UNITED STATES

                       SECURITIES AND 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

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For the fiscal year ended                              December 31, 2006
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                                       OR
[_]            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

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

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Date of event requiring this shell company report
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For the transition period from

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Commission file number              0-22704
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                          KNIGHTSBRIDGE TANKERS LIMITED
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             (Exact name of Registrant as specified in its charter)

                          KNIGHTSBRIDGE TANKERS LIMITED
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                 (Translation of Registrant's name into English)

                                     Bermuda
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                 (Jurisdiction of incorporation or organization)

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


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

  Title of each class                                   Name of each exchange
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  Common Shares, $0.01 Par Value                                 NASDAQ
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Securities registered or to be registered pursuant to section 12(g) of the Act.

                                      None
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                                (Title of Class)


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

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


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
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Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.                      [_] Yes   [X] No

If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.                            [_] Yes   [X] No

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.                              [X] Yes   [_] No

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

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

Indicate by check mark which financial statement the registrant has elected to
follow:                                               [_]  Item 17   [X] Item 18

If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).   [_] Yes   [X] No


<PAGE>


                          INDEX TO REPORT ON FORM 20-F


                                                                           PAGE
PART I
Item 1.    Identity of Directors, Senior Management and Advisers ............1
Item 2.    Offer Statistics and Expected Timetable ..........................1
Item 3.    Key Information...................................................1
Item 4.    Information on the Company........................................8
Item 4A    Unresolved Staff Comments.........................................22
Item 5.    Operating and Financial Review and Prospects......................23
Item 6.    Directors, Senior Management and Employees........................30
Item 7.    Major Shareholders and Related Party Transactions.................33
Item 8.    Financial Information.............................................34
Item 9.    The Offer and Listing.............................................35
Item 10.   Additional Information............................................36
Item 11.   Quantitative and Qualitative Disclosures about Market Risk........39
Item 12.   Description of Securities other than Equity Securities............39

PART II

Item 13.   Defaults, Dividend Arrearages and Delinquencies...................40
Item 14.   Material Modifications to the Rights of Security Holders and
           Use of Proceeds...................................................40
Item 15.   Controls and Procedures...........................................40
Item 16A.  Audit committee financial expert..................................41
Item 16B.  Code of Ethics....................................................41
Item 16C.  Principal Accountant Fees and Services............................41
Item 16D.  Exemptions from the Listing Standards for Audit Committees........42
Item 16E.  Purchase of Equity Securities by the Issuer and Affiliated
           Purchasers........................................................42

PART III

Item 17.   Financial Statements..............................................43
Item 18.   Financial Statements..............................................43
Item 19.   Exhibits..........................................................43

<PAGE>

            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

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

<PAGE>

                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not Applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable

ITEM 3. KEY INFORMATION

Throughout this report, the "Company," "we," "us" and "our" all refer to
Knightsbridge Tankers Limited and its subsidiaries. We use the term deadweight
ton, or dwt, in describing the size of vessels. Dwt, expressed in metric tons,
each of which is equivalent to 1,000 kilograms, refers to the maximum weight of
cargo and supplies that a vessel can carry. Unless otherwise indicated, all
references to "USD,""US$" and "$" in this report are to, and amounts are
presented in, U.S. dollars.

A.   SELECTED FINANCIAL DATA

The selected consolidated income statement data of Knightsbridge Tankers Limited
and its subsidiaries, which we refer to as the Company or Knightsbridge, with
respect to the fiscal years ended December 31, 2006, 2005 and 2004, and the
selected consolidated balance sheet data of the Company with respect to the
fiscal years ended December 31, 2006 and 2005 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 years ended
December 31, 2003 and 2002 and the selected consolidated balance sheet data with
respect to the fiscal years ended December 31, 2004, 2003 and 2002 have been
derived from consolidated financial statements of the Company not included
herein. The following table should also be read in conjunction with Item 5
"Operating and Financial Review and Prospects" and the Company's Consolidated
Financial Statements and Notes thereto included herein.

<TABLE>
<CAPTION>
                                                                            Fiscal year ended December 31,
                                                            2006           2005           2004            2003          2002
(in thousands of $, except shares, per share data and ratios)
<S>                                                        <C>            <C>            <C>              <C>           <C>
Income Statement Data:
Total operating revenues                                   105,728        100,179        135,695          75,246        40,276
Total operating expenses                                    54,463         51,778         42,441          18,457        18,398
Net operating income                                        51,265         48,401         93,254          56,789        21,878
Net income                                                  45,717         43,967         85,839          47,461        12,552
Earnings per common share
- basic and diluted                                           2.67           2.57           5.02            2.78          0.73
Cash dividend declared per share                              3.60           4.55           4.55            2.74          1.81
Cash dividends paid                                         61,560         77,805         77,805          46,854        30,951


Balance Sheet Data (at end of year):
Cash and cash equivalents                                    8,538         12,634         31,653           6,312           228
Restricted cash                                             10,000         10,000         10,000               -             -
Vessels, net                                               267,949        285,070        301,500               -             -
Vessels under capital lease, net                                 -              -              -         319,408       337,001
Total assets                                               301,499        323,159        365,554         348,443       347,825
Short-term debt and current portion of long-term debt       11,211         11,200         11,309           8,400             -
Long-term debt                                              98,000        109,200        120,400         116,997       125,397
Stockholders' equity                                       179,190        195,033        228,871         215,527       208,639
Share capital                                                  171            171            171             171           171
Common shares outstanding                               17,100,000     17,100,000     17,100,000      17,100,000    17,100,000

Cash Flow Data:
Cash provided by operating activities                       68,653         70,128        106,588          52,940        30,899
Cash used in investing activities                                -              -        (9,310)               -             -
Cash used in financing activities                         (72,729)       (89,147)       (71,937)        (46,854)      (30,951)

Other Financial Data:
Equity to assets ratio (percentage) (1)                      59.4%          60.4%          62.6%           61.9%         60.0%
Debt to equity ratio (2)                                       0.6            0.6            0.6             0.6           0.6
Price earnings ratio (3)                                       8.9            9.4            6.7             4.5          20.5
</TABLE>

<PAGE>

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

B.   CAPITALIZATION AND INDEBTEDNESS

Not Applicable

C.   REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable

D.   RISK FACTORS

We are currently engaged in transporting crude oil and oil products. The
following summarizes some of the risks that may materially affect our business,
financial condition or results of operations.

Risk factors relating to our Industry

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

Currently, the Company has four vessels trading on medium or long-term charters,
which expire in 2009, 2010, 2011 and 2012 respectively. The Company's fifth
vessel is trading in the spot market, the market for immediate purchase of
marine petroleum products or chartering of a vessel, usually for single voyages.
Historically, the tanker industry has been highly cyclical, with volatility in
profitability and asset values resulting from changes in the supply of and
demand for tanker capacity. If the tanker market is depressed in the future, our
earnings and available cash flow may decrease. The charter rates payable under
time charters or in the spot market will depend upon, among other things,
economic conditions in the tanker market. Fluctuations in charter rates and
vessel values result from changes in the supply and demand for tanker capacity
and changes in the supply and demand for oil and oil products.

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

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

The factors that influence the supply of tanker capacity include:

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

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

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

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

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

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

Safety, environmental and other governmental and other requirements expose us to
liability, and compliance with current and future regulations could require
significant additional expenditures, which could have a material adverse affect
on our business and financial results

Our operations are affected by extensive and changing international, national,
state and local laws, regulations, treaties, conventions and standards in force
in international waters, the jurisdictions in which our tankers and other
vessels operate and the country or countries in which such vessels are
registered, including those governing the management and disposal of hazardous
substances and wastes, the cleanup of oil spills and other contamination, air
emissions, and water discharges and ballast water management. These regulations
include the U.S. Oil Pollution Act of 1990, or OPA, the International Convention
on Civil Liability for Oil Pollution Damage of 1969, International Convention
for the Prevention of Pollution from Ships, the IMO International Convention for
the Safety of Life at Sea of 1974, or SOLAS, the International Convention on
Load Lines of 1966 and the U.S. Marine Transportation Security Act of 2002. In
addition, vessel classification societies also impose significant safety and
other requirements on our vessels. In complying with current and future
environmental requirements, vessel owners and operators may also incur
significant additional costs in meeting new maintenance and inspection
requirements, in developing contingency arrangements for potential spills and in
obtaining insurance coverage. Government regulation of vessels, particularly in
the areas of safety and environmental requirements, can be expected to become
stricter in the future and require us to incur significant capital expenditures
on our vessels to keep them in compliance, or even to scrap or sell certain
vessels altogether.

Many of these requirements are designed to reduce the risk of oil spills and
other pollution, and our compliance with these requirements can be costly. These
requirements also can affect the resale value or useful lives of our vessels,
require a reduction in cargo-capacity, ship modifications or operational changes
or restrictions, lead to decreased availability of insurance coverage for
environmental matters or result in the denial of access to certain
jurisdictional waters or ports, or detention in, certain ports.

Under local, national and foreign laws, as well as international treaties and
conventions, we could incur material liabilities, including cleanup obligations,
natural resource damages and third-party claims for personal injury or property
damages, in the event that there is a release of petroleum or other hazardous
substances from our vessels or otherwise in connection with our current or
historic operations. We could also incur substantial penalties, fines and other
civil or criminal sanctions, including in certain instances seizure or detention
of our vessels, as a result of violations of or liabilities under environmental
laws, regulations and other requirements.

For example, OPA affects all vessel owners shipping oil to, from or within the
United States. OPA allows for potentially unlimited liability without regard to
fault for owners, operators and bareboat charterers of vessels for oil pollution
in United States waters. Similarly, the International Convention on Civil
Liability for Oil Pollution Damage, 1969, as amended, which has been adopted by
most countries outside of the United States, imposes liability for oil
pollution in international waters. OPA expressly permits individual states to
impose their own liability regimes with regard to hazardous materials and oil
pollution incidents occurring within their boundaries. Coastal states in the
United States have enacted pollution prevention liability and response laws,
many providing for unlimited liability.

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

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

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

Risk Factors relating to our Business

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

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

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

Tanker values have generally experienced high volatility. Investors can expect
the fair market value of our VLCC oil tankers to fluctuate, depending on general
economic and market conditions affecting the tanker industry and competition
from other shipping companies, types and sizes of vessels, and other modes of
transportation. In addition, as vessels grow older, they generally decline in
value. While we have refinanced our previous secured debt during 2004, declining
tanker values could affect our ability to raise cash by limiting our ability to
refinance vessels in the future and thereby adversely impact our liquidity. If
we determine at any time that a tanker's future limited useful life and earnings
require us to impair its value on our financial statements, that could result in
a charge against our earnings and the reduction of our shareholders' equity. Due
to the cyclical nature of the tanker market, if for any reason we sell tankers
at a time when tanker prices have fallen, the sale may be at less than the
tanker's carrying amount on our financial statements, with the result that we
would also incur a loss and a reduction in earnings. Based on the closing price
for our common shares on April 13, 2007, taking into account our total
indebtedness of $106.4 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 was $116.4 million. The market value of a similar
vessel may be significantly lower than the implied value of our vessels.

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.

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

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

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

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

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

The operation of tanker vessels and transportation of crude and petroleum
products and the other businesses in which we operate are extremely competitive.
Competition arises primarily from other tanker owners, including major oil
companies as well as independent tanker companies, some of whom have
substantially greater resources than we do. Competition for the transportation
of oil and oil products can be intense and depends on price, location, size,
age, condition and the acceptability of the tanker and its operators to the
charterers. We compete with other tanker owners, including major oil companies
as well as independent tanker companies for charterers. Due in part to the
fragmented tanker market, competitors with greater resources could enter and
operate larger fleets through acquisitions or consolidations and may be able to
offer better prices and fleets, which could result in our achieving lower
revenues from our VLCC oil tankers.

We receive a portion of our charterhire revenue from a limited number of
customers including Frontline Ltd.

We will derive a significant portion of our revenues from two charters with
Frontline Ltd, or Frontline. If we were to lose one or both of our charters with
Frontline, or any of our other customers, we may be unable to find a suitable
replacement charter for the related vessel on terms as favorable to us as under
our current charters. The loss of any of our customers could have a material
adverse effect on our revenues and results of operations.

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

Currently, four of our five tankers are contractually committed to time
charters, with the remaining terms of these charters expiring on dates between
2009 and 2012. Although these time charters generally provide reliable revenues,
they also limit the portion of our fleet available for spot market voyages
during an upswing in the tanker industry cycle, when spot market voyages might
be more profitable.

