DUBAI: Dana Gas said on Monday it has been awarded two onshore concessions in the Nile Delta in Egypt by state-owned Egyptian Natural Gas Holding Company (EGAS).

The North Al Salhiya (Block 1) and Al Matariya (Block 3) concessions were awarded to wholly-owned subsidiary Dana Gas Egypt for a six year exploration period.

The concession were awarded as part of EGAS’s international bidding round that started back in December 2013.

“We believe there is significant upside potential from continued exploration and development in these concessions,” Patrick Allman-Ward, Dana Gas chief executive, said in a statement.

North Al Salhiya is spread across 1,527 square kilometres and has 11 wells and El Matariya is spread across 960 square kilometres with 12 wells, according to Deloitte.

UK-based Jonathan Stern, a gas expert at the Oxford Institute for Energy Studies, said by email the two blocks are “highly prospective” but that Dana Gas will be “banking on the Egyptian political and economic situation improving by the time they come to produce gas.”

“If it doesn’t they may not proceed,” he added.

Dana Gas has been locked in a dispute with the Egyptian government over overdue payments. Cairo owed Dana Gas $297 million (Dh1.09 billion) as of June 30. Dana Gas declined on Monday to state the current amount owed to them by the Egyptian government.

Dana Gas Egypt will be the sole operator on North Al Salhiya and will work with BP on the Al Matariya concession in a 50 per cent partnership tie-up. Dana Gas said BP will fund all the costs of one exploration well in the Al Matariya block.

The new concessions are located near Dana Gas Egypt’s existing Nile Delta concessions, the Al Manzala, West Al Manzala and West Al Qantara.

Under the deal, BP can elect to become a 50 per cent partner in Dana Gas Egypt’s other concessions.

Dana Gas shares rose 2.99 per cent to Dh0.69 on the Abu Dhabi Securities Exchange (ADX) on Monday.