains (losses) from derivative instruments               -                -           6,280
--------------------------------------------------------------------------------------------------------
  Other comprehensive income (loss)                                   -                -           6,280
--------------------------------------------------------------------------------------------------------
Comprehensive income                                             43,967           85,839          53,741
--------------------------------------------------------------------------------------------------------

See accompanying Notes that are an integral part of these Consolidated Financial Statements
</TABLE>

<PAGE>

Knightsbridge Tankers Limited
Notes to Consolidated Financial Statements

1.   DESCRIPTION OF BUSINESS

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,  or VLCCs,  (the
"Vessels"),  and certain  related  activities.  The  Vessels  are owned  through
wholly-owned subsidiaries (the "Subsidiaries").  The Company's shares are listed
on the NASDAQ National Market.

From February 1997 until March 2004, the Company  chartered its Vessels to Shell
International  Petroleum  Company Limited  ("Shell") on long-term "hell and high
water"  bareboat  charters  (the  "Charters").  The  bareboat  charters to Shell
expired for all five Vessels,  in accordance with their terms, during March 2004
and the Vessels were redelivered to the Company.  Following the redelivery,  the
Company has entered into a five year time  charter for one of its vessels  while
two of the Company's Vessels have each been time chartered for a period of three
years.  The  Company's  remaining two vessels are trading on the spot market and
are  participating  in a pooling  arrangement  with  Frontline  Ltd.,  a Bermuda
publicly traded oil tanker owning and operating company.

The daily  charterhire  rate  payable  by Shell  was  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 would 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,  representing  daily  operating  costs over the Base Rate. The current
five year time charter agreement  provides revenue of approximately  $31,000 per
day for the duration of the charter,  while the three year time charters provide
a rate of $30,000 per day plus a 50:50 profit sharing  arrangement  for earnings
in excess of $30,000 per day calculated by reference to the Baltic International
Trading Route (BITR) Index.

The  business of the Company is managed by ICB Shipping  (Bermuda)  Limited (the
"Manager"), an indirect wholly-owned subsidiary of Frontline Ltd.

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.

Certain   comparative  figures  have  been  reclassified  to  conform  with  the
presentation adopted in the current period.  Effective December 31, 2004 we have
reclassified  amortisation  of  deferred  charges  as a  component  of  interest
expense.

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 and its 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 freight  billings,  time charter and bareboat  charter hires. The
operating  results of voyages in progress are estimated and recorded pro-rata on
a per day basis in the consolidated statements of operations. Probable losses on
voyages are provided for in full at the time such losses can be estimated.  Time
charter and bareboat  charter revenues are recorded over the term of the charter
as service is  provided.  Amounts  receivable  or payable  arising  from  profit
sharing  arrangements are accrued based on the estimates of amounts earned as at
the reporting date.

Revenues and voyage expenses of the vessels  operating in pool  arrangements are
pooled  and the  resulting  net  pool  revenues,  calculated  on a time  charter
equivalent basis, are allocated to the pool participants  according to an agreed
formula. Pool revenues are included in voyage charter revenues. The formula used
to allocate net pool revenues  allocates  revenues to pool  participants  on the
basis  of the  number  of days a vessel  operates  in the  pool  with  weighting
adjustments  made to  reflect  vessels'  differing  capacities  and  performance
capabilities.  The same revenue and expense  principles stated above are applied
in determining the pool's net pool revenues. In the year ended December 31, 2005
pool revenues included in voyage charter revenues were $36.8 million.

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  non-owner
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  conditional  sale   arrangements   with  a  third  party  banking
institution (the "UK Lessor").  Under the arrangements  (the  "Conditional  Sale
Agreements"),  each of the Company's vessel-owning  subsidiaries agreed with the
UK Lessor  that the UK Lessor was  entitled to  purchase  the  Vessels  from the
subsidiaries,  by payment of the purchase price in installments over a period of
twenty-five  years,  subject  to certain  conditions  described  below.  For the
duration  of the  Charters,  the  vessels  were  leased  back  to the  Company's
subsidiaries.  The lease  agreements  did not encumber or obligate the Company's
current  or future  cash  flows and had no  effect  on the  Company's  financial
position.  The  leasebacks  were  classified  as capital  leases by the Company.
Accordingly,  during  the  term  of the  leases,  the  Vessels  remained  on the
Company's  consolidated  balance  sheet and the relevant  subsidiaries  retained
title to the respective Vessels.