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

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

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

Rising fuel prices may adversely affect our profits

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

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

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

Incurrence of expenses or liabilities may reduce or eliminate distributions

Our policy has been to pay out available cash, less reserves for contingencies,
as distributions to stockholders, and we currently intend to continue that
policy. However, we could incur other expenses or contingent liabilities that
would reduce or eliminate the cash available for distribution by us as
dividends. Our loan agreement prohibits the declaration and payment of dividends
if we are in default under such loan agreement. In addition, the declaration and
payment of dividends is subject at all times to the discretion of our Board. We
cannot assure you that we will pay dividends.

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

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

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

Governments could requisition our vessels during a period of war or emergency
without adequate compensation, resulting in a loss of earnings

A government could requisition for title or seize our vessels. Requisition for
title occurs when a government takes control of a vessel and becomes her owner.
Also, a government could requisition our vessels for hire. Requisition for hire
occurs when a government takes control of a vessel and effectively becomes her
charterer at dictated charter rates. This amount could be materially less than
the charterhire that would have been payable otherwise. In addition, we would
bear all risk of loss or damage to a vessel under requisition for hire.

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

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

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

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

Because we are a foreign corporation, you may not have the same rights that a
shareholder in a United States corporation may have

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

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

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

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

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

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

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

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

We are subject to Section 404 of the Sarbanes-Oxley Act of 2002, which requires
us to include in our annual report on Form 20-F our management's report on, and
assessment of the effectiveness of, our internal controls over financial
reporting. In addition, first effective in our annual report for the fiscal year
ended December 31, 2007, our independent registered public accounting firm will
be required to attest to and report on management's assessment of the
effectiveness of our internal controls over financial reporting. If we fail to
maintain the adequacy of our internal controls over financial reporting, we will
not be in compliance with all of the requirements imposed by Section 404. Any
failure to comply with Section 404 could result in an adverse reaction in the
financial marketplace due to a loss of investor confidence in the reliability of
our financial statements, which ultimately could harm our business and could
negatively impact the market price of our common stock. We believe the total
cost of our initial compliance and the future ongoing costs of complying with
these requirements may be substantial.


ITEM 4. INFORMATION ON THE COMPANY

A.  HISTORY AND DEVELOPMENT OF THE COMPANY

Knightsbridge Tankers Limited was incorporated in Bermuda on September 18, 1996.
The Company's registered and principal executive offices are located at
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda, and its
telephone number is +1 (441) 295-0182. References herein to the Company include
the Company and all of its subsidiaries, unless otherwise indicated. The Company
was incorporated for the purpose of the acquisition, disposition, ownership,
leasing and chartering of, through wholly-owned subsidiaries (the "Original
Subsidiaries"), five very large crude oil carriers (the "Vessels"). The Company
used the net proceeds of its initial public offering and bank debt to fund the
purchase by the Original Subsidiaries of the Vessels. Upon their purchase from
their previous owners on February 27, 1997 until March 2004, the Company
chartered its Vessels to Shell International on long-term "hell and high water"
bareboat charters (the "Charters"). The term of each of these Charters was a
minimum of seven years, with an option for Shell International to extend the
period for each Vessel's Charter for an additional seven year term, to a maximum
of approximately 14 years per Charter. Shell International did not extend the
bareboat charters for any of the Vessels for a second seven year period.
Consequently, the Charters expired for all five Vessels, in accordance with
their terms, during March 2004 and the Vessels were redelivered to the Company.

Following the redelivery, the Company entered into a five year time charter, due
to expire in 2009 for one of its vessels while two of the Company's vessels have
each been time chartered for a period of three years which will expire in May
2007. The Company has entered into four and five year time charter agreements,
respectively with Frontline, a Bermuda based publicly listed tanker owner and
operator, to replace the charters due to expire in 2007. The Company's remaining
two vessels are trading on the spot market and since April 2005 have
participated in a pooling arrangement with Frontline. During March 2007 the
pooling arrangement with Frontline was terminated, and the Company commenced a
three year time charter for one of the vessels leaving one vessel trading on the
spot market.

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

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

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

Each Vessel was registered in the Republic of the Marshall Islands by the
relevant New Subsidiary. The Company also repaid its existing loans, on March 2,
2004, and together with the New Subsidiaries entered into a new loan agreement
(the "Loan Agreement") with The Royal Bank of Scotland plc (the "Lender"),
pursuant to which the Company borrowed $140.0 million in the form of five loans
of $28.0 million each in respect of a Vessel (together, the "Loan"). The Company
is obligated to repay the Loan in twenty-eight quarterly installments of $2.8
million and a final installment of $61.6 million on the last payment date. The
Loan Agreement provides for payment of interest on the outstanding principal
balance of the Loan, quarterly in arrears, at the annual rate of LIBOR plus a
margin. If a New Subsidiary sells or disposes of the related Vessel, the Company
will be obligated to make a loan prepayment which will be applied against the
principal balance of the Loan relating to the Vessel. The Loan Agreement is
secured by, among other things, a guarantee from each New Subsidiary, a mortgage
on each Vessel and an assignment of any charter with respect to a Vessel. The
failure by the Company to make payments due and payable under the Loan Agreement
could result in the acceleration of all principal and interest on the Loan
Agreement, the enforcement by the Lender of its rights with respect to the
security therefore, and the consequent forfeiture by the Company of one or more
of the Vessels. The Loan Agreement also provides for other customary events of
default.

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

B.  BUSINESS OVERVIEW

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

Expired Long-Term Charters

Pursuant to the Charters, Shell International paid a daily charterhire
commencing on the delivery date at a rate comprised of two primary components:
(i) the base rate, a fixed minimum rate of charterhire equal to $22,069 per
Vessel per day, payable quarterly in arrears, and (ii) additional hire, an
additional charterhire equal to the excess, if any, of a weighted average of the
daily time charter rates for three round-trip trade routes traditionally served
by VLCCs, less an agreed amount of $10,500, representing daily operating costs
over the base rate.

New Operations

Each of the Vessels is now owned by a New Subsidiary and has been renamed and
reflagged in the Marshall Islands and is currently deployed either on time
charters or in the spot market, operating on routes between the Arabian Gulf and
the Far East, Northern Europe, the Caribbean and the Louisiana Offshore Oil Port
("LOOP"). The following chart provides information on the deployment of our
Vessels as at December 31, 2006:

Vessel Name                            Employment                Expiration Date

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

On the expiration of the charters for the TI Ningbo and TI Qingdao in 2007, the
Company will commence four and five year time charter agreements respectively
with Frontline. During 2007 the Mayfair entered into a three year time charter
agreement with a third party. The following chart gives information on the
deployment of our Vessels from May 2007:

Vessel Name                             Employment              Expiration Date

Camden                                   Time charter           March, 2009
Chelsea                                  Spot market            n/a
Mayfair                                  Time charter           March, 2010
TI Ningbo                                Time charter           May, 2012
TI Qingdao                               Time charter           May, 2011

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

The Company was incorporated for the purpose of the acquisition, disposition,
ownership, leasing and chartering of, the Vessels. At the 2005 Annual General
Meeting of the Company, the Shareholders approved removing restrictive
provisions that limited the Company business to these activities. The Company is
actively engaged in considering its future strategy and opportunities available.
These may include disposition of existing vessels, the acquisition of
newbuildings and/or secondhand tonnage and may include such activities in
shipping transportation sectors other than oil transportation. In pursuing such
opportunities the Company does not expect to change its strategy of maintaining
a balance of term charter and spot market trading and paying dividends subject
to the Company having sufficient earnings, financial condition and cash
position.

Management Agreement

Upon expiration of the Charters in 2004, we amended our agreement with ICB
Shipping (Bermuda) Limited (the "Manager") pursuant to which the Manager now
assumes operational responsibility for the Vessels and has agreed to re-charter
the Vessels, subject to the approval of the Board of Directors. Under the
management agreement the Manager is required to manage the day-to-day business
of the Company subject, always, to the objectives and policies of the Company as
established from time to time by the Board. All decisions of a material nature
concerning the business of the Company are reserved to the Company's Board of
Directors. The management agreement will terminate in 2012, unless earlier
terminated pursuant to the terms thereof, as discussed below.

Under, the management agreement the Manager received an annual fee of $750,000
during the period of the Charters. The management fee was reduced to $630,000
per year in the first quarter of 2004 and subsequently increased to $1,150,000
in the first quarter of 2006. The Company is now responsible for paying its own
administrative expenses including such items as audit fees, legal and
professional fees, registrar fees, and directors and officers fees and expenses.
The Company believes that these management fees are substantially on the same
terms that would be obtained from a non-affiliated party. The Manager was not
affiliated with the Company, the Charterer or Guarantors at the time these fees
were negotiated.

Upon the expiration of the Charters in 2004 and the Company's shareholders'
decision to continue the Company in its business and not sell the Vessels, the
Manager became obligated under the management agreement to attempt to re-charter
each Vessel on an arms-length basis upon such terms as the Manager deems
appropriate, subject to the approval of the Board. The Manager receives a
commission equal to 1.25 percent of the gross freight earned from such
re-chartering (which is the standard industry commission). The Manager, on
behalf of the Company, may utilize the services of brokers and lawyers, and
enter into such compensation arrangements with them, subject to the Board's
approval, as the Manager deems appropriate.

The Company may terminate the management agreement at any time upon 30 day's
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 percent of the Company's outstanding common shares.
The Company may terminate the management agreement at any time upon five
business days' prior written notice to the Manager in the event of the Manager's
material breach thereof, the failure of the Manager to maintain adequate
authorization to perform its duties thereunder, the Manager's insolvency, in the
event that it becomes unlawful for the Manager to perform its duties thereunder
or if the Manager ceases to be wholly-owned, directly or indirectly, by
Frontline. The Manager may terminate the management agreement upon ten business
days' prior written notice to the Company in the event that the Company
undergoes a "change of control" which is the election of any director whose
election was not recommended by the then current Board. The Company believes
that in the case of any termination of the management agreement, the Company
could obtain an appropriate alternative arrangement for the management of the
Company, although there can be no assurance that such alternative arrangement
would not cause the Company to incur additional cash expenses.

During 2006, the Company announced that it has entered into four and five year
time charter agreements with Frontline Ltd, the parent company of the Manager.
These charters will commence in 2007 and were negotiated at an arms-length basis
and at prevailing market rates with Frontline.

Industry Conditions

The oil tanker industry has been highly cyclical, experiencing volatility in
charterhire rates and vessel values resulting from changes in the supply of and
the demand for crude oil and tanker capacity. The demand for tankers is
influenced by, among other factors, the demand for crude oil, global and
regional economic conditions, developments in international trade, changes in
seaborne and other transportation patterns, weather patterns, oil production,
armed conflicts, port congestion, canal closures, embargoes and strikes. In
addition, the Company anticipates that the future demand for VLCCs, such as the
Vessels, will also be dependent upon continued economic growth in the United
States, Continental Europe and the Far East and competition from pipelines and
other sizes of tankers. Adverse economic, political, social or other
developments in any of these regions could have an adverse effect on the
Company's business and results of operations. In addition, even if demand for
crude oil grows in these areas, demand for VLCCs may not necessarily grow and
may even decline. Demand for crude oil is affected by, among other things,
general economic conditions, commodity prices, environmental concerns, taxation,
weather and competition from alternatives to oil. Demand for the seaborne
carriage of oil depends partly on the distance between areas that produce crude
oil and areas that consume it and their demand for oil. The incremental supply
of tanker capacity is a function of the delivery of new vessels and the number
of older vessels scrapped, in lay-up, converted to other uses, reactivated or
lost. Such supply may be affected by regulation of maritime transportation
practices by governmental and international authorities. All of the factors
influencing the supply of and demand for oil tankers are outside the control of
the Company, and the nature, timing and degree of changes in industry conditions
are unpredictable.

VLCCs are specifically designed for the transportation of crude oil and, due to
their size, are used to transport crude oil primarily from the Arabian Gulf to
the Far East, Northern Europe, the Caribbean and the LOOP. While VLCCs are
increasingly being used to carry crude oil from other areas, any decrease in
shipments of crude oil from the Arabian Gulf would have a material adverse
effect on the Company.

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

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

Vessel Values

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

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

Seasonality

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

Competition

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

Environmental Regulation and Other Regulations

Government regulations and laws significantly affect the ownership and operation
of our tankers. We are subject to various international conventions, laws and
regulations in force in the countries in which our vessels may operate or are
registered.

