The United Arab Emirates' Dana Gas has signed an agreement for BP to pay for part of its exploration costs in the El Matriya onshore concession area in Egypt, the UAE firm said on Tuesday.

BP will pay for up to $39 million of the cost of Dana's drilling of a first natural gas exploration well. The concession was awarded to the two companies through international bidding in 2014. Drilling is expected to start in the first half of 2016.

Under the deal, BP will have the option to participate in parts of Dana Gas' West El Manzala concession area, Dana said in a bourse statement.

“We are very excited to be partnering with BP in drilling the Oligocene play onshore the Nile delta,” said Dr Patrick Allman-Ward, CEO Dana Gas.

“This play has long been identified as having a significant potential in our concession area and, in particular, the Mocha prospect, which is the target of the exploration well to be drilled by BP in the El Matariya Concession Area with Dana Gas’ carried interest.

“A successful well result could lead to substantial growth for the company in Egypt, open up the onshore Oligocene play in the Nile delta and could ultimately lead to a material increase in onshore gas production in Egypt. We are particularly pleased to have the well drilled by BP, which has extensive and successful experience in drilling deep, high pressure and temperature wells targeting the Oligocene in the offshore Nile delta area,” he added. – TradeArabia News Service & Reuters