The UK Lessor's  obligation  under each  Conditional  Sale  Agreement to pay the
first  instalment  of the  purchase  price for the  vessel  was  subject  to the
following  conditions:  (i)  the  UK  Lessor  had  not  terminated  the  related
Conditional Sale Agreement prior to the Vessel being delivered by the subsidiary
or a  representative  of the UK Lessor;  (ii) the Company's  subsidiary  had not
terminated the Agreement prior to giving notice of delivery of the Vessel; (iii)
the UK Lessor had received notice of delivery of the Vessel from the subsidiary;
(iv) the UK Lessor had  received  an  invoice  for the first  instalment  of the
purchase price; (v) the  representations and warranties by the subsidiary in the
Conditional Sale Agreement (regarding capital expenditures of the subsidiary and
the purchase price of the vessel)  continued to be true; and (vi) the Vessel had
not suffered a loss.  Upon  termination  of the Charters and  redelivery  of the
Vessels to the  Company in the first and second  quarters  of 2004,  each of the
Company's  subsidiaries  had the right as the UK Lessor's sales agent to arrange
for the  disposition  of the  Conditional  Sale Agreement (and the right to take
title to the related Vessel),  or to arrange for the sale of the related Vessel,
for an amount equal to the fair market value of that Vessel.  In connection with
the termination of the Charter,  the Company's  subsidiaries  arranged for newly
formed  subsidiaries  to purchase the  Conditional  Sale  Agreements from the UK
Lessor  by  way  of  novation  for  fair  market  value  consideration,  thereby
transferring  the right to take title to the Vessels under the Conditional  Sale
Agreements to the Company's new subsidiaries. The new subsidiaries took title to
the  Vessels  during  the  first  half of March  2004 and the  Conditional  Sale
Agreements  are no longer  in  effect.  There was no gain or loss  booked by the
Company on the  transaction  as the fair market value  consideration  was deemed
equal to the Vessels book values at the date of acquisition.

The Charters to Shell were  classified as operating  leases by the Company.  The
current  five  year and  three  year time  charters  for three of the  Company's
vessels are also 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.

Restricted cash
Restricted cash consists of bank deposits which must be maintained in accordance
with contractual loan arrangements.

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

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 Company executed interest
rate swaps 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.

All  derivative  instruments  are  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.

Financial instruments
In  determining  fair value of its  financial  instruments,  the Company  uses a
variety of methods and assumptions that are based on market conditions and risks
existing at each balance sheet date.  For the majority of financial  instruments
including long-term debt, standard market conventions and techniques are used to
determine  fair value.  All methods of assessing  fair value result in a general
approximation of value, and such value may never actually be realised.

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

In connection  with the  termination  of the Charters and the  Conditional  Sale
Agreements and the redelivery of the Vessels to the Company in 2004 as described
above,  the Vessels have been  reclassified  from Vessels under Capital Lease to
Vessels.  Concurrently,  the  Company  revised  its  estimate  of the  estimated
residual  value of the  Vessels  and  changed it from zero to $6.4  million  per
vessel.  The Company believes that this revised estimate is in line with current
standard industry  practise.  A change in accounting  estimate was recognised to
reflect  this  decision,  resulting  in a decrease in  depreciation  expense and
consequently  increasing  net  income by $0.4  million  and  basic  and  diluted
earnings per share by $0.02, for 2004.

Deferred charges
Loan costs,  including debt arrangement fees, are capitalised and amortised on a
straight-line  basis  over the term of the loan.  Amortisation  of loan costs is
included in  interest  expense.  If the loan is repaid  early,  any  unamortized
portion of the related  deferred charges is charged against income in the period
in which the loan is repaid.

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 by sale are  reported  at the lower of their  carrying
amount or 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.

Drydocking
Normal  vessel repair and  maintenance  costs are expensed  when  incurred.  The
Company  recognises the cost of a dry-docking at the time the dry-docking  takes
place,  that is, it applies the  "expense as  incurred"  method.  The expense as
incurred  method is  considered by  management  to be an  appropriate  method of
recognizing  drydocking  costs as it eliminates the uncertainty  associated with
estimating the cost and timing of future drydockings.