A variety of government, quasi-governmental and private organizations subject
our tankers to both scheduled and unscheduled inspections. These organizations
include the local port authorities, national authorities, harbor masters or
equivalent, classification societies, flag state and charterers, particularly
terminal operators and oil companies. Some of these entities require us to
obtain permits, licenses and certificates for the operation of our tankers. Our
failure to maintain necessary permits or approvals could require us to incur
substantial costs or temporarily suspend operation of one or more of the vessels
in our fleet.

We believe that the heightened levels of environmental and quality concerns
among insurance underwriters, regulators and charterers have led to greater
inspection and safety requirements on all tankers and may accelerate the
scrapping of older vessels throughout the industry. Increasing environmental
concerns have created a demand for tankers that conform to the stricter
environmental standards. We are required to maintain operating standards for all
of our vessels emphasizing operational safety, quality maintenance, continuous
training of our officers and crews and compliance with applicable local,
national and international environmental laws and regulations. We believe that
the operation of our vessels will be in substantial compliance with applicable
environmental laws and regulations and that our vessels have all material
permits, licenses, certificates or other authorizations necessary for the
conduct of our operations; however, because such laws and regulations are
frequently changed and may impose increasingly stricter requirements, 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 tankers. In
addition, a future serious marine incident that results in significant oil
pollution or otherwise causes significant adverse environmental impact could
result in additional legislation or regulation that could negatively affect our
profitability.

International Maritime Organization

The International Maritime Organization, or IMO (the United Nations agency for
maritime safety and the prevention of pollution by ships), has adopted the
International Convention for the Prevention of Marine Pollution from Ships,
1973, as modified by the Protocol of 1978 relating thereto, which has been
updated through various amendments, or the MARPOL Convention. The MARPOL
Convention implements environmental standards including oil leakage or spilling,
garbage management, as well as the handling and disposal of noxious liquids,
harmful substances in packaged forms, sewage and air emissions. These
regulations, which have been implemented in many jurisdictions in which our
vessels operate, provide, in part, that:

     o    25-year old tankers must be of double hull construction or of a
          mid-deck design with double-sided construction, unless:

          (1)  they have wing tanks or double-bottom spaces not used for the
               carriage of oil which cover at least 30% of the length of the
               cargo tank section of the hull or bottom; or

          (2)  they are capable of hydrostatically balanced loading (loading
               less cargo into a tanker so that in the event of a breach of the
               hull, water flows into the tanker, displacing oil upwards instead
               of into the sea);

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

     o    all tankers will be subject to enhanced inspections.

Also, under IMO regulations, a tanker must be of double hull construction or a
mid-deck design with double-sided construction or be of another approved design
ensuring the same level of protection against oil pollution if the tanker: o is
the subject of a contract for a major conversion or original construction on or
after July 6, 1993;

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

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

Our vessels are also subject to regulatory requirements, including the phase-out
of single hull tankers, imposed by the IMO. Effective September 2002, the IMO
accelerated its existing timetable for the phase-out of single hull oil tankers.
At that time, these regulations required the phase-out of most single hull oil
tankers by 2015 or earlier, depending on the age of the tanker and whether it
has segregated ballast tanks. We do not currently own any single hull vessels.

Under the regulations, the flag state may allow for some newer single hull ships
registered in its country that conform to certain technical specifications to
continue operating until the 25th anniversary of their delivery. Any port state,
however, may deny entry of those single hull tankers that are allowed to operate
until their 25th anniversary to ports or offshore terminals. These regulations
have been adopted by over 150 nations, including many of the jurisdictions in
which our tankers operate.

As a result of the oil spill in November 2002 relating to the loss of the MT
Prestige, which was owned by a company not affiliated with us, in December 2003,
the Marine Environmental Protection Committee of the IMO, or MEPC, adopted an
amendment to the MARPOL Convention, which became effective in April 2005. The
amendment revised an existing regulation 13G accelerating the phase-out of
single hull oil tankers and adopted a new regulation 13H on the prevention of
oil pollution from oil tankers when carrying heavy grade oil. Under the revised
regulation, single hull oil tankers were required to be phased out no later than
April 5, 2005 or the anniversary of the date of delivery of the ship on the date
or in the year specified in the following table:

Category of Oil Tankers                  Date or Year for Phase Out

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

     Category 2 - oil tankers of
     20,000 dwt and above carrying
     crude oil, fuel oil, heavy
     diesel oil or lubricating oil     April 5, 2005 for ships delivered on
     as cargo, and of 30,000 dwt       April 5, 1977 or earlier
     and above carrying other oils,    2005 for ships delivered after April 5,
     which do comply with the          1977 but before January 1, 1978
     protectively located              2006 for ships delivered in 1978 and 1979
     segregated ballast tank           2007 for ships delivered in 1980 and 1981
     requirements                      2008 for ships delivered in 1982
                                       2009 for ships delivered in 1983
      and                              2010 for ships delivered in 1984 or later

     Category 3 - oil tankers of
     5,000 dwt and above but less
     than the tonnage specified for
     Category 1 and 2 tankers.

Under the revised regulations, the flag state may allow for some newer single
hull oil tankers registered in its country that conform to certain technical
specifications to continue operating until the earlier of the anniversary of the
date of delivery of the vessel in 2015 or the 25th anniversary of their
delivery. Any port state, however, may deny entry of those single hull oil
tankers that are allowed to operate until the earlier of their anniversary date
of delivery in 2015 or the year in which the ship reaches 25 years of age after
the date of its delivery, whichever is earlier.

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

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

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

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

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

Under regulation 13H, HGO means any of the following:

     o    crude oils having a density at 15(0)C higher than 900 kg/m(3);

     o    fuel oils having either a density at 15(0)C higher than 900 kg/m(3) or
          a kinematic viscosity at 50(0)C higher than 180 mm(2)/s; or

     o    bitumen, tar and their emulsions.

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

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

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

Revised Annex I to the MARPOL Convention entered into force in January 2007.
Revised Annex I incorporates various amendments adopted since the MARPOL
Convention entered into force in 1983, including the amendments to regulation
13G (regulation 20 in the revised Annex) and Regulation 13H (Regulation 21 in
the revised Annex). Revised Annex I also imposes construction requirements for
oil tankers delivered on or after January 1, 2010. A further amendment to
revised Annex I includes an amendment to the definition of heavy grade oil that
will broaden the scope of Regulation 21.
In September 1997, the IMO adopted Annex VI to the International Convention for
the Prevention of Pollution from Ships to address air pollution from ships.
Annex VI was ratified in May 2004, and became effective May 19, 2005. Annex VI
sets limits on sulfur oxide and nitrogen oxide emissions from ship exhausts and
prohibits deliberate emissions of ozone depleting substances, such as
chlorofluorocarbons. Annex VI also includes a global cap on the sulfur content
of fuel oil and allows for special areas to be established with more stringent
controls on sulfur emissions. We believe that all our vessels are currently
compliant in all material respects with these regulations. Additional or new
conventions, laws and regulations may be adopted that could adversely affect our
business, cash flows, results of operations and financial condition.

The IMO has also adopted the International Convention for the Safety of Life at
Sea, or SOLAS Convention, and the International Convention on Load Lines, 1966,
or LL Convention, which impose a variety of standards to regulate design and
operational features of ships. SOLAS Convention and LL Convention standards are
revised periodically. We believe that all our vessels are in substantial
compliance with SOLAS Convention and LL Convention standards.
Under Chapter IX of SOLAS, the requirements contained in the International
Safety Management Code for the Safe Operation of Ships and for Pollution
Prevention, or ISM 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. We intend to rely upon the
safety management system that the appointed ship managers have developed.

The ISM Code requires that vessel ship manager or operators obtain a safety
management certificate for each vessel they operate. This certificate evidences
compliance by a vessel's management with the ISM code requirements for a safety
management system. No vessel can obtain a safety management certificate unless
its manager has been awarded a document of compliance, issued by each flag
state, under the ISM Code. The appointed ship managers have obtained documents
of compliance for their offices and safety management certificates for all of
our vessels for which the certificates are required by the IMO.

Noncompliance with the ISM Code and other IMO regulations may subject the
shipowner or 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. 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 has negotiated international conventions that impose liability for oil
pollution in international waters and a signatory's territorial waters.
Additional or new conventions, laws and regulations may be adopted which could
limit our ability to do business and which could have a material adverse effect
on our business and results of operations. The IMO adopted an International
Convention for the Control and Management of Ships' Ballast Water and Sediments,
or the BWM Convention, in February 2004. The BWM Convention's implementing
regulations call for a phased introduction of mandatory ballast water exchange
requirements (beginning in 2009), to be replaced in time with mandatory
concentration limits. The BWM Convention will not enter into force until 12
months after it has been adopted by 30 states, the combined merchant fleets of
which represent not less than 35% of the gross tonnage of the world's merchant
shipping.

The flag state, as defined by the United Nations Convention on Law of the Sea,
has overall responsibility for the implementation and enforcement of
international maritime regulations for all ships granted the right to fly its
flag. The "Shipping Industry Guidelines on Flag State Performance" evaluates
flag states based on factors such as sufficiency of infrastructure, ratification
of international maritime treaties, implementation and enforcement of
international maritime regulations, supervision of surveys, casualty
investigations and participation at IMO meetings. Our vessels are flagged in the
Marshall Islands. Marshall Islands-flagged vessels generally receive a good
assessment in the shipping industry.

Although the United States is not a party to these conventions, many countries
have ratified and follow the liability plan adopted by the IMO and set out in
the International Convention on Civil Liability for Oil Pollution Damage of
1969, as amended in 2000, or the CLC. Under this convention and depending on
whether the country in which the damage results is a party to the 1992 Protocol
to the CLC, a vessel's registered owner is strictly liable for pollution damage
caused in the territorial waters of a contracting state by discharge of
persistent oil, subject to certain complete defenses. The limits on liability
outlined in the 1992 Protocol use the International Monetary Fund currency unit
of Special Drawing Rights, or SDR. Under an amendment to the 1992 Protocol that
became effective on November 1, 2003, for vessels of 5,000 to 140,000 gross tons
(a unit of measurement for the total enclosed spaces within a vessel), liability
will be limited to approximately 4.51 million SDR plus 631 SDR for each
additional gross ton over 5,000. For vessels of over 140,000 gross tons,
liability will be limited to 89.77 million SDR. The exchange rate between SDRs
and U.S. dollars was 0.669487 SDR per U.S. dollar on February 6, 2007. As the
convention calculates liability in terms of a basket of currencies, these
figures are based on currency exchange rates on March 13, 2007. The right to
limit liability is forfeited under the International Convention on Civil
Liability for Oil Pollution Damage 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 that are
parties to these conventions must provide evidence of insurance covering the
liability of the owner. In jurisdictions where the International Convention on
Civil Liability for Oil Pollution Damage 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 that convention. We believe that our
P&I insurance will cover the liability under the plan adopted by the IMO.

United States Requirements

In 1990, the United States Congress enacted OPA to establish an extensive
regulatory and liability regime for environmental protection and cleanup of oil
spills. OPA affects all owners and operators whose vessels trade with the United
States or its territories or possessions, or whose vessels operate in the waters
of the United States, which include the U.S. territorial sea and the 200
nautical mile exclusive economic zone around the United States. The
Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA,
imposes liability for cleanup and natural resource damage from the release of
hazardous substances (other than oil) whether on land or at sea. Both OPA and
CERCLA impact our operations.

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

     o    natural resource damages and related assessment costs;

     o    real and personal property damages;

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

     o    net cost of public services necessitated by a spill response, such as
          protection from fire, safety or health hazards; and loss of
          subsistence use of natural resources.

OPA previously limited the liability of responsible parties to the greater of
$1,200 per gross ton or $10.0 million per tanker that is over 3,000 gross tons
(subject to possible adjustment for inflation). Amendments to OPA signed into
law in July 2006 increased these limits on the liability of responsible parties
to the greater of $1,900 per gross ton or $16.0 million per double hull tanker
that is over 3,000 gross tons. The act 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 this type of 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 $5.0 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 call.

