Drilling off the coast of the Falkland Islands will begin on Sunday despite strong opposition from Argentina.
Argentina has said it will widen restrictions on ships heading to the islands to cover all of South America.
The Falklands Legislative Assembly says the restrictions are "no surprise" and promises that exploration will "commence as planned".
Earlier this week, Argentina announced that all ships heading to the Falklands from its ports would require special permits.
An oil rig from Britain has arrived in Falkland waters. The Ocean Guardian has been at sea since November. The BBC reports drilling is due to begin on Sunday.
Argentina has threatened to take "adequate measures" to stop British oil exploration in contested waters around the islands.
Foreign Secretary David Miliband has said all British oil exploration in the area is "completely in accordance with international law".
Buenos Aires claims sovereignty over the Falkland Islands, which it calls Islas Malvinas.
Britain and Argentina went to war after the Falklands were invaded in 1982.
On Tuesday, Argentine President Cristina Fernandez signed a decree requiring all vessels travelling between Argentina and the islands, or those wanting to cross what Argentina says are its territorial waters en route to the Falklands, to seek prior permission.
Last week, a ship carrying drilling equipment was detained by Argentine officials.
Last year, Argentina submitted a claim to the United Nations for a vast expanse of ocean, based on research into the extent of the continental shelf, stretching to the Antarctic and including the islands governed by Britain.
It is due to raise the issue at the UN next week.