Recently issued accounting standards
In December 2004, the FASB issued  Statement of Financial  Accounting  Standards
153 Exchanges of Nonmonetary  Assets,  an amendment of APB Opinion No. 29 ("SFAS
153").  APB Opinion No. 29 Accounting for  Nonmonetary  Transactions  ("APB 29")
provides that accounting for nonmonetary  transactions  should be measured based
on the fair value of the assets exchanged but allows certain  exceptions to this
principle.  SFAS 153 amends APB 29 to eliminate the  exception  for  nonmonetary
exchanges of similar  productive assets and replaces it with a general exception
for exchanges of  nonmonetary  assets that don't have  commercial  substance.  A
nonmonetary  exchange has  commercial  substance if the future cash flows of the
entity are expected to change  significantly  as a result of the exchange.  SFAS
153 is effective for  nonmonetary  asset  exchanges  occurring in fiscal periods
beginning  after June 15, 2005 and shall be applied  prospectively.  Adoption of
SFAS 153 has not affected the Company's results to date.

In May 2005,  the FASB issued  Statement of Financial  Accounting  Standards 154
Accounting  Changes and Error  Corrections,  a replacement of APB Opinion No. 20
and FAS 3 ("SFAS 154"). SFAS 154 replaces APB Opinion No. 20 Accounting  Changes
and  SFAS 3  Reporting  Accounting  Changes  in  Interim  Financial  Statements.
Previously,  most changes in accounting  principle were  recognised by including
the cumulative effect of changing to the new accounting  principle in net income
for the period of the change. SFAS 154 requires  retrospective  application of a
change in accounting  principle to prior periods unless it is  impracticable  to
determine  either the  period-specific  effects or the cumulative  effect of the
change to any period.  When it is impracticable to determine the period-specific
effects of an  accounting  change,  SFAS 154  requires  that the new  accounting
principle  be  applied  to the  balances  of assets  and  liabilities  as of the
beginning  of  the  earliest  period  for  which  retrospective  application  is
practicable and that a  corresponding  adjustment be made to the opening balance
of retained earnings ( or other appropriate  components of equity or net assets)
for that period rather than being reported in an income  statement.  SFAS 154 is
applicable for all  accounting  changes and  corrections of errors  occurring in
fiscal years  beginning after December 15, 2005. The Company will apply SFAS 154
from January 1, 2006 on a prospective basis as required.

3.   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.

4.   LEASES

The minimum future  revenues to be received on time charters which are accounted
for as operating leases as of December 31, 2005 are as follows:

Year ending December 31,                                              Total

(in thousands of $)
2006                                                                  33,215
2007                                                                  18,275
2008                                                                  11,315
2009                                                                   2,201
2010                                                                       -
2011 and later                                                             -
----------------------------------------------------------------------------
Total minimum lease revenues                                          65,006
----------------------------------------------------------------------------

5.   TRADE ACCOUNTS RECEIVABLE

Trade accounts  receivable are presented net of allowance for doubtful  accounts
amounting to $0.2 million for the year ended  December  31, 2005  (December  31,
2004: $0.2 million).

6.   VESSELS

(in thousands of $)                          2005          2004
Cost                                      439,822       439,132
Accumulated depreciation                 (154,752)      137,632
--------------------------------------------------------------------------------
Net book value at end of year             285,070       301,500
--------------------------------------------------------------------------------

Depreciation expense was $17.1 million,  $17.2 million and $17.6 million for the
years ended December 31, 2005, 2004 and 2003, respectively.

7.   DEFERRED CHARGES

Deferred  charges  represent  debt  arrangement  fees that are  capitalized  and
amortized on a straight-line basis to interest expense over the life of the debt
instrument. The deferred charges are comprised of the following amounts:

(in thousands of $)                                  2005              2004
Capitalized financing fees and expenses              477                444
Accumulated amortization                            (118)               (52)
----------------------------------------------------------------------------
Net book value at end of year                         359               392
----------------------------------------------------------------------------

8.   DEBT

(in thousands of $)                                  2005              2004

US dollar denominated floating rate debt
(LIBOR + 0.7% to 1.0%)                            120,400           131,600
----------------------------------------------------------------------------
                                                  120,400           131,600
Credit facilities                                       -               109
----------------------------------------------------------------------------
Total debt                                        120,400           131,709
Less: short-term and current portion of
long-term debt                                    (11,200)          (11,309)
----------------------------------------------------------------------------
                                                  109,200           120,400
----------------------------------------------------------------------------

The  average  interest  rate for the  floating  rate debt was 4.12% for the year
ended December 31, 2005 and 6.46% for the year ended December 31, 2004.

