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Karadeniz in the market to buy up to three more capes to convert to powerships

Turkey’s Karadeniz has finalised the acquisition of one capesize bulk carrier for conversion to a powership and the purchase of up to three more 14-year-old capes could follow, brokers tell Splash.

The company recently purchased Nisshin Trader (172,500 dwt, built 2001) for $9.3m from Nisshin Shipping. The ship is to be delivered to Turkey for conversion to a floating power station or powership, and three further capesize vessels could soon follow.

Reports have erroneously suggested the sale of SA Altius and SA Fortius (both 171,600 dwt, built 2001) to Karadeniz has either failed or been successfully concluded. Multiple brokers told Splash today that negotiations are still ongoing with the capes’ current owner Enterprises Shipping & Trading, which is headed by Victor Restis. The price is suggested to be around $9m per ship.

Brokers also told Splash that Karadeniz is also looking at buying Unique Brilliance (176,300 dwt, built 2002), a cape currently owned by China’s Unique Shipping.

Now is a good time to be buying capesize bulk carriers, especially older vessels. The low market means that 2000-built capes of 175,000 dwt are worth 59.3% less than they were a year ago, according to estimates from VesselsValue.com.

Press reports in August said Karadeniz had been in discussions for some time with South African energy producer Eskom, which is interested in using floating power stations to produce electricity while it converts its existing diesel-fuelled power stations to run on natural gas. This could indicate the intended destination of the Nisshin Trader after its conversion to a powership, plus any more that are acquired in the coming weeks and months.

Karadeniz’s specialised subsidiary Karpowership currently has nine floating power stations on the water, four of which are deployed in Iraq, two in Lebanon and one each in Pakistan, Ghana and Indonesia.

Two further vessels – Karadeniz Osman Khan and Orhan Ali Khanare undergoing conversion in Turkey.

Karadeniz bought its first capesize in December 2014, when it paid BHP Billiton $17.1m for Pacific Triangle (184,700 dwt, built 2000), which was later renamed Karadeniz Osman Khan. Once its conversion is completed, the powership will have production capacity of 486 mW.

Orhan Ali Khan will become the world’s largest floating power plant when it is delivered in August 2016, with production capacity of 460 mW, Karadeniz told Turkish press on October 31.  The vessel was formerly a capesize called Abyo Four (172,600 dwt, built 1999), which Karadeniz bought in March for $11m from Malta-registered Abyo Holdings.

The two vessels are part of the energy company’s Khan class of powerships, which Karpowerships’ website says will be 300 metres long and 50 metres wide – just greater than the dimensions of a conventional capesize bulker. Khan-class powerships will have production capacity of up to 500mW and draft of just 3 metres, allowing them to enter almost any port.

Splash has contacted Karadeniz for comment but has not yet received a response.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.
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