Japan warned China that it would take action if Beijing starts gas production in a disputed field in the East China Sea, reported Japan's Kyodo news agency.
Although the two countries reached a broad agreement in 2008 on principles intended to solve the dispute by jointly developing gas fields, progress has been slow and Japan has accused China of drilling for gas in violation of the agreement.
Japanese Foreign Minister Katsuya Okada indicated to his Chinese counterpart Yang Jiechi at a meeting in Tokyo yesterday that Japan might also start its own development in the disputed area, if China moves ahead with its gas production at the site, Kyodo reported, citing a ministry source.
The two ministers had heated exchanges, with Yang saying Okada's stance as not acceptable.
But the two also agreed on the need to continue frequent high-level dialogue, and Yang invited Japanese Prime Minister Yukio Hatoyama to visit China for this year's World Expo in Shanghai while Okada invited Chinese premier Wen Jiabao to visit Japan, Kyodo also reported.
Tokyo objects to Chinese development of the Chunxiao gas field in seas close to Japan's claimed boundary.
Estimated net known reserves in the disputed fields are a modest 92 million barrels of oil equivalent, but both countries have pursued the issue because there may be larger hidden reserves.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.