OPA requires owners and operators of vessels to establish and maintain with the
U.S. Coast Guard evidence of financial responsibility sufficient to meet the
limit of their potential strict liability under the act. The U.S. Coast Guard
has enacted regulations requiring evidence of financial responsibility in the
amount of $1,500 per gross ton for tankers, coupling the former OPA limitation
on liability of $1,200 per gross ton with the CERCLA liability limit of $300 per
gross ton. The U.S. Coast Guard has indicated that it expects to adopt
regulations requiring evidence of financial responsibility in amounts that
reflect the higher limits of liability imposed by the July 2006 amendments to
OPA, as described above. 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 is
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 strict liability under OPA and CERCLA. We
have provided such evidence and received certificates of financial
responsibility from the U.S. Coast Guard for each of our vessels required to
have one.

We insure each of our vessels with pollution liability insurance in the maximum
commercially available amount of $1.0 billion. A catastrophic spill could exceed
the insurance coverage available, which could have a material adverse effect on
our business.

Under OPA, with certain limited exceptions, all newly-built or converted vessels
operating in U.S. waters must be built with double hulls, and existing vessels
that do not comply with the double hull requirement will be prohibited from
trading in U.S. waters over a 20-year period (1995-2015) based on size, age and
place of discharge, unless retrofitted with double hulls. Notwithstanding the
prohibition to trade schedule, the act currently permits existing single hull
and double-sided tankers to operate until the year 2015 if their operations
within U.S. waters are limited to discharging at the LOOP or off-loading by
lightering within authorized lightering zones more than 60 miles off-shore.
Lightering is the process by which vessels at sea off-load their cargo to
smaller vessels for ultimate delivery to the discharge port.

All of our vessels are of double hull construction.

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

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

     o    describe crew training and drills; and

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

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

In addition, the United States Clean Water Act prohibits the discharge of oil or
hazardous substances in United States navigable waters and imposes strict
liability in the form of penalties for unauthorized discharges. The Clean Water
Act also imposes substantial liability for the costs of removal, remediation and
damages and complements the remedies available under OPA and CERCLA, discussed
above. The United States Environmental Protection Agency, or EPA, has exempted
the discharge of ballast water and other substances incidental to the normal
operation of vessels in U.S. ports from Clean Water Act permitting requirements.
However, on March 31, 2005, a U.S. District Court ruled that the EPA exceeded
its authority in creating an exemption for ballast water. On September 18, 2006,
the court issued an order invalidating the exemption in EPA's regulations for
all discharges incidental to the normal operation of a vessel as of September
30, 2008, and directing the EPA to develop a system for regulating all
discharges from vessels by that date. The EPA filed a notice of appeal of this
decision and, if the EPA's appeals are successful and exemption is repealed, our
vessels may be subject to Clean Water Act permit requirements that could include
ballast water treatment obligations that could increase the cost of operating in
the United States. For example, this could require the installation of equipment
on our vessels to treat ballast water before it is discharged or the
implementation of other port facility disposal arrangements or procedures at
potentially substantial cost, and/or otherwise restrict our vessels from
entering U.S. waters.

Other Regulations

In July 2003, in response to the MT Prestige oil spill in November 2002, the
European Union adopted legislation that prohibits all single hull tankers from
entering into its ports or offshore terminals by 2010. The European Union has
also banned all single hull tankers carrying heavy grades of oil from entering
or leaving its ports or offshore terminals or anchoring in areas under its
jurisdiction. Commencing in 2005, certain single hull tankers above 15 years of
age will also be restricted from entering or leaving European Union ports or
offshore terminals and anchoring in areas under European Union jurisdiction. The
European Union has also adopted legislation that would: (1) ban manifestly
sub-standard vessels (defined as those over 15 years old that have been detained
by port authorities at least twice in a six month period) from European waters
and create an obligation of port states to inspect vessels posing a high risk to
maritime safety or the marine environment; and (2) provide the European Union
with greater authority and control over classification societies, including the
ability to seek to suspend or revoke the authority of negligent societies. The
sinking of the MT Prestige and resulting oil spill in November 2002 has led to
the adoption of other environmental regulations by certain European Union
nations, which could adversely affect the remaining useful lives of all of our
vessels and our ability to generate income from them. 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.

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.

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

The U.S. National Invasive Species Act, or NISA, was enacted in 1996 in response
to growing reports of harmful organisms being released into U.S. ports through
ballast water taken on by ships in foreign ports. The United States Coast Guard
adopted regulations under NISA in July 2004 that impose mandatory ballast water
management practices for all vessels equipped with ballast water tanks entering
U.S. waters. These requirements can be met by performing mid-ocean ballast
exchange, by retaining ballast water on board the ship, or by using
environmentally sound alternative ballast water management methods approved by
the United States Coast Guard. Mid-ocean ballast exchange is the primary method
for compliance with the United States Coast Guard regulations, since holding
ballast water can prevent ships from performing cargo operations upon arrival in
the United States, and alternative methods are still under development. Vessels
that are unable to conduct mid-ocean ballast exchange due to voyage or safety
concerns may discharge minimum amounts of ballast water (in areas other than the
Great Lakes and the Hudson River), provided that they comply with recordkeeping
requirements and document the reasons they could not follow the required ballast
water management requirements. The United States Coast Guard is developing a
proposal to establish ballast water discharge standards, which could set maximum
acceptable discharge limits for various invasive species, and/or lead to
requirements for active treatment of ballast water.

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

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of
initiatives intended to enhance vessel security. On November 25, 2002, the U.S.
Maritime Transportation Security Act of 2002, or MTSA, came into effect. To
implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard
issued regulations requiring the implementation of certain security requirements
aboard vessels operating in waters subject to the jurisdiction of the United
States. Similarly, in December 2002, amendments to SOLAS created a new chapter
of the convention dealing specifically with maritime security. The new chapter
became effective in July 2004 and imposes various detailed security obligations
on vessels and port authorities, most of which are contained in the
International Ship and Port Facilities Security Code, or the ISPS Code. The ISPS
Code is designed to protect ports and international shipping against terrorism.
After July 1, 2004, to trade internationally, a vessel must attain an
International Ship Security Certificate from a recognized security organization
approved by the vessel's flag state. Among the various requirements are:

     o    on-board installation of automatic identification systems to provide a
          means for the automatic transmission of safety-related information
          from among similarly equipped ships and shore stations, including
          information on a ship's identity, position, course, speed and
          navigational status;

     o    on-board installation of ship security alert systems, which do not
          sound on the vessel but only alerts the authorities on shore;

     o    the development of vessel security plans;

     o    ship identification number to be permanently marked on a vessel's
          hull;

     o    a continuous synopsis record kept onboard showing a vessel's history
          including, name of the ship and of the state whose flag the ship is
          entitled to fly, the date on which the ship was registered with that
          state, the ship's identification number, the port at which the ship is
          registered and the name of the registered owner(s) and their
          registered address; and

     o    compliance with flag state security certification requirements.

The U.S. Coast Guard regulations, intended to align with international maritime
security standards, exempt from MTSA vessel security measures non-U.S. vessels
that have on board, as of July 1, 2004, a valid ISSC attesting to the vessel's
compliance with SOLAS security requirements and the ISPS Code. We have
implemented the various security measures addressed by MTSA, SOLAS and the ISPS
Code, and our fleet is in compliance with applicable security requirements.

Inspection by Classification Societies

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:

     o    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.

     o    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.

     o    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 ship owner 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 ship owner within prescribed time limits.

Risk of loss and insurance

Most insurance underwriters make it a condition for insurance coverage that a
vessel be certified as "in-class" by a classification society which is a member
of the International Association of Classification Societies. All our vessels
are certified as being "in-class" by Det Norske Veritas. All new and secondhand
vessels that we purchase must be certified prior to their delivery under our
standard purchase contracts and memoranda of agreement. If the vessel is not
certified on the scheduled date of closing, we have no obligation to take
delivery of the vessel.

The operation of any ocean-going vessel carries an inherent risk of catastrophic
marine disasters and property losses caused by adverse weather conditions,
mechanical failures, human error, war, terrorism and other circumstances or
events. In addition, the transportation of crude oil is subject to the risk of
spills, and business interruptions due to political circumstances in foreign
countries, hostilities, labor strikes and boycotts. OPA has made liability
insurance more expensive for ship owners and operators imposing potentially
unlimited liability upon owners, operators and bareboat charterers for oil
pollution incidents in the territorial waters of the United States. We believe
that our current insurance coverage is adequate to protect us against the
principal accident-related risks that we face in the conduct of our business.

Our protection and indemnity insurance, or P&I insurance, covers third-party
liabilities and other related expenses from, among other things, injury or death
of crew, passengers and other third parties, claims arising from collisions,
damage to cargo and other third-party property and pollution arising from oil or
other substances. Our current P&I insurance coverage for pollution is the
maximum commercially available amount of $1.0 billion per tanker per incident
and is provided by mutual protection and indemnity associations. Each of the
vessels currently in our fleet is entered in a protection and indemnity
association which is a member of the International Group of Protection and
Indemnity Mutual Assurance Associations. The 13 protection and indemnity
associations that comprise the International Group insure approximately 90% of
the world's commercial tonnage and have entered into a pooling agreement to
reinsure each association's liabilities. Each protection and indemnity
association has capped its exposure to this pooling agreement at $4.3 billion.
As a member of protection and indemnity associations, which are, in turn,
members of the International Group, we are subject to calls payable to the
associations based on its claim records as well as the claim records of all
other members of the individual associations and members of the pool of
protection and indemnity associations comprising the International Group.

Our hull and machinery insurance covers actual or constructive total loss from
covered risks of collision, fire, heavy weather, grounding and engine failure or
damages from same. Our war risk insurance covers risks of confiscation, seizure,
capture, vandalism, sabotage and other war-related risks. Our loss-of-hire
insurance covers loss of revenue for not less than 90 days resulting from an
accident covered by the terms of our hull and machinery insurance for each of
our vessels, with a 20 day deductible.

C.   ORGANIZATIONAL STRUCTURE

See Exhibit 8.1 for a list of our subsidiaries.

D.   PROPERTY, PLANT AND EQUIPMENT

We operate a modern fleet of five tankers. The name, dwt, hull type, flag and
date of original delivery from the Builder's yard are set forth below.

                    Approximate
Vessel name         dwt            Hull type       Flag              Year Built

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

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

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

ITEM 4A. UNRESOLVED STAFF COMMENTS

None

<PAGE>

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

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

In February 1997, the Company's five Original Subsidiaries each purchased one
VLCC. From their purchase in February 1997 until March 2004, the Company
chartered the Vessels to Shell International on long-term "hell and high water"
bareboat charters (the "Charters"). The Charters expired for all five Vessels,
in accordance with their terms, in March 2004 and the Vessels were redelivered
to the Company.

Following the redelivery, the Company entered into the following time charter
agreements:
<TABLE>
<CAPTION>
              Type of Charter            Time Charter Terms           Length of Charter   Expiration date
---------------------------------------------------------------------------------------------------------
<S>                 <C>          <C>                                         <C>           <C>
TI Ningbo           Time         $30,000 per day plus profit share*         3 year          April, 2007
TI Qingdao          Time         $30,000 per day plus profit share*         3 year          April, 2007
Camden              Time         $31,000 per day                            5 year          March, 2009
</TABLE>

* Profit share is calculated for earnings in excess of $30,000 per vessel per
day calculated by reference to the Baltic International Trading Route (BITR)
Index.

On the expiration of the charters for TI Ningbo and TI Qingdao in 2007, the
Company has entered into four and five year time charter agreements with
Frontline. The charters are for a fixed base rate of $37,750 per day plus a
market related element being 50 percent of the difference between the spot
market related rate index and the base rate.

The Company's remaining two vessels; Mayfair and Chelsea traded on the spot
market and participated in a pooling arrangement with Frontline until this
arrangement was terminated in 2007. In March 2007, the Company commenced a three
year time charter for the Mayfair with a third party at a fixed rate of $45,000
per day while Chelsea continues to trade on the spot market.

Factors Affecting Our 2006 and Future Results

The principal factors that have affected our 2006 results of operations and
financial position and are expected to affect our future results of operations
and financial position include:

     o    the earnings of our vessels in the charter market;

     o    vessel operating expenses including drydocking;

     o    administrative expenses;

     o    depreciation; and

     o    interest expense.


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

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

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

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

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

Interest expense depends on our overall borrowing levels and will change with
prevailing interest rates, although the effect of these changes may be reduced
by interest rate swaps or other derivative instruments. At December 31, 2006,
all of our debt was floating rate debt. We may enter into interest rate swap
arrangements if we believe it is advantageous to do so.

