Dispute likely to escalate after Nicosia said it would seek to arrest anyone caught drilling.

Tensions over energy resources in the eastern Mediterranean have risen sharply after Turkey said it would “exercise its sovereign rights” to drill off Cyprus in flagrant defiance of warnings from western allies.

As the dispute over potential gas reserves intensified, Ankara insisted its state-of-the-art drilling ship, the Fatih, and its support vessels would begin operations in waters viewed by the EU as being within the island’s exclusive economic zone.

“Turkey does not recognise the unilateral and illegitimate exclusive economic zone claims of the Greek Cypriots,” its foreign minister, Mevlüt Çavuşoğlu, announced in a letter released by the state-run Anadolu news agency.

“Third parties should refrain in taking sides in overlapping maritime boundary claims and they should not act as if they are in a court in rendering judgement on bilateral maritime boundaries.”

But Ankara, which refuses to recognise Cyprus – instead acknowledging the self-proclaimed Turkish republic in the north, argues the region is part of its own continental shelf and, as such, it is complying with international law. It is a stance that, increasingly, has put the Nato country at odds with allies.

On Sunday a senior Cypriot official said Nicosia will issue international and European arrest warrants “for all involved” if, as looked likely, drilling did take place.

Earlier this month, the EU’s policy chief, Federica Mogherini, expressed “grave concern” over Turkey’s intentions.

In a statement that highlighted growing alarm at the sabre-rattling, she hinted that sanctions could follow if Ankara did not heed the bloc’s warnings. “We urgently call on Turkey to show restraint, respect the sovereign rights of Cyprus in its exclusive economic zone [EEZ] and refrain from any such action to which the European Union will respond appropriately and in full solidarity with Cyprus.”