Turkish ‘powerships’ ride wave of energy crises amid COVID-19 outbreak

The Orca Sultan and Raif Bey powerships docked in a shipyard in Yalova. The COVID-19 crisis has birthed new opportunities for Turkish powerships. (AFP)
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Updated 29 June 2020

Turkish ‘powerships’ ride wave of energy crises amid COVID-19 outbreak

  • The pandemic has created a windfall for the Turkish company by playing to the advantages of its floating power plants, especially the unbeatable delivery times

ALTINOVA, Turkey: A Turkish company’s expertise in turning freighters built for carrying coal or sand into mobile power stations is proving to be an antidote to woes brought onto energy supply projects by the coronavirus.

Floating electricity plants known as powerships come into their own when conflicts or other crises make the construction of land-based power stations difficult.

The novel coronavirus pandemic is such a crisis, having forced many companies to shut down and bringing construction to a halt.

Enter Karpowership, which has been building floating plants for almost 15 years by converting old freight ships, making it a leading player in the industry with a fleet of 25 powerships.

The pandemic has created a windfall for the Turkish company by playing to the advantages of its floating power plants, especially the unbeatable delivery times: 60 days maximum to anywhere in the world.

Lockdown measures taken by several countries for months have obstructed progress of conventional power plant projects, whose construction already takes several years even in normal times.

“Credit committees were not approving credits, suppliers weren’t able to meet their timelines, (and) workers weren’t able to do constructions on site,” Zeynep Harezi, Karpowership’s chief commercial officer, told AFP.

“So the demand for our powerships naturally increased. We are now speaking to more than a dozen countries who requested powerships as soon as possible,” she added. Powerships have existed since the 1930s.

The principle is simple: A merchant vessel is converted into a floating power plant, typically fueled by diesel or liquid gas used to generate electricity.

It then travels to its destination where it connects to the local grid, supplying a steady stream of power.

Karpowership has deployed 19 such plants in 11 countries in Africa, the Middle East and Asia as well as Cuba.

The floating plants provide more than half of the electricity consumed by several West African countries, including Guinea-Bissau, The Gambia and Sierra Leone.

They are particularly suitable for countries whose capacity is insufficient to meet growing demand, or where infrastructure has been destroyed by conflict.

According to Turkish media, Karpowership is in talks about sending several powerships to war-torn Libya.

Karpowership said it was ready to deploy powerships “from this summer onwards” to supply 1,000 megawatts (MW) or “eight hours of additional electricity” per day to a country facing massive blackouts.

To meet delivery deadlines quickly, the company invests massively to build ships before they have been ordered, a calculated risk.

“There, you see a billion dollars sitting on the dock,” Harezi said, pointing to six powerships of different sizes moored in a shipyard in northwestern Turkey, pending the signing of deals.

“At the shipyard, it takes around 18 months to build a ship, but since we are doing our construction back to back, we can produce our ships in six months,” explained Deniz Yalcindag, a Karpowership engineer.

Iranian oil in perfect storm of storage shortage, low demand, sanctions

Updated 07 July 2020

Iranian oil in perfect storm of storage shortage, low demand, sanctions

  • Coronavirus, US economic action sees inventories reach bursting point

LONDON: Iranian oil production has reached its lowest point in almost four decades, according to industry experts, with the country’s storage facilities fast approaching full capacity.

The news comes amid a dip in Iran’s oil exports due to a crash in global demand, and in a period when its refineries have been hampered as a result of the coronavirus outbreak.

With over 11,000 confirmed fatalities, Iran has suffered the worst coronavirus outbreak in the Middle East, affecting all areas of industry. 

This has created a perfect storm for the country’s vital oil sector, with what little selling ability it has further disrupted by sanctions imposed by the US in 2018 following Washington’s withdrawal from the Iran nuclear deal.

Iran’s total liquid production dropped from 3.1 million barrels per day (bpd) in March this year to 3 million bpd in June, according to FGE Energy, which predicts that the figure will drop by an additional 100,000 bpd in July.

Crude production was as low as 1.9 million bpd in June, the lowest since the beginning of the Iran-Iraq war in 1981.

Exports also fell, with estimates varying depending on source — 100,000 bpd in May according to market intelligence firm Kpler, and around 210,000 bpd according to FGE — well under 10 percent of the 2.5 million bpd Iran exported in April 2018.

Iran’s onshore crude stocks, meanwhile, hit 63 million barrels in June, having been just 15 million barrels in January, according to FGE.

Kpler said Iran averaged 66 million barrels in storage throughout June, meaning that around 85 percent of the country’s total onshore storage capacity was full.

“However, it will technically not be possible to fill tanks to 100 percent, given technical constraints at storage tanks and potential infrastructure bottlenecks,” Homayoun Falakshahi, a senior analyst at Kpler, told Reuters.

Offshore the story is much the same, with options running out fast. Iran has 54 crude oil tankers, according to valuations specialist VesselsValue, and is thought to be using around 30 ships, mainly supertankers with a maximum capacity of 2 million barrels of oil each, to store over 50 million barrels of crude and condensate.

“The exact number of Iranian vessels on floating storage is a bit of a black box as they have all turned off their AIS (tracking transponder) signals,” said a spokesman for shipping group NORDEN.

“Storage is expected to continue as we do not see these vessels being able to trade anytime soon.”