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

Market Overview and Trend Information

The tanker market continued to strengthen in 2006 driven by the demand side
which had the greatest influence on rates. The year started at TCE of
approximately $81,000 per day, rates then followed the traditional seasonal
pattern by softening to about $33,000 around the middle of April, 2006. From
this point, the rates began to firm against market predictions at the time and
rose to $89,000 by the end of August. The fear of another active hurricane
season in the US Gulf, geopolitical uncertainty and increased risk of supply
disruptions gave strong incentives to build oil stocks throughout the summer. On
land storage capacity was in some regions filled to capacity, driven by an
extraordinary strong future rates compared to market rates, with the wide use of
tankers for storage purposes as the consequence.

Gradually the oil market picked up after the inventory build up which had
triggered a sharp drop in crude prices, from $76 per barrel in early August to
$56 per barrel in early October. This led to the market weakening and rates fell
to $45,000 a day by the middle of December 2006. Depending on the source of
information, the average TCE for the year was about $63,000 for a double hulled
VLCC.

For OPEC it was important to prevent an uncontrolled price decline so in
October, OPEC cut production by 1.2 million barrels per day from November, 2006.
It was reported by the International Energy Agency ("IEA") that average OPEC oil
production, including Iraq and excluding Angola, was approximately 29.7 million
barrels per day during 2006, a 0.02 million barrels per day decrease from 2005.
Even if OPEC crude production was unchanged from 2005 to 2006 there was a
noticeable shift in production from Nigeria and Venezuela to the Middle East.

The IEA further estimates that the average world oil demand was 84.5 million
barrels per day in 2006, a 1.0 percent increase from 2005. For 2007 a 1.8
percent or 1.55 million barrels per day growth is forecasted in world oil demand
with North America, China and the Middle East as the main drivers.

The total VLCC fleet increased by 3.2 percent in 2006 from 464 to 479 vessels
according to industry sources, who also state that a total of 18 new vessels
were delivered to owners during 2006 while 79 new orders were made. The majority
of the vessels on order are scheduled to be delivered in 2009. The total order
book amounted to 161 vessels at the end of the year which represented
approximately 34 percent of the existing fleet.

We are expecting about 30 ships to be delivered during 2007 and it is likely
that we will see more tankers either being converted or scrapped compared to
recent years. The Middle East Gulf exports are expected to drop in the first
half of 2007, but rebound in the second half. The long haul trade route West
Africa-Asia is expected to rise during 2007.

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

(in $ per day)          2006        2005       2004       2003       2002
VLCCs                 47,967      47,111     68,698     51,731     32,569

Net voyage revenues, a non-GAAP measure, provides more meaningful information to
us than voyage revenues, the most directly comparable GAAP measure. Net voyage
revenues are also widely used by investors and analysts in the tanker shipping
industry for comparing financial performance between companies and to industry
averages. The following table reconciles our net voyage revenues to voyage
revenues in 2006, 2005 and 2004..

(in thousands of $)                     2006           2005         2004
Voyage revenues                       63,283         57,854       63,812
Voyage expenses and commission        20,015         16,459       14,240
--------------------------------------------------------------------------------
Net voyage revenues                   43,268         41,395       49,572
--------------------------------------------------------------------------------

Critical Accounting Policies and Estimates

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

Revenue Recognition

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

Vessels, Depreciation and Impairment

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

Recently Issued Accounting Standards

In March 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 156 Accounting for Servicing of
Financial Assets - an amendment to FAS 140 ("FAS 156"). FAS 156 requires that
all separately recognized servicing rights be initially measured at fair value
if practicable. The statement also permits an entity to choose between two
measurement methods for each class of separately recognized servicing assets and
liabilities. FAS 156 is effective for fiscal years beginning after September 15,
2006. The Company does not expect the adoption of FAS 156 to have an impact on
its financial statements.

In July 2006, the FASB issued Interpretation No. 48 Accounting for Uncertainty
in Income Taxes - an interpretation of FAS 109 ("FIN 48"). FIN 48 clarifies the
application of FAS 109 by defining the criterion that an individual tax position
must meet for any part of the benefit of that position to be recognized in an
entity's financial statements and also provides guidance on measurement,
de-recognition, classification, interest and penalties and disclosure. FIN 48 is
effective for fiscal years beginning after November 1, 2007. The Company does
not expect the adoption of FIN 48 to have an impact on its financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157 Fair Value Measurements ("FAS 157"). FAS 157 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements. FAS
157 applies under most other accounting pronouncements that require or permit
fair value measurements and does not require any new fair value measurements.
FAS 157 is effective for fiscal years beginning after November 15, 2007. The
Company has not yet determined the effect of adoption of FAS 157 on its
financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 158 Employers' Accounting for Defined Benefit Pension and Other Post
Retirement Plans - an amendment of FAS 87, 88, 106, and 132R ("FAS 158"). FAS
158 requires that the funded status of defined benefit post retirement plans be
recognized in the statement of financial position and changes in the funded
status be reflected in comprehensive income. FAS 158 also requires the benefit
obligations to be measured as of the same date of the financial statements and
requires additional disclosures related to the effects of delayed recognition of
gains or losses, prior service costs or credits and transition assets or
obligation on net periodic benefit cost. FAS 158 is effective for fiscal years
ending after June 15, 2007 for employers without publicly traded securities. The
Company does not expect the adoption of FAS 158 to have an impact on its
financial statements.

In September 2006, the United States Securities and Exchange Commission ("SEC")
issued SAB No. 108 Considering the Effects of Prior Year Misstatements When
Quantifying Misstatements in Current Year Financial Statements, which provides
interpretative guidance on how registrants should quantify financial statement
misstatements. Under SAB 108 registrants are required to consider both a
"rollover" method, which focuses primarily on the income statement impact of
misstatements, and the "iron curtain" method, which focuses primarily on the
balance sheet impact of misstatements. The effects of prior year uncorrected
errors include the potential accumulation of improper amounts that may result in
material misstatement on the balance sheet or the reversal of prior period
errors in the current period that result in a material misstatement of the
current period income statement amounts. Adjustments to current or prior period
financial statements would be required in the event that after application of
various approaches for assessing materiality of a misstatement in a current
period financial statements and consideration of all relevant quantitative and
qualitative factors, a misstatement is determined to be material. We adopted the
provisions of SAB 108 as of December 31, 2006 and this did not have a material
effect on the Company's results of operations or financial position.
Results of Operations

Year ended December 31, 2006 compared with year ended December 31, 2005

Operating revenues

(in thousands of $)                      2006          2005        Change
Time charter revenues                  42,445        42,325        (0.3)%
Voyage charter revenues                63,283        57,854          9.4%
--------------------------------------------------------------------------------
Total operating revenues              105,728       100,179          5.5%
--------------------------------------------------------------------------------

The increase in total operating revenues was a result of higher voyage charter
revenues in 2006 while time charter revenues were stable. Voyage charter
revenues are generated from our Vessels trading on the spot market in 2006 and
2005; these vessels participated in a pooling arrangement with two similar
vessels since the second quarter of 2005. Under the pooling agreement revenues
and voyage expenses of the vessels operating in pool arrangements are pooled and
the resulting net pool revenues, calculated on a time charter equivalent basis,
are allocated to the pool participants according to an agreed formula. Pool
revenues of $63.1 million are included in voyage charter revenues for the year
ended December 31, 2006 (2005: $36.8 million). Subsequent to the year end this
arrangement was terminated and only one Vessel continues to trade in the spot
market.

Operating expenses

(in thousands of $)                   2006             2005         Change
Voyage expenses and commission        20,015          16,459        21.6%
Ship operating expenses               15,835          17,211       (8.0)%
Administrative expenses                1,492             988        51.0%
Depreciation                          17,121          17,120         0.0%

Total operating expenses              54,463          51,778         5.2%

The two Vessels that traded in the spot market generated 93.3 percent in 2006
(2005: 94.1 percent) of the voyage expenses and commission as substantially all
voyage costs associated with time charters are covered by the charterer. The
increased voyage expenses in 2006 correlate to the increase in voyage charter
revenues. The decrease in ship operating expenses in 2006 is a result of only
one Vessel drydocking in 2006, whereas in 2005 four of the five Vessels
drydocked. The Vessels have scheduled drydockings approximately every five
years.

The increase in administration costs in 2006 relates primarily relates to higher
fees payable to the Manager for administration services provided of $645,000
(2005: $245,000). The remainder of administration costs for the Company are
directors' fees, directors and officers insurance, shareholder and public
relations, management fees and audit fees.

Interest income and expenses

(in thousands of $)                     2006          2005         Change
Interest income                         1,383           959          44.2%
Interest expense                      (6,881)       (5,310)          29.6%
--------------------------------------------------------------------------------
Net interest expense                  (5,498)       (4,351)          26.4%
--------------------------------------------------------------------------------

The significant increase in interest income during 2006 is a result of higher
interest rates received on short term deposits.

Interest expense consists of interest paid in relation to the $140.0 million
loan facility and the amortization of deferred financing charges incurred in
connection with the debt. The increase in interest expense in 2006 is primarily
due to rise in the three month LIBOR since the beginning of the year from 4.5%
to 5.4%. Since March 2005, the interest rate is calculated at LIBOR + 0.7
percent, previously LIBOR + 1.0 percent.

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

Operating revenues

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

In March 2004, our long-term bareboat Charters with Shell International expired
and the Vessels commenced trading under new employment regimes. Following the
expiration of the Charters:

     o    three Vessels were contracted under medium-term time charters, two of
          which include market related profit sharing arrangements; and

     o    two Vessels traded on the spot market and participated in a pooling
          arrangement with two similar vessels from the second quarter of 2005.
          Pool revenues of $36.8 are included in voyage charter revenues for the
          year ended December 31, 2005.

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

Operating expenses

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

In 2005, the two Vessels that traded on the spot market generated 94.1 percent
of the voyage expenses and commission. Under the bareboat charters that ended
March 2004, all ship operating costs were paid by Shell International. Following
the redelivery of the Vessels, the Company became responsible for the Vessels'
operating expenses. The increase in ship operating expenses in 2005 is a result
of a full year of expenses in 2005, compared with nine months in 2004, plus the
fact that four of our five Vessels were drydocked in 2005. In addition to direct
drydocking costs of approximately $2.2 million, additional repairs and
maintenance costs of $3.1 million were incurred during these drydocking.

In 2005, the decrease in administration costs relates to shareholder and public
relations and legal fees which were high in 2004 due to the costs associated
with the termination of the Charters and holding two shareholder meetings.

Interest income and expenses

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

The significant increase in interest income during 2005 is a result of the
increased use of short term deposits as a result of strong cash flows in late
2004 and early 2005.

Interest expense consists of interest paid in relation to the $140.0 million
loan facility, swap interest expense and the amortization of deferred financing
charges incurred in connection with the debt. The decrease in interest expense
in 2005 is primarily due to the expiration of an interest rate swap in August
2004 which had effectively fixed interest at a rate of 6.74 percent per annum.
Swap interest expense was $4.5 million in 2004. Following the expiration of this
swap our debt is all floating rate at LIBOR plus a margin. The benefit of the
expiration of the swap in 2004, as well as the renegotiation of the loan
interest margin from the three month LIBOR rate +1.0 percent to +0.7 percent in
March 2005 has been partially offset as LIBOR has gradually increased during
2005.

Liquidity and Capital Resources

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

Since March 2004, the Company's revenues have been more exposed to fluctuations
in earnings in the spot market. These fluctuations may increase or decrease
revenues compared to revenues under the Charters depending on prevailing spot
market rates. During the period 2004 to quarter one 2007, the Company had two
Vessels operating in the Spot market and two Vessels on medium term charters
that include 50:50 profit sharing arrangements for earnings in excess of $30,000
per day calculated by reference to the BITR Index. In 2007, the Company reduced
its exposure to the spot market with only one Vessel trading in the spot market
and two Vessels on medium term charters that include a fifty percent share of
trading profit in excess of $37,750. Prior to March 2004, the Company had fixed
base rate charter hire for all of its Vessels. In each quarter where the spot
market related rate was higher than the base rate, the spot market related rate
was paid. The Company had a fixed management fee and its administrative expenses
were comprised principally of directors' and officers' liability insurance.

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

At December 31, 2006 we estimated the cash breakeven average daily TCE rate of
$18,540 for our VLCCs. This represents the daily rate our Vessels must earn to
cover payment of budgeted operating costs (including corporate overheads),
estimated interest and scheduled loan principal repayments. These rates do not
take into account loan balloon repayments at maturity. Based on the current
strength of the tanker market, the Company believes that working capital is
sufficient for the Company's present requirements.

