Knightsbridge Tankers Limited – Third quarter 2002 report to shareholders

Enclosed is our report for the third quarter of 2002. The report contains selected unaudited financial information accompanied by a Management’s Discussion and Analysis of Financial Condition and Results of Operations for the period ended September 30, 2002.

On February 27, 1997, the Company’s ship owning subsidiaries purchased five very large crude carriers (“VLCC’s”) from their previous owners and delivered them to Shell International Petroleum Company Limited (“Shell International”), as charterer, under separate “hell and high water” bareboat charters. Under those charters, the Company’s ship owning subsidiaries receive the greater of a Base Rate of hire in the amount of $22,069 per day per VLCC or a spot market related rate. After inclusion of a component for operating expenses of $10,500 per day, the spot market related rate must exceed $32,569 per day for the Company’s subsidiaries to receive any Additional Hire over the Base Rate.

Based upon the determination by the London Tanker Brokers Panel, the spot market related rate totaled $9,093 per day for the period July 1 through September 30, 2002. (The corresponding spot market related rate for the period July 1 through September 30, 2001 was determined to be $25,163).

Accordingly, on October 15, 2002, Shell International paid to the Company’s vessel owning subsidiaries charter hire at the Base Rate in the aggregate amount of $10,151,740 for the period July 1 through September 30, 2002. (For the period July 1 through September 30, 2001, Shell International paid charter hire at the Base Rate of $10,151,740).

On October 15, 2002, the Board of Directors of the Company declared a distribution to shareholders of record as of October 25, 2002, payable on or about November 7, 2002, in the amount of $0.45 per share for the period July 1 through September 30, 2002. (For the period July 1 through September 30, 2001, the distribution was $0.45 per share.)

The Company has agreed to provide information to shareholders that are United States income tax payers by February 15, 2003, so that they may make the appropriate tax reporting and elections with the United States tax authorities with respect to the Company’s status as a “Passive Foreign Investment Company”. Under present United States tax rules, the amount of income reported by a shareholder is based on the Company’s income on an annual basis. Therefore, the Company will provide information enabling shareholders to determine the tax consequences of their investment in the Company, including the treatment of distributions received from the Company, for the entire year ending December 31, 2002.