CORRECT:Argentina Government Protests Falklands Oil & Gas Exploration

Argentina's government on Tuesday protested oil and gas exploration activities in waters to the north of the U.K.-controlled Falkland Islands, over which the two countries fought a war in 1982.

The Argentine government "firmly rejects the United Kingdom's plan to authorize operations for exploration and exploitation of hydrocarbons in the Argentine continental shelf," the foreign ministry said in a statement.

The Argentine government said it would deliver a note later Tuesday to the U.K. representative in Buenos Aires in which it would express its "most energetic protest" against the exploration activities.

Argentina claims the Falklands and surrounding waters are under "illegitimate British occupation."

Officials at the U.K. embassy in Buenos Aires said they didn't have an immediate comment.

The Falkland Islands, known as the Islas Malvinas in Argentina, are a source of tension in relations with the U.K., which won the brief war in 1982.

Analysts say that as much as 60 billion barrels of high-grade oil could be found in the 200-square-mile economic zone surrounding the islands. That could make the Falklands one of the world's largest oil reserves, comparable with the North Sea, which so far has produced about 40 billion barrels.

The U.K. and Argentina have overlapping claims around the Falklands and have clashed over territorial rights at the United Nations. The U.K. wants to extend its rights to waters surrounding the Falkland Islands and also wants to lock in a vast tract of seabed off the coast of Antarctica.

Argentina has submitted its own claim at the U.N. for territory in the South Atlantic.

Exploration for oil and gas is proceeding on both sides of the maritime divide. On the U.K. side, Desire Petroleum PLC (DES.LN) and Rockhopper Exploration PLC (RKH.LN) will start looking for oil and gas in the North Falkland Basin this month.

That lies northeast of Argentina's Cuenca Malvinas, which is being explored by a consortium led by Spanish oil firm Repsol YPF SA (REP, REP.MC), and which includes a unit of the U.K.'s BP PLC (BP, BP.LN) as well as Brazil's Petroleo Brasileiro SA (PBR, PETR4.BR).

-By Matthew Cowley, Dow Jones Newswires; [phone]; [e-mail]