Argentina has built up its military presence in the Falklands' waters and warned Britain and the Falklands administration it will not abandon its claim of sovereignty over the islands.

Britain and Argentina went to war over the islands in 1982, with the loss of about 900 lives. British troops prevailed over an Argentine invasion force but Buenos Aires never abandoned its claim over the islands.

The Argentine campaign for "return" of the Falklands to Argentina gained momentum last year after a British oil prospecting firm unveiled plans for extensive drilling of the basin.

Backed by the British and Falklands governments, Desire Petrolum and Falklands Oil and Gas announced they would go ahead with plans to exploit the Falklands' hydrocarbon resources, believed to be the world's largest after Saudi Arabia's reserves.

British media speculated the renewed row over the Falklands' ownership could be a precursor to a new military conflict. Argentina has been canvassing for international sympathy and last week won Latin American support at the Cancun summit of Central and South American leaders. Buenos Aires has also canvassed for U.N. intervention in a bid to halt oil prospecting.

Analysts said Argentina has been shopping for weapons and set about regenerating its armed forces. Before the row over the oil drilling reignited the Falklands crisis the Argentine military had been lobbying for funding to revamp their arms inventories but failed to get government funds amid an economic slowdown.

The continuing turmoil over the farm strikes and the government's quarrel with the Central Bank put the military's demands for funds on the back burner -- until the Falklands row took on the center stage again.

Argentina's threat of sanctions against shipping and oil firms that trade with the Falklands has raised the temperatures in the South Atlantic politics, renewing questions about Argentina's next moves when the drilling for oil gains momentum in the spring.

BHP Billion holds 14 exploration and production licenses with Falkland Oil and Gas and has announced plans to begin drilling within the next four months. Analysts said the drilling operations could be a major test for Argentine President Cristina Fernandez de Kirchner.

U.S. Secretary of State Hillary Clinton, due to visit Argentina this week, will face demands from Fernandez to try and dissuade Britain from going ahead with the oil drilling, Argentine media reported.

Fernandez has been openly critical of the Obama administration but analysts said the criticism was designed to extract a more sympathetic U.S. approach over the Falklands dispute.

U.S. officials have said the Obama administration will remain neutral on the Falklands and will not be drawn into the dispute.

However, last month's Cancun summit of Central and South American leaders declared sympathy with Argentina and also delivered a diplomatic rebuff to Washington by excluding Canada and the United States from a planned new political bloc. The new strategic group was set up as an answer to the Organization of American States, which has its headquarters in Washington.

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