Cyprus says it has begun exploratory drilling for oil and gas in the eastern Mediterranean Sea - risking escalating tensions with Turkey.
The director of Cyprus's energy service Solon Kassinis told Reuters news agency the work began "late last night".
Turkish PM Recep Tayyip Erdogan later said Turkey would "very soon" start drilling for gas off the Cyprus coast.
He added the Turkish military would monitor the eastern Mediterranean with aircraft, frigates and torpedo boats.
"We will start this within our exclusive economic zone very soon, possibly this week," Mr Erdogan told reporters.
"This exclusive economic zone is disputed and we have told them that it is not right for them to take such a step in this area," he said.
The Cypriot government is recognised internationally but not by Ankara.
The European Commission has urged both sides to exercise restraint over the issue and seek ways of resolving their long-standing dispute over northern Cyprus.
Ankara argues that until the ongoing talks to reunite the island succeed, no government has the right to negotiate over Cyprus's territorial waters, the BBC's Jonathan Head reports from Istanbul.
But Cyprus is badly in need of income and energy, and the Cypriot government is fully recognised by both the United Nations and the European Union, our correspondent adds.
Cyprus has licensed Texas-based Noble Energy to carry out exploratory drilling for gas off its southern coast.
"It started late last night," Mr Kassinis told Reuters. "It's preparatory work, yes, but the procedure for drilling has started."
He said the process would be completed in 73 days.
Earlier on Monday, Turkey's Energy Minister Taner Yildiz told journalists in Ankara: "The drilling work which the Greek Cypriots will conduct in the eastern Mediterranean is a provocation. We want the Greek Cypriots to halt immediately the work with Noble."
He warned that if the work went ahead then Turkey would send its own research ships to begin oil and gas exploration next week.
"This work will be carried out together with the [navy] escort," he said. "There will be no turning back on the issue."
If Turkey does carry out its threat, it would certainly be resisted by the Cypriot government and could provoke a military confrontation, our correspondent says.
Last year, the Cypriot government signed an agreement with Israel on the exploitation of resources in the Mediterranean. Turkey rejected that deal, because it does not recognise the Greek Cypriot government.
The Cypriot drilling has begun in the zone known as Block 12 - an area south of the island which the Israeli and Cypriot governments agreed to explore last year.
On Sunday, Turkey's Deputy Prime Minister Besir Atalay warned of a "real crisis" between the EU and Turkey if the Cypriot government takes over the six-month rotating presidency in July 2012.
"We will at that point freeze our relations with the EU," Mr Atalay told Turkish-Cypriot Bayrak television.
The island has been split since 1974, when Turkish forces invaded the north of Cyprus in response to a Greek-engineered coup. The internationally recognised government in Nicosia in fact only exercises control over the Greek south of Cyprus.
The issue has been a stumbling block to Turkey's bid to join the EU.
Turkey is alone in supporting the Turkish-Cypriot administration in the northern part of Cyprus.
A spokeswoman for EU foreign policy chief, Catherine Ashton, said on Monday that there were no plans to change the EU's presidency schedule to prevent Cyprus taking over.
Maja Kocijancic told reporters in Brussels that both Cyprus and Turkey should "make all efforts to reach a comprehensive settlement as soon as possible".