The 31,000-ton rig with a deck the size of a football field was delivered Monday to state-owned China National Offshore Oil Corp., the country's largest offshore oil producer.
Its manufacturer, China State Shipbuilding Corp., says the massive rig -- called CNOOC 981 -- is capable of undertaking an offshore operation at a water depth of 10,000 feet and drilling a length of 39,000 feet.
Previously, China's deep-water drilling capabilities didn't exceed 1,640 feet.
Following installation in the South China Sea, CNOOC 981 is to begin oil and gas prospecting in July, CNOOC says. The company said it plans to invest $30 billion and drill 800 deep-water wells, raising its deep-water oil and natural gas output to 500 million barrels of oil equivalent by 2020.
Dubbed the "second Persian Gulf," the South China Sea is estimated to contain more than 50 billion tons of crude oil and more than 20 trillion cubic meters of natural gas.
CNOOC Chairman Wang Yilin said the deep-water rig represents an opportunity for China to ensure its energy security.
Government statistics indicate that China -- the world's second largest oil importer behind the United States -- imported 84.96 million tons of crude oil in the first four months this year, up 11.5 percent from a year earlier.
China's latest five-year-plan, 2011-15, calls for "actively developing offshore oil and gas."
But till now, oil and natural gas exploration in the South China Sea has largely been dominated by southeastern Asian countries, including Vietnam, the Philippines, Malaysia, Indonesia and Brunei.
The rig is "undoubtedly a milestone in China's oil drilling industry," Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, told the Global Times.
"It is always a first-come, first-served game when vying for non-renewable resources in disputed sea areas, as the resources are not infinite."
Zhao Ying, a scholar with the Chinese Academy of Social Sciences, said the new platform is strategically significant for China.
"The value of the South China Sea natural resources is immense. Now that technologies are available for China to tap resources there, efforts to guard its operations and deter foreign illegal explorations become meaningful and necessary," Zhao told the Times.
CNOOC 981 is equipped with third-generation dynamic and global positioning systems, rendering the rig capable of withstanding vibrations from a major typhoon, says CSSC, builder of the rig.