diff --git a/opm/parser/eclipse/EclipseState/Grid/GridDims.hpp b/opm/parser/eclipse/EclipseState/Grid/GridDims.hpp
index 4237da466..c5a304999 100644
--- a/opm/parser/eclipse/EclipseState/Grid/GridDims.hpp
+++ b/opm/parser/eclipse/EclipseState/Grid/GridDims.hpp
@@ -65,7 +65,7 @@ namespace Opm {
 
     private:
         void init(const DeckKeyword& keyword);
-        void binary_init(const DeckKeyword& gdfile);
+        void binary_init(const Deck& deck);
     };
 }
 
diff --git a/src/opm/parser/eclipse/EclipseState/Grid/EclipseGrid.cpp b/src/opm/parser/eclipse/EclipseState/Grid/EclipseGrid.cpp
index 455c2ead8..c6e557619 100644
--- a/src/opm/parser/eclipse/EclipseState/Grid/EclipseGrid.cpp
+++ b/src/opm/parser/eclipse/EclipseState/Grid/EclipseGrid.cpp
@@ -297,8 +297,10 @@ namespace Opm {
 
 
     void EclipseGrid::initBinaryGrid(const Deck& deck) {
-        const auto& gdfile_record = deck.getKeyword<ParserKeywords::GDFILE>().getRecord(0);
-        const std::string& filename = gdfile_record.getItem("filename").get<std::string>(0);
+        const DeckKeyword& gdfile_kw = deck.getKeyword("GDFILE");
+        const std::string& gdfile_arg = gdfile_kw.getRecord(0).getItem("filename").get<std::string>(0);
+        std::string filename = deck.makeDeckPath(gdfile_arg);
+
         ecl_grid_type * grid_ptr = ecl_grid_load_case__( filename.c_str(), false);
         if (grid_ptr)
             this->m_grid.reset( grid_ptr );
diff --git a/src/opm/parser/eclipse/EclipseState/Grid/GridDims.cpp b/src/opm/parser/eclipse/EclipseState/Grid/GridDims.cpp
index 494a45565..894d73e1d 100644
--- a/src/opm/parser/eclipse/EclipseState/Grid/GridDims.cpp
+++ b/src/opm/parser/eclipse/EclipseState/Grid/GridDims.cpp
@@ -49,7 +49,7 @@ namespace Opm {
         else if (deck.hasKeyword("DIMENS"))
             init(deck.getKeyword("DIMENS"));
         else if (deck.hasKeyword("GDFILE"))
-            binary_init(deck.getKeyword("GDFILE"));
+            binary_init(deck);
         else
             throw std::invalid_argument("Must have either SPECGRID or DIMENS to indicate grid dimensions");
     }
@@ -137,8 +137,10 @@ namespace Opm {
         m_nz = dims[2];
     }
 
-    void GridDims::binary_init(const DeckKeyword& gdfile) {
-        const std::string& filename = gdfile.getRecord(0).getItem("filename").get<std::string>(0);
+    void GridDims::binary_init(const Deck& deck) {
+        const DeckKeyword& gdfile_kw = deck.getKeyword("GDFILE");
+        const std::string& gdfile_arg = gdfile_kw.getRecord(0).getItem("filename").get<std::string>(0);
+        std::string filename = deck.makeDeckPath(gdfile_arg);
         ecl_grid_dims_type * grid_dims = ecl_grid_dims_alloc( filename.c_str(), nullptr );
         if (grid_dims) {
             const auto& dims = ecl_grid_dims_iget_dims(grid_dims, 0);
@@ -146,7 +148,7 @@ namespace Opm {
             m_ny = dims->ny;
             m_nz = dims->nz;
         } else
-            throw std::invalid_argument("Could not determine grid dimensions from " + filename);
+            throw std::invalid_argument("Could not determine grid dimensions from: " + filename);
     }
 
 }
diff --git a/tests/parser/EclipseGridTests.cpp b/tests/parser/EclipseGridTests.cpp
index b23448e77..de7ed5b7c 100644
--- a/tests/parser/EclipseGridTests.cpp
+++ b/tests/parser/EclipseGridTests.cpp
@@ -23,6 +23,7 @@
 #include <cstdio>
 #include <numeric>
 
+
 #define BOOST_TEST_MODULE EclipseGridTests
 #include <boost/test/unit_test.hpp>
 #include <boost/date_time/posix_time/posix_time.hpp>
@@ -792,15 +793,21 @@ BOOST_AUTO_TEST_CASE(GDFILE) {
     const char* gdfile_deck =
         "GRID\n"
         "GDFILE\n"
-        "CASE.EGRID /\n"
+        "'grid/CASE.EGRID' /\n"
         "\n";
 
     Opm::EclipseGrid grid1(createCPDeck());
     test_work_area_type * work_area = test_work_area_alloc("GDFILE");
-    grid1.save("CASE.EGRID", Opm::UnitSystem::UnitType::UNIT_TYPE_METRIC);
+    util_mkdir_p("ecl/grid");
+    grid1.save("ecl/grid/CASE.EGRID", Opm::UnitSystem::UnitType::UNIT_TYPE_METRIC);
+    {
+        FILE * stream = fopen("ecl/DECK.DATA", "w");
+        fputs(gdfile_deck, stream);
+        fclose(stream);
+    }
     {
         Opm::Parser parser;
-        Opm::EclipseGrid grid2(parser.parseString(gdfile_deck, Opm::ParseContext() ));
+        Opm::EclipseGrid grid2(parser.parseFile("ecl/DECK.DATA", Opm::ParseContext() ));
         BOOST_CHECK(grid1.equal(grid2));
     }
     test_work_area_free( work_area );