Iceland on Friday awarded two exploration and production licenses to foreign energy firms hoping to find oil and gas in the northeastern waters off the North Atlantic island's coast.

Icelandic energy authority Orkustofnun said in a statement that it had "signed and issued licensing documents for exploration and production of hydrocarbons in the Dreki area."

The island nation will get a helping hand from neighboring Norway, Europe's second largest oil producer, after Oslo took a 25 percent stake in both licenses awarded on Friday through state-owned oil company Petoro.

"This is of course an important step," said Icelandic Minister of Industries and Innovation Steingrimur Sigfusson.

"These are the first real licenses that we believe will be used and they call for extensive research in the area," said Sigfusson, referring to a derailed licensing round in 2009.

AFP