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

                                    FORM 20-F

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

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

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

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

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

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

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

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

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

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

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

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

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



<PAGE>


                                TABLE OF CONTENTS

                                                                           PAGE
PART I

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

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

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

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

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

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

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

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

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

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

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

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

PART II

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

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

Item 15.  Reserved

Item 16.  Reserved

PART III

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

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

Item 19.  Exhibits


<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," "except," "anticipate," "intends," "estimate," "forecast," "project,"
"plan,"  "potential,"  "will," "may," "should," "expect" and similar expressions
identify forward-looking statements.

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

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

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

<TABLE>
<CAPTION>
                                                       Fiscal Year                  Fiscal Period
                                                          Ended                         Ended
                                                       December 31                   December 31
                                -----------------------------------------------------------------------
                                     2001          2000         1999           1998         1997

<S>                            <C>           <C>            <C>           <C>            <C>

(in US$, except share data)

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

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

</TABLE>


B. CAPITALIZATION AND INDEBTEDNESS

Not Applicable

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable

D. RISK FACTORS

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

Industry Specific Risk Factors

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

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

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

          -      demand for oil and oil products;

          -      global and regional economic conditions;

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

          -      changes in seaborne and other transportation patterns

          The factors that influence the supply of tanker capacity include:

          -      the number of newbuilding deliveries;

          -      the scrapping rate of older vessels; and

          -      the number of vessels that are out of service.

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

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

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

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

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

         -      increased refining capacity in the Arabian Gulf area;

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

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

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

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

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

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

Company Specific Risk Factors

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

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

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

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

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

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

<PAGE>

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

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

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

          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.  Under  the  existing
charters,  Shell  International bears all risks associated with the operation of
our vessels including any total loss of one or more vessels.  However, we cannot
assure  investors that we will adequately  insure against all risks in the event
our existing  charters are not renewed at the expiration of their terms.  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.

We are highly dependent on Shell International and its guarantors

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

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

Incurrence of expenses or liabilities may reduce or eliminate distributions

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

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

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

We have a limited business purpose which limits our flexibility

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

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

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

ITEM 4. INFORMATION ON THE COMPANY

A.  HISTORY AND DEVELOPMENT OF THE COMPANY

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

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

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

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

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

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

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

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

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

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

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

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

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

B.  BUSINESS OVERVIEW

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Industry Conditions

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

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

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

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

Vessel Values

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

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

Loss and Liability Insurance

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

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

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

Environmental and Other Regulations

          Government   regulation   significantly   affects  the  ownership  and
operation of our vessels.  The various  types of  governmental  regulation  that
affect our vessels include international conventions,  national, state and local
laws and  regulations in force in the countries in which our vessels may operate
or where our vessels are  registered.  We cannot  predict the  ultimate  cost of
complying with these  requirements,  or the impact of these  requirements on the
resale  value  or  useful  lives  of  our  vessels.   Various  governmental  and
quasi-governmental   agencies  require  us  to  obtain  permits,   licenses  and
certificates  for the operation of our vessels.  Although we believe that we are
substantially  in compliance with applicable  environmental  and regulatory laws
and have all permits, licenses and certificates necessary for the conduct of our
operations,  future  non-compliance or failure to maintain  necessary permits or
approvals  could require us to incur  substantial  costs or temporarily  suspend
operation of one or more of our vessels.

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

Environmental Regulation--IMO.

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

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

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

          The  requirements  contained in the  International  Safety  Management
Code, or ISM Code,  promulgated by the IMO, also affect our operations.  The ISM
Code  requires  the party  with  operational  control  of a vessel to develop an
extensive  safety  management  system that  includes,  among other  things,  the
adoption  of  a  safety  and  environmental   protection  policy  setting  forth
instructions  and  procedures  for operating its vessels  safely and  describing
procedures for responding to emergencies.  Our vessel manager is certified as an
approved ship manager under the ISM Code.