$140.0 million loan facility
In March 2004, the Company refinanced its existing credit facility with a $140.0
million facility in the form of five loans of $28.0 million,  each in respect of
a Vessel.  This facility is repayable in twenty eight  quarterly  instalments of
$2.8 million and a final  instalment  of $61.6 million on the last payment date.
The facility is secured by, among other things, a mortgage on each Vessel and an
assignment of any charter in respect of a Vessel.

The outstanding debt as of December 31, 2005 is repayable as follows:

Year ending December 31,
(in thousands of $)
2006                                                                  11,200
2007                                                                  11,200
2008                                                                  11,200
2009                                                                  11,200
2010                                                                  11,200
2011 and later                                                        64,400
-----------------------------------------------------------------------------
Total debt                                                           120,400
-----------------------------------------------------------------------------

9.   SHARE CAPITAL

     Authorised share capital:

                                                     2005                2004
17,100,000 ordinary shares of $0.01 each          171,000             171,000
-----------------------------------------------------------------------------

      Issued and fully paid share capital:

                                                     2005                2004
17,100,000 ordinary shares of $0.01each           171,000             171,000
-----------------------------------------------------------------------------

10.  FINANCIAL INSTRUMENTS

Interest rate risk management
In certain  situations,  the Company  may enter into  financial  instruments  to
reduce the risk associated with fluctuations in interest rates. The Company does
not hold or  issue  instruments  for  speculative  or  trading  purposes.  As at
December 31, 2005,  the Company is not party to any interest rate swaps to hedge
interest rate exposure

Foreign currency risk
The  majority  of  the  Company's  transactions,   assets  and  liabilities  are
denominated in U.S. dollars, the functional currency of the Company. There is no
significant risk that currency  fluctuations  will have a negative effect of the
value of the Company's cash flows.

Fair values
The  carrying  value  and  estimated  fair  value  of  the  Company's  financial
instruments at December 31, 2005 and 2004 are as follows:

<TABLE>
<CAPTION>
                                                   2005           2005            2004            2004
(in thousands of $)                          Fair Value        Carrying       Fair Value       Carrying
                                                                  Value                           Value
<S>                                              <C>             <C>             <C>             <C>
Cash and cash equivalents                        12,634          12,634          31,653          31,653
Restricted cash                                  10,000          10,000          10,000          10,000
Floating rate debt and credit facilities        120,400         120,400         131,709         131,709
</TABLE>

The carrying value of cash and cash equivalents,  and restricted cash, which are
highly liquid, is a reasonable estimate of fair value.

The estimated  fair value for floating rate  long-term  debt is considered to be
equal to the carrying value since it bears variable  interest  rates,  which are
reset on a quarterly basis.

Concentrations of risk
There  is a  concentration  of  credit  risk  with  respect  to  cash  and  cash
equivalents to the extent that substantially all of the amounts are carried with
Skandinaviska  Enskilda Banken, and The Royal Bank of Scotland plc. However, the
Company  believes  this risk is remote as these  banks are high  credit  quality
financial  institutions.  The  Company  does  not  require  collateral  or other
security to support financial instruments subject to credit risk.

In 2005, two customers accounted for 42 per cent of gross revenue, while in 2004
two customers  accounted for 46 per cent of gross revenue.  In 2003 one customer
accounted for 100 per cent of gross revenue.

11.  MANAGEMENT OF COMPANY

On February 12, 1997, the Company  entered into a management  agreement with the
Manager under which the Manager provided certain administrative,  management and
advisory  services to the Company for an amount of $750,000 per year.  Effective
February 2004,  the Company  entered into an amendment to the agreement with the
Manager.  The  management fee has been amended to $630,000 per year, in addition
to a commission of 1.25% on gross freight revenues. Pursuant to the terms of the
amendment,  the  Company is now  responsible  for paying its own  administrative
expenses.  In February 2006 the  management  fee was increased to $1,150,000 per
annum.

12.  SUPPLEMENTAL INFORMATION

Non-cash investing and financing activities included the following:

(in thousands of $)                                  2005         2004      2003
Termination of vessels under capital leases:
Termination of vessels under capital leases, net        -    (316,363)

Acquisition of vessels:
Additions to vessels, net                               -      316,363