*Company says deal would show Vietnam's commitment to area



HANOI - Petrovietnam and its partners may buy $1.5 billion in Vietnamese oil assets in the contentious South China Sea from ConocoPhillips to help protect Hanoi's territorial claims, the chief executive of the state oil group said.



Vietnam and the Philippines have protested against aggressive action by China in the resource-rich area, which covers the world's busiest sea lanes and straddles oil-and-gas deposits. It is also rich in fishing grounds.



China has made the largest claim over the area, and Taiwan, Vietnam, Brunei, Malaysia and the Philippines also claim territorial sovereignty.



Petrovietnam Chief Executive Phung Dinh Thuc said ConocoPhillips may sell the oil assets because it was scaling back its presence, possibly as part of a restructuring.



"There is also an opinion that this oil field is in a complicated stage" and they are no longer increasing production, he said. He did not say when a deal could occur.



Thuc was quoted in a statement published by PV Oil, Petrovietnam's marketing arm.



The South China Sea dispute is expected to be discussed on Friday in talks in Beijing between Philippine Foreign Minister Albert del Rosario and his Chinese counterpart Yang Jiechi.



A political adviser to Philippine President Benigno Aquino said in Manila that the country had to carefully manage relations with both China and the United States in the territorial dispute.



"We should know how to balance our interests between the two superpowers," Ronald Llamas said at a forum, adding Manila should negotiate through the Association of Southeast Asian Nations (ASEAN).



"Smaller states must work together as a bloc and avoid taking any side. ASEAN should be a fulcrum to balance the interests of the US and China. The problem can be avoided by not being partisan."



Tensions over sovereignty of the region have escalated this year. The Philippines and Vietnam have accused China of cutting the seismic cables of ships exploring for oil and gas, threatening to ram vessels and firing shots at fishermen.



Last month, the Philippine military reported an unidentified fighter jet harassed Filipino fishermen in the Spratlys, the second incident involving unidentified fighters since May.



The Lowy Institute, an Australian think tank, warned late last month of growing risks that incidents at sea involving China could lead to war, potentially drawing in the United States and other powers.



China wants one-to-one negotiations with each of the claimants rather than dealing with them within ASEAN and rejects any suggestion of US involvement in the process.



Beijing says it has historical sovereignty over the region, which it says supersedes claims of other countries under the United Nations Convention on the Law of the Sea (UNCLOS).



Complicated stage



Officials at ConocoPhillips in Vietnam could not be reached for comment on Petrovietnam's comments. Thuc spoke with domestic media on Tuesday, but his comments were not released until Friday.



ConocoPhillips owns a 23.3% stake in a complex of five oil fields in block 15-1 in the area. It owns 36% of the Rang Dong oil field in block 15-2 in the Cuu Long basin and 16.3% in the Nam Con Son gas pipeline project, the PV Oil statement said.



It said ConocoPhillips' assets in Vietnam totalled $1.5 billion.



In Block 15-1, its partners include Petrovietnam with a 50% interest, state-run Korea National Oil Corp with 14.2 percent, Korea's SK Corp with 9 percent and 3.5 percent owned by Monaco's Geopetrol.



The firm's partners in block 15-2 are Japan Vietnam Petroleum Co with 46.5% of stake and Petrovietnam with 17.5%.



In the Nam Con Son gas pipeline project, BP has 32.7% and Petrovietnam owns 17.5%.



Late last year, Petrovietnam said it had considered buying BP's stakes in offshore oil projects, but later waived the option, paving the way for BP to sell them to its Russian joint venture, TNK-BP, for $1.8 billion.