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

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

Long-term liquidity requirements of the Company include funding the replacement
of vessels through the acquisition of second hand vessels or newbuilding
vessels, and the repayment of long-term debt balances. The Company's sources of
capital have been the proceeds of its initial public offering, bank loans and
charterhire income. The Company expects that charterhire paid from time charters
or voyage charter income in the spot market will be sufficient sources of income
for the Company to continue to pay ordinary recurring expenses including
installments due under the Loan Agreement. However, there can be no assurance
that the Company will be able to pay or refinance its borrowings when the Loan
becomes due, or that it will not incur extraordinary expenses.

As of December 31, 2006, 2005, and 2004, the Company had cash and cash
equivalents of $8.5 million, $12.6 million and $31.7 million, respectively. As
of December 31, 2006, 2005, and 2004, the Company had restricted cash of $10.0
million. The restricted cash balance is a result of a minimum liquidity balance
which we are required to maintain at all times in conjunction with the $140.0
million loan facility with the Royal Bank of Scotland.

During the year ended December 31, 2006 we paid total cash dividends of $61.6
million. In the first quarter of 2007, we declared a cash dividend of $0.80 per
share for a total cash payment of $13.7 million.

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

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

Off-balance sheet arrangements

None

Tabular disclosure of contractual obligations

At December 31 2006, the Company had the following contractual obligations:
<TABLE>
<CAPTION>
                                                 Payment due by period
                                              Less than                     More than 5
                                      Total   one year   1-3 years   3-5 years    years

                                  ----------------------------------------------------
(In thousands of $)
<S>                                <C>          <C>         <C>       <C>         <C>
Long-term debt obligations         109,200      11,200      22,400    75,600        -
                                  ----------------------------------------------------
Total contractual cash obligations 109,200      11,200      22,400    75,600         -
                                  ----------------------------------------------------
</TABLE>

Safe Harbor

Matters discussed in this Item 5 include assumptions, expectations, projections,
intentions and beliefs about future events. These statements are intended as
"forward-looking statements". We caution that assumptions, expectations,
projections, intentions and beliefs about future events may and often do vary
from actual results and the differences can be material. Please see "Cautionary
Statement Regarding Forward-Looking Statements" in this Report.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.  DIRECTORS AND SENIOR MANAGEMENT

Set forth below are the names and positions of the directors and executive
officers of the Company.

The Company

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

Ola Lorentzon         57   Director and Chairman
Tor Olav Troim        44   Director, Chief Executive Officer and Vice-Chairman
Douglas C. Wolcott    75   Director and Audit Committee member
David M. White        66   Director and Audit Committee Chairman
Timothy J. Counsell   48   Director
Kate Blankenship      42   Chief Financial Officer
Georgina Sousa        57   Company Secretary

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

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

Kate Blankenship      42   Director and Chairman
Inger M. Klemp        44   Director and Vice-Chairman
Graham Baker          47   Director
Bjorn Sjaastad        49   Chief Executive Officer of Frontline Management AS

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

Ola Lorentzon has been a director of the Company since September 18, 1996 and
Chairman since May 26, 2000. Mr. Lorentzon is also a director of Erik Thun AB
and Crew Chart Ship Management AB. Mr. Lorentzon was the Managing Director of
Frontline Management AS, a subsidiary of Frontline, from April 2000 until
September 2003.

Tor Olav Troim has been a director, Vice-Chairman and Chief Executive Officer of
the Company since May 26, 2000. Mr. Tr0im graduated as M.Sc Naval Architect from
the University of Trondheim, Norway in 1985. His careers include Portfolio
Manager Equity in Storebrand ASA (1987- 1990), and Chief Executive Officer for
the Norwegian Oil Company DNO AS (1992-1995). Since 1995 Mr. Tr0im has been a
Director of SeaTankers Management in Cyprus. In this capacity he has acted as
Chief Executive Officer for the public companies Frontline and Golar LNG Limited
(NASDAQ). Mr. Tr0im was also the Chief Executive Officer of Seadrill Ltd. until
the recent takeover and intergration of Smedvig ASA. Mr. Tr0im is currently Vice
Chairman of these three companies and in addition is a director and Chairman of
Ship Finance International Limited (NYSE) and a member of the Boards in the
public companies Golden Ocean Group Limited (OSE), Aktiv Kapital ASA (OSE) and
PanFish ASA (OSE).

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

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

Timothy J. Counsell has been a director of the Company since March 27, 1998. Mr.
Counsell is a partner of the law firm of Appleby, Bermudian counsel to the
Company and has been with that firm since 1990.

Kate Blankenship has been Chief Financial Officer of the Company since April 17,
2000 and served as Secretary of the Company from December 27, 2000 to March 15,
2007. Mrs. Blankenship has been a director and Chairman of the Manager since
March 2000. Mrs. Blankenship served as the Chief Accounting Officer and
Secretary of Frontline between 1994 and October 2005. Mrs. Blankenship also
serves as a director of Golar LNG Limited, Ship Finance International Limited,
Seadrill Limited and Golden Ocean Group Limited. She is a member of the
Institute of Chartered Accountants in England and Wales.

Georgina E. Sousa has served as Secretary of the Company since March 15, 2007
and has been employed by Frontline since February 2007. Prior to joining
Frontline, Mrs. Sousa was Vice-President-Corporate Services of Consolidated
Services Limited, a Bermuda management company having joined that firm in 1993
as Manager of Corporate Administration. From 1976 to 1982 she was employed by
the Bermuda law firm of Appleby, Spurling & Kempe as a Company Secretary and
from 1982 to 1993 she was employed by the Bermuda law firm of Cox & Wilkinson as
Senior Company Secretary.

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

Graham Baker has been a director of the Manager since December 6, 2006. Mr Baker
is Chief Accounting Officer of Frontline having joined the company in July 2006.
Mr Baker has worked in various senior financial roles and most recently was the
Head of Group Reporting at NTL Inc., a large NASDAQ quoted company and before
that the European Chief Financial Officer of DVI Inc., a NYSE listed group. He
is a member of the Institute of Chartered Accountants in England and Wales and
the Association of Corporate Treasurers.

Bjorn Sjaastad has served as Chief Executive Officer of Frontline Management
A.S. since October 2006. From 2004 to 2006 Mr. Sjaastad ran his own consultancy
business. From 1990 to 2004, Mr. Sjaastad was the Chief Executive Officer of
Odfjell ASA, a Norwegian based, stock listed, international chemical tanker
operator. From 1981 to 1989 Mr. Sjaastad served as a lending officer of DNBNOR
ASA (previously Bergen Bank AS), heading up the banks shipping and offshore
department in Bergen. Mr. Sjaastad has, over the years, been a member of the
boards of a range of companies and has also been the President of the Norwegian
Shipowners Association.


B.  COMPENSATION

The Company incurred directors' fees of $255,000 in 2006. No separate
compensation was paid to the Company's officers.

C.  BOARD PRACTICES

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

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

Board practices and exemptions from Nasdaq corporate governance rules

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

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

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

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

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

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

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

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

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

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

D.  EMPLOYEES

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

E.  SHARE OWNERSHIP

As of March 31, 2007, none of the directors or officers of the Company owned any
Common Shares of the Company.

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.  MAJOR SHAREHOLDERS

The Company is not directly or indirectly controlled by another corporation, by
a foreign government or by any other natural or legal person. We are not aware
of any arrangements, the operation of which may at a subsequent date result in a
change in control of the Company.

The Company is not aware of any person who owns more than five percent of the
Company's outstanding common shares as of March 31, 2007.

B.  RELATED PARTY TRANSACTIONS

None

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

Our policy is to make quarterly distributions to shareholders based on the
Company's earnings and cash flow. These distributions are expected to be a
minimum of $1.00 per share per year. However, the amount and timing of dividends
will depend on the Company's earnings, financial condition, cash position,
Bermuda law affecting the payment of distributions and other factors.

Should the Company enter into contracts for the construction of vessels, it will
likely incur financing and other related expenses without realizing revenues
while these are under construction. The Company may not be able to make
distributions in quarters where earnings are low and where cash flow is
insufficient. The Company's financing may also restrict distributions in certain
circumstances.

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

In 2006, 2005 and 2004, the Company paid the following distributions to
shareholders.

Record Date                     Payment Date                   Amount per share
2006
February 23, 2006               March  9, 2006                        $0.80
May 29, 2006                    June 12, 2006                         $1.00
August 25, 2006                 September 8, 2006                     $0.80
November 27, 2006               December 7, 2006                      $1.00

2005
February 25, 2005               March 11, 2005                        $1.75
May 19, 2005                    June 1, 2005                          $1.50
August 26, 2005                 September 6, 2005                     $0.80
November 21, 2005               December 5, 2005                      $0.50

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

B.  SIGNIFICANT CHANGES

Not applicable

ITEM 9.  THE OFFER AND LISTING

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

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

Fiscal year ended December 31                High                 Low

2006                                       $30.78              $20.42
2005                                       $47.50              $23.76
2004                                       $39.25              $12.52
2003                                       $17.56               $8.45
2002                                       $18.85              $11.51

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

Fiscal year ended December 31, 2006          High                 Low

First quarter                              $27.87              $24.03
Second quarter                             $28.23              $20.42
Third quarter                              $30.78              $24.53
Fourth quarter                             $28.57              $22.48

Fiscal year ended December 31, 2005          High                 Low

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


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

Month                                        High                 Low

March 2007                                 $27.90              $23.08
February 2007                              $25.70              $23.61
January 2007                               $25.15              $23.27
December 2006                              $25.60              $22.48
November 2006                              $28.57              $25.44
October 2006                               $27.54              $24.62


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

ITEM 10.  ADDITIONAL INFORMATION

A.  SHARE CAPITAL

Not Applicable

B.  MEMORANDUM AND ARTICLES OF ASSOCIATION

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

At the 2005 Annual General Meeting of the Company the shareholders voted to
amend the Company's bye-laws 83 and 85 by removing the restrictions that limited
the Company's business activities. The changes to the bye-laws removed
restrictions on the Company's activities such as rechartering the Vessels,
refinancing or replacing the credit facility, acting in connection with the
management agreement, offering Common Shares and listing them, enforcing its
rights in connection with the Charters, the Credit Facility, the UK Finance
Leases, the management agreement and other agreements into which the Company and
its subsidiaries entered at the time of its initial public offering, and
leasing, selling or otherwise disposing of the Vessels (or Vessel owning
subsidiaries) on termination of the Charters or subsequent charters. The amended
bye-laws of the Company as adopted on June 27, 2005, have been filed as Exhibit
4.2 to the Company's Annual Report on Form 20-F for the fiscal year ended
December 31, 2005, filed with Securities and Exchange Commission on June 15,
2006, and are hereby incorporated by reference into this Annual Report.

C.  MATERIAL CONTRACTS

Not Applicable

D.  EXCHANGE CONTROLS

The Company is classified by the Bermuda Monetary Authority as a non-resident of
Bermuda for exchange control purposes.

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

The owners of Ordinary Shares who are ordinarily resident outside Bermuda are
not subject to any restrictions on their rights to hold or vote their shares.
Because the Company has been designated as a 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 U.S. residents who are holders of
Ordinary Shares, other than in respect of local Bermuda currency.

E.  TAXATION

Bermuda Taxation

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

There are no provisions of any reciprocal tax treaty between Bermuda and the
United States which affect the Company.

United States Taxation

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

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

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

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

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

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

Application of Code Section 883
Under the relevant provisions of Section 883, the Company will be exempt from
United States taxation on its United States source shipping income if:

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

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

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

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

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

Therefore, the Company's eligibility to qualify for exemption under Section 883
is wholly dependent upon being able to satisfy one of the stock ownership
requirements. For the 2006 tax year, the Company satisfied the Publicly-Traded
Test since, on more than half the days of the taxable year, the Company's stock
was primarily and regularly traded on the Nasdaq National Market.

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

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

Distributions and PFIC Status
It is expected that any cash distributions by the Company will exceed the
Company's earnings and profits for United States 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 United States
holder's Common Shares.

The Company was a passive foreign investment company ("PFIC") through its 2003
taxable year. Beginning with its 2004 taxable year, the Company ceased to be a
PFIC as a result of the expiration of the Shell International charters on
February 27, 2004. The Company was not a PFIC for United States federal income
tax purposes in the 2006 taxable year and does not anticipate being a PFIC in
future years, although there is no assurance that this will be the case.

