* China disputes Vietnam's account of incident last week
* China repeats warning against "unilateral" oil and gas exploration
* South China Sea is one of Asia's most sensitive military hotspots
By Michael Martina
BEIJING, Dec 6 (Reuters) - China told Vietnam on Thursday to stop unilateral oil exploration in disputed areas of the South China Sea and not harass Chinese fishing boats, raising tensions in a protracted maritime territorial dispute with its neighbour.
Vietnam had already expelled Chinese fishing vessels from waters near China's southern Hainan province, Chinese Foreign Ministry spokesman Hong Lei told a daily news briefing.
Hong's description of the confrontation last Friday was in contrast to the account by Vietnam, which said a Vietnamese ship had a seismic cable it was pulling cut by two Chinese fishing ships.
"Vietnam's statement is inconsistent with the facts," Hong said.
China is in increasingly angry disputes with neighbours including the Philippines, Taiwan, Vietnam, Brunei and Malaysia over claims to parts of the potentially oil and gas-rich South China Sea. China, which lays claim to almost the whole of the sea, criss-crossed by crucial shipping lanes, also has a separate dispute with Japan over islands in the East China Sea.
The Chinese fishing boats were in an area where Vietnam's claim overlaps with waters of Hainan province, Hong said.
New Chinese regulations allow police to board vessels deemed to be intruding in waters off the island of Hainan, though details about how this could happen have not been made clear.
"The relevant fishing vessels were in these waters conducting regular fishing activities and they were unreasonably expelled by Vietnamese military vessels," Hong said.
He added that China and Vietnam were currently in negotiations over the waters.
"We hope the Vietnam side will not engage in unilateral oil and gas exploration activities in the relevant waters, cease interfering with Chinese fishing vessels' normal operations, and create a friendly atmosphere for bilateral negotiations", Hong said.
China has made similar warnings in the past about not exploring for oil and gas in waters it considers its own.
In Washington, the U.S. State Department said it was aware of the incident between the Chinese and Vietnamese vessels and said it had expressed concerns to Beijing over the new regulations.
"We call on the Chinese government to clarify the revised regulations and ensure their implementation is consistent with international law," State Department spokesman Mark Toner said in an emailed statement.
"All concerned parties should avoid any unilateral actions that raise tensions and undermine the prospects for a diplomatic or other peaceful resolution of differences," he said.
India, which jointly conducts some oil exploration with Vietnam, said this week that it was prepared to send navy ships into the region to safeguard its interests.
Energy-hungry China is also actively exploring the resources of the South China Sea. It aims to produce 15 billion cubic metres of natural gas a year from the South China Sea by 2015, the energy administration said on Monday, raising the possibility of disputes escalating.
State-run CNOOC, China's top offshore oil producer, in late June invited foreign companies to jointly develop nine blocks in the western part of the South China Sea, a move Vietnam said was illegal because the blocks overlap its territorial waters.
The South China Sea is one of Asia's most sensitive military hotspots whose profile has been raised by a newly assertive China.
The mounting disputes come at a time when China is flexing increasing naval might, including the launch of its first aircraft carrier in September and the test flights of its first two models of a stealth jet fighter, one of which is believed to be designed to land on aircraft carriers.