The UK will not lay claim to any oil - potentially worth over £100bn - that is found in the Falklands, a Government minister has told Sky News.
Foreign Office minister Jeremy Browne has also strongly condemned threats by the Argentinian government to British businesses involved with oil exploration in the region.
In an interview on the 30th anniversary since the UK went to war with Argentina over the sovereignty of the South Atlantic islands, Mr Brown said: "If oil is found in quantities that are commercially meaningful, then that oil is for the people of the Falkland Islands.
"It won't be for Britain to have that oil."
The minister was emphatic that the British Government wanted to protect the islanders' rights to choose their own future .
Tensions between the UK, which has owned the islands since 1833, and Argentina have mounted in recent months, with Buenos Aires laying claim to the archipelago.
The discovery of oil off the Falklands has raised the stakes, leading Argentina to threaten to sue companies involved in oil exploration and to protest to the United Nations over British "militarisation" of the South Atlantic.
According to The Sunday Telegraph, President Cristina Fernandez de Kirchner's government has threatened legal action against British and US banks that gave advice to or even wrote research reports about companies involved in the Falklands oil sector.
Argentina's embassy in London has written to 15 banks, including Goldman Sachs, Credit Suisse and Barclays Capital, in the past 10 days, warning they could face criminal and civil action in the Latin American country.
Mr Browne told Sky News: "We have made clear to the Argentinians that we think that is the wrong path to go down.
"We think they are making a mistake being more protectionist, we think they are making a mistake cutting off Argentina from trade, especially with the United Kingdom."
The island's oil reserves, which remain untapped until now but which analysts predict could be worth tens of billions of pounds, have been a major source of tension between the countries since their discovery in 1998.
Mr Browne said: "I don't remember anybody saying that the motivation for the British Government in 1982 was oil.
"The motivation of the British Government then and the motivation of the British Government now is to defend the right to self-determination of the people of the Falklands Islands."
Five small-to-medium sized British companies are currently exploring four areas for oil in and around the Falklands.
Only one of the companies, Rockhopper, has so far confirmed significant reserves of recoverable oil - 350 million barrels in the Sea Lion field to the north of the islands, which it plans to start pumping by 2016.
But analysts Edison Investment Research estimated in a report last month that a total of 8.3 billion barrels could lie offshore if other wells come in as hoped.
This could generate some £113bn for the Falklands' local government in royalties and tax revenues, said EIR, which was reportedly among the researchers threatened by Argentina.
Malcolm Graham-Wood, an oil analyst at VSA Capital, told Sky News that there were also "substantial potential structures" in the south of the island that could attract big oil companies to the Falklands.
He added that "wherever oil is discovered, the politics are always a problem in one way or another", but he did not expect the current tensions between the UK and Argentina to deter oil companies from further exploration in the area.
Mr Graham-Wood said the region was physically easier to access than the North Sea, the tax rate was "fairly straight-forward" and it was not as deep as the Gulf of Mexico.