Assuming that the Company is not a PFIC, dividends paid by the Company to a
non-corporate United States shareholder will generally be treated as "qualified
dividend income" that is taxable to such shareholders at preferential United
States federal income tax rates (currently through 2010) provided that the
non-corporate United States shareholder satisfies certain holding period and
other requirements. Legislation has been recently introduced in the U.S. House
of Representatives which, if enacted, would preclude our dividends from
qualifying for such preferential rates prospectively from the date of the
enactment. Any dividends paid by the Company which are not eligible for these
preferential rates will be taxed as ordinary income to a United States
shareholder.

F.  DIVIDENDS AND PAYING AGENTS

Not Applicable

G.  STATEMENT BY EXPERTS

Not Applicable

H.  DOCUMENTS ON DISPLAY

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. In accordance with these requirements we file
reports and other information with the Securities and Exchange Commission. These
materials, including this annual report and the accompanying exhibits may be
inspected and copied at the public reference facilities maintained by the
Commission at 100 F Street, N.E., Room 1580, Washington, D.C. 20549 and at 500
West Madison Street, Suite 1400, Northwestern Atrium Center, Chicago, Illinois
60661 and are also available on our website located at
www.knightsbridgetankers.com. You may obtain information on the operation of the
public reference room by calling 1 (800) SEC-0330, and you may obtain copies at
prescribed rates from the Public Reference Section of the Commission at its
principal office in Washington, D.C. 20549. The SEC maintains a website
(http://www.sec.gov.) that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
SEC. In addition, documents referred to in this annual report may be inspected
at the Company's headquarters at Par-la-Ville Place, 14 Par-la-Ville Road,
Hamilton, Bermuda.

I.  SUBSIDIARY INFORMATION

Not Applicable

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The Company's borrowings under its loan facility at December 31, 2006 of $109.2
million (December 31, 2005: $120.4 million) bear interest at an annual rate of
LIBOR plus a margin of 0.7 percent. A one percent change in interest rates would
increase or decrease interest expense by $1.1 million per year as of December
31, 2006. The fair value of the loan facility at December 31, 2006 was equal to
the carrying amount of the facility at the same date.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable

<PAGE>



                                     PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

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

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

Not Applicable

ITEM 15.  CONTROLS AND PROCEDURES

a)   Disclosure Controls and Procedures

Management assessed the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Rule 13a-15(e) of the
Securities Exchange Act of 1934, as of the end of the period covered by this
annual report as of December 31, 2006. Based upon that evaluation, the Principal
Executive Officer and Principal Financial Officer concluded that the Company's
disclosure controls and procedures are effective as of the evaluation date.

b)   Management's annual report on internal controls over financial reporting

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) promulgated under
the Securities Exchange Act of 1934.

Internal control over financial reporting is defined in Rule 13a-15(f) or
15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process
designed by, or under the supervision of, the Company's principal executive and
principal financial officers and effected by the Company's board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

     o    Pertain to the maintenance of records that, in reasonable detail,
          accurately and fairly reflect the transactions and dispositions of the
          assets of the Company;

     o    Provide reasonable assurance that transactions are recorded as
          necessary to permit preparation of financial statements in accordance
          with generally accepted accounting principles, and that our receipts
          and expenditures are being made only in accordance with authorizations
          of Company's management and directors; and

     o    Provide reasonable assurance regarding prevention or timely detection
          of unauthorized acquisition, use or disposition of our assets that
          could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree or compliance
with the policies or procedures may deteriorate.

Management conducted the evaluation of the effectiveness of the internal
controls over financial reporting using the control criteria framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
published in its report entitled Internal Control-Integrated Framework.

Our management with the participation of our Principal Executive Officer and
Principal Financial Officer assessed the effectiveness of the design and
operation of the Company's internal controls over financial reporting pursuant
to Rule 13a-15 of the Securities Exchange Act of 1934, as of December 31, 2006.
Based upon that evaluation, the Principal Executive Officer and Principal
Financial Officer concluded that the Company's internal controls over financial
reporting are effective as of December 31, 2006.

This annual report does not include an attestation report of the Company's
current registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's current registered public accounting firm pursuant to temporary rules
of the Securities and Exchange Commission that permit the Company to provide
only management's report in this annual report.

c)   Changes in internal control over financial reporting

There were no changes in our internal controls over financial reporting that
occurred during the period covered by this annual report that have materially
effected or are reasonably likely to materially affect, the Company's internal
control over financial reporting

ITEM 16 A. AUDIT COMMITTEE FINANCIAL EXPERT

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

ITEM 16 B. CODE OF ETHICS

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

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

ITEM 16 C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our principal accountant for 2006 and 2005 was Moore Stephens, P.C. The
following table sets forth for the two most recent fiscal years the fees paid or
accrued for audit and services provided by Moore Stephens, P.C.

(in $)                                        2006               2005
--------------------------------------------------------------------------------
Audit Fees (a)                             120,000             96,540
Audit-Related Fees (b)                           -                  -
Tax Fees (c)                                 2,900                  -
All Other Fees (d)                           3,000                  -
Total                                      125,900             96,540

(a)  Audit Fees

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

(b)  Audit Related Fees

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

(c)  Tax Fees

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

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

The Company's Audit Committee has adopted pre-approval policies and procedures
in compliance with paragraph (c) (7)(i) of Rule 2-01 of Regulation S-X that
require the Audit Committee to approve the appointment of the independent
auditor of the Company before such auditor is engaged and approve each of the
audit and non-audit related services to be provided by such auditor under such
engagement by the Company. All services provided by the principal auditor in
2006 were approved by the Audit Committee pursuant to the pre-approval policy.

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

Not applicable

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

Not Applicable

<PAGE>
                                    PART III

ITEM 17.  FINANCIAL STATEMENTS

Not Applicable


ITEM 18.  FINANCIAL STATEMENTS

The following financial statements listed below and set forth on pages F-1
through F-12 are filed as part of this annual report:

Consolidated Financial Statements of Knightsbridge Tankers Limited


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

Report of Independent Registered Public Accounting Firm                      F-2

Consolidated Statements of Operations for the years ended December 31,
2006, 2005 and 2004                                                          F-3

Consolidated Balance Sheets as of December 31, 2006 and 2005                 F-4

Consolidated Statements of Cash Flows for the years ended December 31,
2006, 2005 and 2004                                                          F-5

Consolidated Statements of Changes in Stockholders' Equity for the
years ended December 31, 2006, 2005 and 2004                                 F-6


Notes to Consolidated Financial Statements                                   F-7


ITEM 19.  EXHIBITS

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

1.1      Memorandum of Association of the Company. *

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

8.1      List of subsidiaries of the Company.

11.1     Code of Ethics.***

12.1     Certification of the Principal Executive Officer.

12.2     Certification of the Principal Financial Officer.

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

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


*        Incorporated by reference to Exhibit No. 4.1 in the Company's
         Registration Statement on Form F-1, filed December 13, 1996.
**       Incorporated by reference to Exhibit No. 4.2 in the Company's Annual
         report on Form 20F for the fiscal year ended December 31, 2005.
***      Incorporated by reference to the same Exhibit No. of the Company's
         Annual Report on Form 20-F for the fiscal year ended December 31, 2003.

<PAGE>

                                   SIGNATURES

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

KNIGHTSBRIDGE TANKERS LIMITED

By: /s/ Kate Blankenship
---------------------


Kate Blankenship
Chief Financial Officer

Dated:  April 27, 2007

<PAGE>

Index to Consolidated Financial Statements of Knightsbridge Tankers Limited

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

Report of Independent Registered Public Accounting Firm                      F-2

Consolidated Statements of Operations for the years ended December 31,
2006, 2005 and 2004                                                          F-3

Consolidated Balance Sheets as of December 31, 2006 and 2005                 F-4

Consolidated Statements of Cash Flows for the years ended December 31,
2006, 2005 and 2004                                                          F-5

Consolidated Statements of Changes in Stockholders' Equity for the
years ended December 31, 2006, 2005 and 2004                                 F-6

Notes to Consolidated Financial Statements                                   F-7


<PAGE>


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors of
Knightsbridge Tankers Limited


We have audited the accompanying consolidated balance sheets of Knightsbridge
Tankers Limited and subsidiaries (the "Company"), as of December 31, 2006 and
2005, and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 2006. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. We were not
engaged to perform an audit of the Company's internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of December 31, 2006 and 2005, and the consolidated results of their
operations, and their cash flows for each of the three years in the period ended
December 31, 2006, in conformity with U.S. generally accepted accounting
principles.


/s/ MOORE STEPHENS, P. C.
Certified Public Accountants.

New York, New York
April 3, 2007

<PAGE>

Knightsbridge Tankers Limited
Consolidated Statements of Operations for the years ended
December 31, 2006, 2005 and 2004
(in thousands of $, except per share data)

                                                  2006        2005        2004

Operating revenues
  Time charter revenues                          42,445      42,325      42,113
  Bareboat charter revenues                           -           -      29,770
  Voyage charter revenues                        63,283      57,854      63,812
--------------------------------------------------------------------------------
  Total operating revenues                      105,728     100,179     135,695
--------------------------------------------------------------------------------
Operating expenses
  Voyage expenses and commission                 20,015      16,459      14,240
  Ship operating expenses                        15,835      17,211       9,868
  Administrative expenses                         1,492         988       1,114
  Depreciation and amortization                  17,121      17,120      17,219
--------------------------------------------------------------------------------
  Total operating expenses                       54,463      51,778      42,441
--------------------------------------------------------------------------------
Net operating income                             51,265      48,401      93,254
--------------------------------------------------------------------------------
Other income (expenses)
  Interest income                                 1,383         959         449
  Interest expense                               (6,881)     (5,310)     (7,877)
  Other financial items, net                        (50)        (83)         13
--------------------------------------------------------------------------------
  Net other expenses                             (5,548)     (4,434)     (7,415)
  Net income                                     45,717      43,967      85,839
--------------------------------------------------------------------------------

Earnings per share: basic and diluted             $2.67       $2.57       $5.02
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>

Knightsbridge Tankers Limited
Consolidated Balance Sheets as of December 31, 2006 and 2005
(in thousands of $)

                                                             2006         2005
ASSETS
Current Assets
   Cash and cash equivalents                                 8,538      12,634
   Restricted cash                                          10,000      10,000
   Trade accounts receivable                                 8,535       7,633
   Other receivables                                           666       1,139
   Inventories                                               2,621       2,012
   Voyages in progress                                       2,273       3,667
   Prepaid expenses and accrued income                         628         645
--------------------------------------------------------------------------------
   Total current assets                                     33,261      37,730
--------------------------------------------------------------------------------
   Vessels, net                                            267,949     285,070
   Deferred charges                                            289         359
--------------------------------------------------------------------------------
   Total assets                                            301,499     323,159
--------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Credit facilities and current portion
     of long-term debt                                      11,211      11,200
   Trade accounts payable                                    8,094       1,974
   Accrued expenses                                          3,072       3,300
   Other current liabilities                                 1,932       2,452
--------------------------------------------------------------------------------
   Total current liabilities                                24,309      18,926
--------------------------------------------------------------------------------
Long-term liabilities
  Long-term debt                                            98,000     109,200
  Total liabilities                                        122,309     128,126
--------------------------------------------------------------------------------
Stockholders' equity
   Share capital                                               171         171
   Contributed capital surplus account                     179,019     194,862
   Retained earnings                                             -           -
--------------------------------------------------------------------------------
   Total stockholders' equity                              179,190     195,033
--------------------------------------------------------------------------------
   Total liabilities and stockholders' equity              301,499     323,159
--------------------------------------------------------------------------------

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

<PAGE>

Knightsbridge Tankers Limited
Consolidated Statements of Cash Flows for the years ended
December 31, 2006, 2005 and 2004
(in thousands of $)


