After you feel a powerful shock, leave the bridge at the captain's request and go check the situation on the stern.
On the way - when crossing the quarterdeck - pick up the handmade matches, lying near the first chair (the row on the left, near the Youkols). Then, look under the first chair in the next row. Zoom in, and retrieve a small box (mouse movement) from under the chair, remove (with the mouse) the small bolt that's keeping it locked, and open the lid. Look inside and move the things on top to find a flare. Take it. Leave the quarterdeck and proceed to the stern.
Once Kate learns what causes the shocks, she'll be ordered to destroy the light sources on the ferry. Head for the giant floodlight on the stern and use the flare on it to distract the kraken. Now, you'll need some tools to smash each and every floodlight on board (there's six of them: one on the stern, second one on the bow, and two on each board).
Head for the port - the right side of the ship - there's a nice solid rod on a chest right beside the quarterdeck. Take it. Get back on the stern and smash the floodlight. Now, head for the starboard, where you'll have to move one of the chests near the quarterdeck to access the floodlight. Climb the chest and smash the light.
Proceed along the starboard. Once you reach the next floodlight (right behind the quarterdeck) turn the crank to lower it and turn towards Kate, then smash it. Carry on. Use the stairs to climb the catwalk on the ship's bow. Smash the fourth floodlight. Take the stairs to the port and head back for the stern - the first floodlight (near the exit) will be smashed without any action from Kate, the last, a bit further, you'll have to once again lower by turning a crank, before you can smash it.
Unfortunately, it won't be enough - captain's next idea will be to turn off the engines. Enter the quarterdeck from the stern and take the stairs on the left, leading to the engine room.
Head towards the control panel, but do not stop there. Proceed to the right. The lever that will shut down the power (and turn off the engines) is at the end of the catwalk (on the right) - lower it.
Exit the engine room, and then the quarterdeck (towards the stern). Go to port - you'll find the captain in a lifeboat - talk to him. He'll send Kate to retrieve a lamp.
First, head for the bridge. Not where the steering wheel is, but a bit lower - to the room with the gramophone.
Examine the books lying in the corner (near the globe), focusing on the one to the right. Zoom in and open it - inside, Kate will find a bottle of powerful vodka.
Now, return to the engine room (best take the stairs on the left). Once you're on the catwalk, circle around the stairs you've just used and head down once again, taking a new flight of stairs to the left. You'll reach a place with a group of Youkols, and on the right, there will be something like a workshop - a desk and a long workbench with some tools hanging above it.
Take a closer look at the things on the desk - zoom in and pick up the lamp on the right, Kate will combine it with the stand on the left. Examine the bottom of the stand - turns out there's no fuel in the lamp. That's where the captain's vodka will come in handy - fill the lamp (second active point from the bottom), and light the wick with the matches. Pick up the lamp, and head back to the captain in the lifeboat (achievement We're going to need a bigger boat).