Chinese state media say the country's first deep-water oil drilling rig has begun operations in the South China Sea.

The official Xinhua news agency says the rig began drilling for oil Wednesday at a depth of 1,500 meters in an area located about 320 kilometers southeast of Hong Kong.

The state-owned China National Offshore Oil Corp, which operates the rig, called the moment a “substantial step” for China's deep-sea oil industry. Its oil production and exploration had previously been limited to a depth of 300 meters.

China relies heavily on imported oil to fuel its economy. But it has been more aggressive in recent months in staking its territorial claims in the South China Sea, which is thought to have huge oil and gas reserves.

The deep-sea drilling area does not appear to be in a disputed part of the South China Sea. But just to the southeast, China has been locked in a month-long standoff with the Philippines over an uninhabited group of islands.

The standoff began on April 10 when Chinese surveillance ships prevented a Philippine warship from arresting Chinese fishermen near the Scarborough Shoal, which both sides claim as sovereign territory.

Beijing's Foreign Ministry on Tuesday said it was ready to respond to “any escalation” by Manila and warned that it was not optimistic about resolving the dispute. Earlier this week, China summoned a top Philippine diplomat in Beijing to make a “serious representation” over the situation.

China has already rejected a request by the Philippines to refer the issue to an international court.

China says the islands, known as Huangyan in China, are a key part of Chinese territory and that any Philippine claim to them is baseless. The Philippines says the shoal is well within its internationally recognized exclusive economic zone.

The Philippines, China, Vietnam, Taiwan, Malaysia and Brunei all have competing claims in the South China Sea. China claims nearly the entire energy-rich region.