The nation's first indigenous deep-water drilling rig, the CNOOC 981, will begin operations Wednesday in an area in the South China Sea 320 kilometers southeast of Hong Kong.
The move, hailed by analysts as an effective way to reinforce China's territorial claims in the region, came amid an ongoing standoff between Chinese and Philippine ships in waters near Huangyan Island.
The sixth-generation semi-submersible CNOOC 981 will begin operations at a water depth of 1,500 meters. It is the first independent deep-water oil drilling rig produced by a Chinese company, marking "a substantial step" for the country's deep-sea oil industry, China National Offshore Oil Corp (CNOOC) said in a statement.
"Exploiting maritime resources in the South China Sea and sending fishing fleets there are effective ways to reinforce China's territorial claims in the region," Zhuang Guotu, director of the Center for Southeast Asia Studies at Xiamen University, told the Global Times.
"I expect China to further exploit natural resources in waters near Huangyan Island," Zhuang said.
According to a statement released by China's foreign ministry, Vice Foreign Minister Fu Ying said Beijing is not optimistic about the situation concerning Huangyan Island and the country is fully prepared to respond to anything the Philippine side does to escalate the situation.
Fu called a meeting Monday with Alex Chua, Charge D'affaires of the Philippine embassy in China, and said that Huangyan Island has been a part of China since ancient times, a fact also in line with legal principles.
She urged the Philippine side to withdraw its ships and stop obstructing the operations of Chinese fishing and government vessels, and said that Chinese boats will continue to be on alert in the region.
Zhuang said Fu's remarks signaled a toughening stance by China in the dispute.
"China is likely to take tough measures, such as economic sanctions, but the use of force is unlikely," Zhuang noted.
When asked if "all preparations" mentioned by Fu includes the option of using armed forces, foreign ministry spokesman Hong Lei said Tuesday that Beijing demands that Manila seriously respond to China's concerns and return to the diplomatic track to handle the matter.
Philippine President Benigno Aquino III said Friday that his administration may split the South China Sea issue with China in order to "have a political discussion on one side" and "have commercial issues on another side."
Meanwhile, media reports said that China had upgraded its fishing fleet to enhance maritime enforcement capability.
The Hainan Baosha 001, a 32,000-ton processing ship, along with three supporting vessels with over 10,000 tons of displacement and three 3,000 to 5,000-ton supply vessels, will join 300 to 500 fishing boats in the waters, the Wen Wei Po newspaper reported.
The Hainan Baosha 001 is China's largest seafood-processing ship and one of only four in the world.
China's current fishing fleet cannot stay long on high seas due to the lack of processing facilities. The additional ships will allow the fleet to fish in the area for up to nine months at a time, the paper said.
"These kinds of large fishing boats are usually used in deep-ocean fishing. Their sheer size makes it difficult for Philippine coast guards to board, thus can protect the crew," Lan Yun, a defense observer, told the Global Times.
According to a plan by the fishery and maritime authorities of Hainan Province, the GDP produced in the South China Sea area should reach 109.8 billion yuan ($17.41 billion) by 2015.
The South China Sea is estimated to have 23 billion to 30 billion tons of oil and 16 trillion cubic meters of natural gas, accounting for one-third of China's total oil and gas resources.
About 70 percent of oil and gas reserves in the sea are contained in 1.54 million square kilometers of deep-water regions, or sea areas with depths of over 300 meters. However, most of China's current offshore oil exploration is conducted less than 300 meters below the surface.
Also Tuesday, the Ministry of Commerce issued a notice telling Chinese staff in the Philippines to take precautions against possible anti-China demonstrations.
Yang Jingjie and agencies contributed to this story