                                                2006        2005         2004

Net income                                      45,717      43,967      85,839
Adjustments to reconcile net income to net
cash provided by operating activities:
   Depreciation and amortization                17,121      17,120      17,219
   Amortization of deferred charges                 70          66         110
   Changes in operating assets and
     liabilities:
     Trade accounts receivable                   (902)       5,599       9,393
     Other receivables                             473        (531)       (608)
     Inventories                                  (609)       (381)     (1,631)
     Voyages in progress                         1,394       2,455      (6,122)
     Prepaid expenses and accrued
       income                                       17        (229)       (377)
     Trade accounts payable                      6,120       1,509         465
     Accrued expenses                             (228)        570         521
     Other current liabilities                    (520)        (17)      1,779
--------------------------------------------------------------------------------
   Net cash provided by operating
   activities                                   68,653      70,128     106,588
--------------------------------------------------------------------------------
Investing activities
   Placement of restricted cash                      -           -     (10,000)
   Compensation on vessel redelivery                 -           -         690
--------------------------------------------------------------------------------
   Net cash used in investing
     activities                                      -           -      (9,310)
--------------------------------------------------------------------------------
Financing activities
   Proceeds from long-term debt                     87           -     140,000
   Repayments of long-term debt and
     credit facilities                         (11,276)    (11,309)   (133,688)
   Debt fees paid                                    -         (33)       (444)
   Dividends paid and distributions
     to shareholders                           (61,560)    (77,805)    (77,805)
--------------------------------------------------------------------------------
   Net cash used in financing
     activities                                (72,749)    (89,147)    (71,937)
--------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
   equivalents                                  (4,096)    (19,019)     25,341
Cash and cash equivalents at beginning of year  12,634      31,653       6,312
--------------------------------------------------------------------------------
Cash and cash equivalents at end of year         8,538      12,634      31,653
--------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
   Interest paid                                 6,791       5,235       9,631


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

<PAGE>

Knightsbridge Tankers Limited
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 2006, 2005 and 2004
(in thousands of $, except number of shares)

                                                  2006        2005         2004

NUMBER OF SHARES OUTSTANDING
Balance at beginning and end of year        17,100,000  17,100,000   17,100,000
--------------------------------------------------------------------------------
SHARE CAPITAL
Balance at beginning and end of year               171         171          171
--------------------------------------------------------------------------------
CONTRIBUTED CAPITAL SURPLUS ACCOUNT
Balance at beginning of year                   194,862     220,059      220,059
Distributions to shareholders                 (15,843)    (25,197)            -
--------------------------------------------------------------------------------
Balance at end of year                         179,019     194,862      220,059
--------------------------------------------------------------------------------
ACCUMULATED OTHER COMPREHENSIVE
INCOME (LOSS)
Balance at beginning of year                         -           -      (5,310)
De-designation of interest rate swap                 -           -        5,310
--------------------------------------------------------------------------------
Balance at end of year                               -           -            -
--------------------------------------------------------------------------------
RETAINED EARNINGS
Balance at beginning of year                         -       8,641          607
Net income                                      45,717      43,967       85,839
Dividends paid                                (45,717)    (52,608)     (77,805)
--------------------------------------------------------------------------------
Balance at end of year                               -           -        8,641
--------------------------------------------------------------------------------
Total Stockholders' Equity                     179,190     195,033      228,871
--------------------------------------------------------------------------------

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

<PAGE>

Knightsbridge Tankers Limited
Notes to Consolidated Financial Statements

1.   DESCRIPTION OF BUSINESS

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

From February 1997 until March 2004, the Company chartered its Vessels to Shell
International Petroleum Company Limited ("Shell") on long-term "hell and high
water" bareboat charters (the "Charters"). The bareboat charters to Shell
expired for all five Vessels, in accordance with their terms, during March 2004
and the Vessels were redelivered to the Company. Following the redelivery, the
Company entered into a five year time charter for one of its vessels and two of
the Company's vessels were time chartered for a period of three years. The five
year charter agreement provides revenue of approximately $31,000 per day for the
duration of the charter, while the three year time charters provide a rate of
$30,000 per day plus a 50:50 profit sharing arrangement for earnings in excess
of $30,000 per day calculated by reference to the Baltic International Trading
Route (BITR) Index. The Company's remaining two vessels trade on the spot market
and were participating in a pooling arrangement with Frontline Ltd., a Bermuda
registered, publicly traded oil tanker owning and operating company. This
arrangement was terminated in 2007.

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

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

Reporting currency
The Company's functional currency is the United States dollar as all revenues
are received in United States dollars and a majority of the Company's
expenditures are made in United States dollars. The Company and its subsidiaries
report in United States dollars.

Transactions in foreign currencies during the year are translated into United
States 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 time charter and voyage charter hires. The operating results of
voyages in progress are estimated and recorded pro-rata on a per day basis in
the consolidated statements of operations. Probable losses on voyages are
provided for in full at the time such losses can be estimated. Time charter and
voyage charter revenues are recorded over the term of the charter as service is
provided. Amounts receivable or payable arising from profit sharing arrangements
are accrued based on the estimates of amounts earned as at the reporting date.

Revenues and voyage expenses of the vessels operating in pool arrangements are
pooled and the resulting net pool revenues, calculated on a time charter
equivalent basis, are allocated to the pool participants according to an agreed
formula. Pool revenues are included in voyage charter revenues. The formula used
to allocate net pool revenues allocates revenues to pool participants on the
basis of the number of days a vessel operates in the pool with weighting
adjustments made to reflect vessels' differing capacities and performance
capabilities. The same revenue and expense principles stated above are applied
in determining the pool's net pool revenues. In the year ended December 31, 2006
pool revenues included in voyage charter revenues were $63.1 million.

Leases
The current five year and three year time charters for three of the Company's
vessels are classified as operating leases by the Company.

Cash and cash equivalents
All demand and time deposits and highly liquid, low risk investments with
maturities of three months or less at the date of purchase are considered
equivalent to cash.

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

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

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

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

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

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

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

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

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

Recently issued accounting standards

In March 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 156 Accounting for Servicing of
Financial Assets - an amendment to FAS 140 ("FAS 156"). FAS 156 requires that
all separately recognised servicing rights be initially measured at fair value
if practicable. The statement also permits an entity to choose between two
measurement methods for each class of separately recognised servicing assets and
liabilities. FAS 156 is effective for fiscal years beginning after September 15,
2006. The Company does not expect the adoption of FAS 156 to have an impact on
its financial statements.

In July 2006, the FASB issued Interpretation No. 48 Accounting for Uncertainty
in Income Taxes - an interpretation of FAS 109 ("FIN 48"). FIN 48 clarifies the
application of FAS 109 by defining the criterion that an individual tax position
must meet for any part of the benefit of that position to be recognised in an
entity's financial statements and also provides guidance on measurement,
de-recognition, classification, interest and penalties and disclosure. FIN 48 is
effective for fiscal years beginning after November 1, 2007. The Company does
not expect the adoption of FIN 48 to have an impact on its financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157 Fair Value Measurements ("FAS 157"). FAS 157 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements. FAS
157 applies under most other accounting pronouncements that require or permit
fair value measurements and does not require any new fair value measurements.
FAS 157 is effective for fiscal years beginning after November 15, 2007. The
Company has not yet determined the effect of adoption of FAS 157 on its
financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 158 Employers' Accounting for Defined Benefit Pension and Other Post
Retirement Plans - an amendment of FAS 87, 88, 106, and 132R ("FAS 158"). FAS
158 requires that the funded status of defined benefit post retirement plans be
recognised in the statement of financial position and changes in the funded
status be reflected in comprehensive income. FAS 158 also requires the benefit
obligations to be measured as of the same date of the financial statements and
requires additional disclosures related to the effects of delayed recognition of
gains or losses, prior service costs or credits and transition assets or
obligation on net periodic benefit cost. FAS 158 is effective as of the end of
fiscal years ending after December 15, 2006 for employers with publicly traded
securities. The Company does not expect the adoption of FAS 158 to have an
impact on its financial statements.

In September 2006, the SEC issued SAB No. 108 Considering the Effects of Prior
Year Misstatements When Quantifying Misstatements in Current Year Financial
Statements, which provides interpretative guidance on how registrants should
quantify financial statement misstatements. Under SAB 108 registrants are
required to consider both a "rollover" method, which focuses primarily on the
income statement impact of misstatements, and the "iron curtain" method, which
focuses primarily on the balance sheet impact of misstatements. The effects of
prior year uncorrected errors include the potential accumulation of improper
amounts that may result in material misstatement on the balance sheet or the
reversal of prior period errors in the current period that result in a material
misstatement of the current period income statement amounts. Adjustments to
current or prior period financial statements would be required in the event that
after application of various approaches for assessing materiality of a
misstatement in a current period financial statements and consideration of all
relevant quantitative and qualitative factors, a misstatement is determined to
be material. We adopted the provisions of SAB 108 as of December 31, 2006. The
adoption of SAB 108 did not have a material effect on the Company's results of
operations or financial position

3.   TAXATION

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

4.   LEASES

The minimum future revenues to be received on time charters which are accounted
for as operating leases as of December 31, 2006 are as follows:

Year ending December 31,
(in thousands of $)
2007                                                                   18,275
2008                                                                   11,315
2009                                                                    2,201
2010 and later                                                              -
------------------------------------------------------------------------------
Total minimum lease revenues                                           31,791
------------------------------------------------------------------------------

The cost and accumulated depreciation of vessels leased to third parties at
December 31, 2006 were $264.4 million and $103.3 million respectively and at
December 31, 2005 were $264.4 million and $93.0 million respectively.

5.   TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable are presented net of allowance for doubtful accounts
amounting to $0.2 million for the year ended December 31, 2006 (December 31,
2005: $0.2 million).

6.   VESSELS

(in thousands of $)                                            2006      2005
Cost                                                        439,822   439,822
Accumulated depreciation                                  (171,873) (154,752)
------------------------------------------------------------------------------
Net book value at end of year                               267,949   285,070
------------------------------------------------------------------------------

Depreciation expense was $17.1 million, $17.1 million and $17.2 million for the
years ended December 31, 2006, 2005 and 2004, respectively.

7.   DEFERRED CHARGES

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

(in thousands of $)                                            2006      2005
Capitalized financing fees and expenses                         477       477
Accumulated amortization                                      (188)     (118)
------------------------------------------------------------------------------
Net book value at end of year                                   289       359
------------------------------------------------------------------------------

8.   DEBT

(in thousands of $)                                            2006       2005

US dollar denominated floating rate debt                    109,200    120,400
Credit facilities                                                11          -
------------------------------------------------------------------------------
Total debt                                                  109,211    120,400
Less: current portion of debt                              (11,211)   (11,200)
------------------------------------------------------------------------------
                                                             98,000    109,200
------------------------------------------------------------------------------

The average interest rate for the floating rate debt was 5.87% percent for the
year ended December 31, 2006 and 4.12% percent for the year ended December 31,
2005.


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

The outstanding debt as of December 31, 2006 is repayable as follows:

Year ending December 31,
(in thousands of $)
2007                                                                     11,200
2008                                                                     11,200
2009                                                                     11,200
2010                                                                     11,200
2011                                                                     64,400
--------------------------------------------------------------------------------
Total debt                                                              109,200
--------------------------------------------------------------------------------


9.   SHARE CAPITAL

Authorized, issued and fully paid share capital:

                                                                   2006     2005
17,100,000 ordinary shares of $0.01 each                        171,000  171,000
--------------------------------------------------------------------------------


10.  FINANCIAL INSTRUMENTS

Interest rate risk management
In certain situations, the Company may enter into financial instruments to
reduce the risk associated with fluctuations in interest rates. The Company does
not hold or issue instruments for speculative or trading purposes. As at
December 31, 2006, the Company is not party to any interest rate swaps to hedge
interest rate exposure.

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

Fair values
The carrying value and estimated fair value of the Company's financial
instruments at December 31, 2006 and 2005 are as follows:

                                        2006         2006      2005      2005
(in thousands of $)                     Fair     Carrying      Fair    Carrying
                                       Value        Value     Value     Value
Cash and cash equivalents              8,538        8,538     12,634     12,634
Restricted cash                       10,000       10,000     10,000     10,000
Floating rate debt and credit
 facilities                          109,211      109,211    120,400    120,400

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

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

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

In 2006, four customers accounted for $71.1 million, or 67 percent of gross
revenue, while in 2005 two customers accounted for $42.6 million or 42 per cent
of gross revenue. In 2004 two customers accounted for $62.4 million or 46% of
gross revenues.

11.  MANAGEMENT OF COMPANY

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

12.  SUPPLEMENTAL INFORMATION

Non-cash investing and financing activities included the following:

(in thousands of $)                                   2006     2005         2004
Termination of vessels under capital leases:
Termination of vessels under capital leases, net         -        -    (316,363)

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

13.  SUBSEQUENT EVENTS

In March 2007 the pooling arrangement with Frontline involving the Vessels
Mayfair and Chelsea was terminated. During March 2007, the Company entered into
a time charter agreement for the Mayfair with a third party for a period of
three years at a rate of $45,000 per day, commencing in March 2007.



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