Japan has given permission for the test-drilling of a potentially lucrative gas field in the East China Sea contested with Beijing, after talks on the dispute broke down amid deteriorating ties.

 China National Offshore Oil Corporation's (CNOOC) oil rigs in China's Bohai Sea is seen in this photograph taken July 7, 2004. [newsphoto/file] 

China immediately protested the decision to let Teikoku Oil be the first Japanese company to explore the waters in the East China Sea.

"In response to an application from Teikoku Oil, we have authorized the company to be granted test drilling rights," Minister of Economy, Trade and Industry Shoichi Nakagawa told a news conference.

Japan said in April that it would accept bids to drill in the region, ending decades of hesitation over upsetting China. Relations between the two countries have seriously deteriorated this year over how they remember World War II.

Teikoku Oil said it was notified it could explore three areas covering a total of 400 square kilometers (155 square miles) in the disputed sea area.

Chinese foreign ministry spokesman Liu Jianchao expressed "serious concern" over the move.

"If Japan deliberately authorizes private enterprises the right to drill, this will constitute a serious infringement of China's sovereignty and will complicate the East China Sea situation," Liu told a press briefing.

"We strongly advise Japan not to take any actions that are unfavorable for the stability of the East China Sea and would damage China-Japan's overall relations," he added.

Teikoku Oil said the actual drilling could take more time, as it looks into safety concerns about working on the sea at the center of the international dispute.

"We would like to conduct test-drilling in the future," the Tokyo-based company said in a statement.

"However, there are many issues regarding the water area such as safety so we want to make a decision on when actual work will take place after consulting with the government agencies concerned," it said.

Japan and China have held a series of high-level meetings to address their growing disputes but they have reached little agreement on the gas fields other than to keep talking.

The two nations are among the world's biggest energy importers as they try to keep their huge economies running. A Japanese survey in 1999 estimated the disputed fields had a massive 200 billion cubic meters of gas.

Japan has previously protested that China may be drilling beyond what Tokyo considers the median line. China has insisted its exploration is not in the disputed portion of the waters and has instead called for joint exploration of the gas fields.

The dispute comes at a time of tense relations between the Asian nations with China accusing Japan of failing to atone for its bloody occupation of parts of the mainland that ended in 1945.

The Mainichi Shimbun reported last month that Japan was considering putting any company that drills in the East China Sea under government contract to show Tokyo's commitment and help shoulder the costs.

Editor: Yan