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

          Noncompliance  with the ISM Code and other IMO regulations may subject
the  shipowner  or a bareboat  charterer  to  increased  liability,  may lead to
decreases in available insurance coverage for affected vessels and may result in
the denial of access to, or detention in, some ports.  Both the U.S. Coast Guard
and European  Union  authorities  have  indicated that vessels not in compliance
with the ISM Code by the applicable deadlines will be prohibited from trading in
U.S. and European Union ports, as the case may be.

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

Environmental Regulation--OPA/CERCLA

          The U.S. Oil Pollution Act of 1990, or OPA,  established  an extensive
regulatory and liability regime for environmental  protection and cleanup of oil
spills.  OPA affects all owners and operators  whose vessels trade with the U.S.
or its territories or possessions, or whose vessels operate in the waters of the
U.S.,  which include the U.S.  territorial  waters and the two hundred  nautical
mile  exclusive  economic  zone  of the  U.S.  The  Comprehensive  Environmental
Response, Compensation and Liability Act, or CERCLA, applies to the discharge of
hazardous  substances  whether on land or at sea. Both OPA and CERCLA impact our
operations.

          Under  OPA,   vessel  owners,   operators  and  bareboat  or  "demise"
charterers  are  "responsible  parties" who are all liable  regardless of fault,
individually  and as a group,  for all  containment and clean-up costs and other
damages arising from oil spills from their vessels.  These "responsible parties"
would not be liable if the spill  results  solely  from the act or omission of a
third  party,  an act of God or an act of war.  The  other  damages  aside  from
clean-up and containment costs are defined broadly to include:

        -     natural resource damages and related assessment costs;

        -     real and personal property damages;

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

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

        -     loss of subsistence use of natural resources.

          OPA limits the  liability  of  responsible  parties to the  greater of
$1,200 per gross ton or $10  million  per tanker  that is over 3,000 gross tons.
This is subject to possible adjustment for inflation.  OPA specifically  permits
individual  states to impose  their own  liability  regimes  with  regard to oil
pollution  incidents  occurring  within their  boundaries,  and some states have
enacted   legislation   providing  for  unlimited  liability  for  discharge  of
pollutants within their waters.  In some cases,  states which have enacted their
own legislation  have not yet issued  implementing  regulations  defining tanker
owners' responsibilities under these laws.

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

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

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

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

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

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

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

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

        -      describe crew training and drills; and

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

Environmental Regulation--Other

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

          In addition,  most U.S.  states that border a navigable  waterway have
enacted  environmental  pollution laws that impose strict  liability on a person
for removal costs and damages  resulting from a discharge of oil or a release of
a hazardous  substance.  These laws may be more stringent than U.S. federal law.
OPA specifically permits individual states to impose their own liability regimes
with regard to oil pollution  incidents  occurring within their boundaries,  and
many states have enacted  legislation  providing for unlimited liability for oil
spills.

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

Proposed EU Regulations

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

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

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

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

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

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

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

Inspection by Classification Societies

          Every seagoing vessel must be "classed" by a  classification  society.
The  classification  society certifies that the vessel is "in class," signifying
that the vessel has been built and  maintained in  accordance  with the rules of
the classification society and complies with applicable rules and regulations of
the vessel's country of registry and the international conventions of which that
country is a member.  In addition,  where surveys are required by  international
conventions  and  corresponding  laws  and  ordinances  of  a  flag  state,  the
classification  society will undertake them on application or by official order,
acting on behalf of the authorities concerned.

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

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

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

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

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

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

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

          Most vessels are also  drydocked  every 30 to 36 months for inspection
of the underwater  parts and for repairs related to inspections.  If any defects
are found, the classification  surveyor will issue a "recommendation" which must
be rectified by the shipowner within prescribed time limits.

          Most insurance underwriters make it a condition for insurance coverage
that a vessel be certified as "in class" by a classification  society which is a
member of the International Association of Classification Societies.

