Washington (Platts)--3Aug2012/1250 pm EDT/1650 GMT

The US State Department Friday said it is "concerned" about increasing tensions in the South China Sea, including "disagreements over resource exploitation."

In June, China National Offshore Oil Corp. offered leasing in nine offshore blocks that Vietnam considers part of its exclusive economic zone. And last month, the Association of Southeast Asian Nations (ASEAN) failed to make progress in ratifying a code of conduct that would be used to resolve disputes in the region. Soon after, China established a military garrison in disputed South China Sea territory.

"We are concerned by the increase in tensions in the South China Sea and are monitoring the situation closely," Patrick Ventrell, State Department acting deputy press secretary said in a statement Friday. "Recent developments include an uptick in confrontational rhetoric, disagreements over resource exploitation, coercive economic actions, and the incidents around the Scarborough Reef, including the use of barriers to deny access."

Ventrell said that China's establishment of a military garrison at Sansha City and its upgrading of the administrative level there are of particular concern and "run counter to collaborative diplomatic efforts to resolve differences and risk further escalating tensions in the region."

Ventrell said the US is encouraging ASEAN and China to continue work on a code of conduct as a way of establishing peaceful mechanisms for the settling of disputes.

"We continue to urge all parties to clarify and pursue their territorial and maritime claims in accordance with international law, including the Law of the Sea Convention," Ventrell said. "We believe that claimants should explore every diplomatic or other peaceful avenue for resolution, including the use of arbitration or other international legal mechanisms as needed. We also encourage relevant parties to explore new cooperative arrangements for managing the responsible exploitation of resources in the South China Sea."

--Gary Gentile, gary_gentile@platts.com 
--Edited by Katharine Fraser, katharine_fraser@platts.com

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