HSBC and Standard Chartered Bank have issued a US$500mn standby letter of credit for the development of an offshore gas project in Ghana in an effort to boost the country’s power production.

The letter of credit was issued on behalf of Ghana National Petroleum Corporation (GNPC), Ghana’s national oil company. The facility will guarantee GNPC’s payments to energy companies Vitol and ENI for gas extracted from the offshore Sankofa field and piped onshore for power generation and industrial and domestic consumption.

HSBC France acted as agent on the deal and co-issued US$250mn along with Standard Chartered Bank. The tenor for the deal is up to 17 years, including a two-year commitment period prior to production followed by 15 years of effectiveness. Law firm DLA Piper advised the banks.

The facility is covered by the International Development Association (IDA), a member of the World Bank Group. IDA’s guarantee was approved by the World Bank board in July, along with a US$200mn guarantee from the International Bank for Reconstruction and Development (IBRD) for private financing. The guarantees are expected to mobilise US$7.9bn in new private investment for offshore natural gas.

The Sankofa field, located 60km off the coast of Western Ghana, is being developed by Italian oil and gas company ENI and is due to start producing gas in 2018. The project is expected to contribute to the improvement of the energy matrix in Ghana and boost the country’s power availability.

“The Sankofa integrated oil and gas project will be Ghana’s third operating field in quick succession. Gas from the field will provide baseload fuel to generate about 1,100MW of electricity in Ghana for 15 years,” says Alexander Mould, acting chief executive of GNPC.

The gas piped onshore from the Sankofa field will primarily be used for local consumption and possibly exported to adjacent countries, the banks say in a statement.

ENI holds a 44.4% stake in Sankofa, upstream trader Vitol 35.6% and GNPC 20%.