Sale of Vessels and Replacement Charters

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

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

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

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

C.  ORGANIZATIONAL STRUCTURE

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

                                COUNTRY OF          OWNERSHIP       VESSEL
NAME                            INCORPORATION       INTEREST        OWNED

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

D.  PROPERTY, PLANT AND EQUIPMENT

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

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

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

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

          The Vessels are all registered in the Isle of Man.

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

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.  OPERATING RESULTS

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

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

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

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

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

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

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

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

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

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

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

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

The Tanker Market

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

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

Critical Accounting Policies and Estimates

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

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

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

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

Charterhire

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

Operating Expenses

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

Interest Income And Expense

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

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

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

Charterhire

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

Operating Expenses

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

Interest Income And Expense

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

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


Inflation

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

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

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

B.  LIQUIDITY AND CAPITAL RESOURCES

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

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

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

Recently Issues Accounting Standards

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

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

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

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived  Assets".  The  objectives of SFAS No. 144 are to address
significant issues relating to the  implementation of SFAS No. 121,  "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of", and to develop a single accounting model based on the framework established
in SFAS No. 121 for  long-lived  assets to be disposed of by sale.  SFAS No. 144
requires that  long-lived  assets that are to be disposed of by sale be measured
at the lower of book value or fair value less costs to sell.  Additionally,  the
standard expands the scope of discontinued  operations to include all components
of an entity  with  operations  that can be  distinguished  from the rest of the
entity and will be  eliminated  from the ongoing  operations  of the entity in a
disposal transaction.  The adoption of SFAS No. 144 by the Company on January 1,
2002 did not have any impact on the Company's consolidated financial position or
results of operations.

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

          Not applicable

D.  TREND INFORMATION

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

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

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

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.  DIRECTORS AND SENIOR MANAGEMENT

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

The Company

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

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

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

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

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

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

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

Tor Olav Troim has been a director, Vice-Chairman and Chief Executive Officer of
the Company since May 26, 2000. Mr. Troim has been a director of Frontline since
July 1,  1996.  Mr.  Troim  also  serves  as a  director  of ICB  and  Frontline
Management AS, both subsidiaries of Frontline. He is a director of Aktiv Inkasso
ASA, Northern Oil ASA, both Norwegian Oslo Stock Exchange listed  companies.  He
is also a director of Northern Offshore Ltd. and Golar LNG Limited, both Bermuda
companies  listed  on  the  Oslo  Stock  Exchange.  Prior  to his  service  with
Frontline, from January 1992, Mr. Troim served as Managing Director and a member
of the board of Directors of DNO AS, a Norwegian oil company.

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

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

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

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

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

Management Agreement

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

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

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

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

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

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

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

B.  COMPENSATION

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

C.  BOARD PRACTICES

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

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

D.  EMPLOYEES

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

E.  SHARE OWNERSHIP

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

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.  MAJOR SHAREHOLDERS

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

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

                                                  ORDINARY SHARES
OWNER                                            AMOUNT  PER CENT

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

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

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

B.  RELATED PARTY TRANSACTIONS

Not Applicable

C.  INTERESTS OF EXPERTS AND COUNSEL

Not Applicable

ITEM 8. FINANCIAL INFORMATION

A.  CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See Item 18.

Legal Proceedings

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

Dividend Policy

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

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

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

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

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

RECORD DATE                       PAYMENT DATE              AMOUNT PER SHARE

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

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

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

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

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

B.  SIGNIFICANT CHANGES

Not Applicable

ITEM 9.  THE OFFER AND LISTING

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

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

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

FISCAL PERIOD ENDED DECEMBER 31
1997                                             $33.375          $20.375


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

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

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

                                                  HIGH              LOW

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

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

ITEM 10.  ADDITIONAL INFORMATION

A.  SHARE CAPITAL

Not Applicable

B.  MEMORANDUM AND ARTICLES OF ASSOCIATION

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

C.  MATERIAL CONTRACTS

Not Applicable

D.  EXCHANGE CONTROLS

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

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

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

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

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

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

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

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

E.  TAXATION

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

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

F.  DIVIDENDS AND PAYING AGENTS

Not Applicable

G.  STATEMENT BY EXPERTS

Not Applicable

H.  DOCUMENTS ON DISPLAY

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

I.  SUBSIDIARY INFORMATION

          Not Applicable

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
          RISK

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

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

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

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

          Not Applicable

<PAGE>

                                     PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

          Not Applicable

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

          Not Applicable

ITEM 15.  RESERVED


ITEM 16.  RESERVED

<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-13 together with the  independent  auditors'  report of Deloitte &
Touche AB thereon, are filed as part of this annual report:

