By Manuel Mogato
ULUGAN BAY, Philippines (Reuters) - Thousands of American and Philippine troops waded ashore on Wednesday in a mock assault to retake a small island in the South China Sea as tensions bubbled over rival claims to disputed areas rich in oil and gas.
The drill, part of annual U.S.-Philippine war games on the western island of Palawan, comes after the Chinese military warned last week that the exercise raised the risks of armed confrontation over contested areas of the South China Sea.
China has territorial disputes with the Philippines, Vietnam, Brunei, Malaysia and Taiwan across the South China Sea, each searching deeper into disputed waters for energy supplies while building up their navies and military alliances.
On Wednesday, Chinese Vice Foreign Minister Cui Tiankai said China was committed to dialogue and diplomacy to resolve sovereignty disputes in the region. But Cui also said China did not start the current standoff.
"We are certainly worried about the South China Sea issue," Cui told a news briefing in Beijing, saying "some people tried to mix two unrelated things, territorial sovereignty and freedom of navigation".
The comments come before high-level talks with the Obama administration. China, which claims the South China Sea as its territory based on historical records, has sought to resolve disputes bilaterally but its neighbors worry over what some see as growing Chinese assertiveness in its claims in the region.
U.S. President Barack Obama has sought to reassure regional allies that Washington would serve as a counterbalance to China in the South China Sea, part of his campaign to "pivot" U.S. foreign policy towards Asia after wars in Iraq and Afghanistan.
Philippine military officials sought to play down the exercise. Lieutenant General Juancho Sabban, military commander for the western Philippines, said the drill with U.S. troops "simply means we want to work together, improve our skills".
The drill coincides with another standoff between Chinese and Philippine vessels near Scarborough Shoal in a different part of the South China Sea, west of a former U.S. navy base at Subic Bay.
Sabban's area of command includes Reed Bank and the Spratlys, a group of 250 mostly uninhabitable islets spread over 427,350 sq km (165,000 sq miles) west of Palawan.
The Spratlys are claimed entirely by China, Taiwan and Vietnam and in part by Malaysia, Brunei and the Philippines.
HUGE OIL, GAS RESERVES
Proven and undiscovered oil reserve estimates in the South China Sea range as high as 213 billion barrels of oil, the U.S. Energy Information Administration said in a 2008 report. That would surpass every country's proven oil reserves except Saudi Arabia and Venezuela, according to the BP Statistical Review.
A Philippine exploration firm, Philex Petroleum Corp, said on Tuesday its unit, Forum Energy Plc, found more natural gas than expected around Reed Bank, where Chinese navy vessels tried to ram one of Forum Energy's survey ships last year.
The Philippines is due to open oil-and-gas exploration bids in Reed Bank on Friday.
In Hanoi, Foreign Ministry spokesman Luong Thanh Nghi reasserted Vietnam's claim to the Spratlys and the Paracel islands, known in Chinese as the Xisha islands, further west of Scarborough Shoal in what it calls the East Sea.
"Vietnam is considering and researching all means to resolve conflicts in the East Sea peacefully, including means that make use of organizations with international jurisdiction to find a lasting means acceptable to all parties concerned," he said in a statement.
"CHINA SHOULD NOT BE WORRIED"
Sabban said the military drill was not focused on China.
"Never was China ever mentioned in our planning and execution," he told reporters.
"China should not be worried about Balikatan (shoulder-to-shoulder) exercises," he said.
Nearly 7,000 American and Philippine troops were launched from U.S. and Philippine ships in the simulated amphibious assault to recapture an island supposedly taken by militants.
Four days ago, commando teams rappelled from U.S. helicopters and landed from rubber boats in a mock assault to retake an oil rig in northern Palawan, 18 km (11 miles) off the town of El Nido on the South China Sea.
The annual war games come under the 1951 Mutual Defense Treaty, part of a web of security alliances the United States built in the Asia-Pacific region during the Cold War.
The drills are a rehearsal of a mutual defense plan by the two allies to repel any aggression in the Philippines.
Hundreds of kilometers to the north, a Philippine coast guard ship patrols near Scarborough Shoal, a group of half-submerged rock formations 124 nautical miles west of the Philippines' main island of Luzon.
Philippine and Chinese ships are often in the same areas of the South China Sea, with two Chinese maritime surveillance ships a few miles away from the coast guard vessel and five Chinese fishing boats hauling clams, coral and sharks nearby.
(Additional reporting by Ben Blanchard in BEIJING and John Ruwitch in HANOI; Editing by Jason Szep and Paul Tait)