Index to Financial Statements

                                                                           Page

Independent Auditors' Report                                               F-1

Consolidated Financial Statements:

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

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

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

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

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

Notes to Consolidated Financial Statements                                 F-7


<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
Knightsbridge Tankers Limited

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

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

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

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


Deloitte & Touche AB
Stockholm, Sweden
May 10, 2002


<PAGE>


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

                                                      2001            2000
ASSETS

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

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

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

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

LIABILITIES AND SHAREHOLDERS' EQUITY

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

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

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

Total liabilities                                 137,126,788      127,521553

Commitments and contingencies

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

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

          See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>

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


                                              2001           2000              1999

<S>                                   <C>              <C>               <C>

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

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


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


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

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

          See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


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

                                                         2001           2000              1999

<S>                                                  <C>           <C>               <C>

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

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

          See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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



                                                     2001           2000              1999

<S>                                             <C>           <C>                <C>

Cash flows from operating activities

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

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

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

Cash flows from financing activities

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

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

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

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

          See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


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


                                                       2001           2000          1999

<S>                                               <C>            <C>            <C>

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

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

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

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


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

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

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

          See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>

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

1.   DESCRIPTION OF BUSINESS

GENERAL

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

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

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

OWNERSHIP AND MANAGEMENT OF THE COMPANY

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

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

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

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

The preparation of financial  statements in accordance  with generally  accepted
accounting  principles  requires that  management make estimates and assumptions
affecting  the reported  amounts of assets and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

REPORTING CURRENCY

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

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

REVENUE AND EXPENSE RECOGNITION

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

COMPREHENSIVE INCOME

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

LEASES

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

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

CASH AND CASH EQUIVALENTS

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

CHARTER HIRE RECEIVABLE

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

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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

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

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

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

VESSELS AND DEPRECIATION

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

CAPITALIZED FINANCING FEES AND EXPENSES

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

EARNINGS PER SHARE

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

IMPAIRMENT OF LONG-LIVED ASSETS

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

DISTRIBUTIONS TO SHAREHOLDERS

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

NEW ACCOUNTING STANDARDS

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

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

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

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

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived  Assets".  The  objectives of SFAS No. 144 are to address
significant issues relating to the  implementation of SFAS No. 121,  "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of", and to develop a single accounting model based on the framework established
in SFAS No. 121 for  long-lived  assets to be disposed of by sale.  SFAS No. 144
requires that  long-lived  assets that are to be disposed of by sale be measured
at the lower of book value or fair value less costs to sell.  Additionally,  the
standard expands the scope of discontinued  operations to include all components
of an entity  with  operations  that can be  distinguished  from the rest of the
entity and will be  eliminated  from the ongoing  operations  of the entity in a
disposal transaction.  The adoption of SFAS No. 144 by the Company on January 1,
2002 did not have any impact on the Company's consolidated financial position or
results of operations.

3.   VESSELS UNDER CAPITAL LEASE

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

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


4.   CAPITALIZED FINANCING FEES AND EXPENSES

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

                                               2001             2000

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

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

5.   CREDIT FACILITY AND RELATED INTEREST RATE SWAP AGREEMENT

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


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

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

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

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

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

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

6.   LEASES

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

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

7.   TAXATION

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

8.   RELATED PARTY TRANSACTION

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

<PAGE>

ITEM 19.  EXHIBITS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

<PAGE>

                                   SIGNATURES

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

                                     KNIGHTSBRIDGE TANKERS LIMITED


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


Dated:  May 10, 2002




01655.0002 #324323