Clinton warns against threats in South China Sea dispute By Martin Petty and Arshad Mohammed PHNOM PENH (Reuters) - U.S. Secretary of State Hillary Clinton on Thursday urged rival claimants to the South China Sea not to resort to threats and intimidation in the potentially oil-rich waters, an indirect reference to China at the start of a regional meeting. Clinton said the United States wanted talks involving all parties to resolve the dispute, a stance likely to upset China, which has sought a bilateral approach to addressing rival claims to the waters, a potential military flashpoint. "We believe the nations of the region should work collaboratively and diplomatically to resolve disputes without coercion, without intimidation, without threats, and without use of force," Clinton told the East Asia Summit meeting in Phnom Penh, according to a text released by the State Department. Long-simmering tensions in the waters entered a more contentious chapter this year, with claimant countries searching deeper into disputed waters for energy supplies while building up their navies and military alliances. "Issues such as freedom of navigation and lawful exploitation of maritime resources often involve a wide region, and approaching them strictly bilaterally could be a recipe for confusion and even confrontation," Clinton added. Beijing claims the South China Sea as its territory based on historical records and has said China has "indisputable sovereignty" over the area, parts of which are claimed by five other countries. The Philippines and China only recently stepped back from a months-long standoff at the Scarborough Shoal, a horseshoe shaped reef in waters they both claim -- the latest round of naval brinkmanship over the heavily trafficked waters. 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 except Saudi Arabia and Venezuela, according to the BP Statistical Review. U.S. President Barack Obama has sought to reassure regional allies that Washington would serve as a counterbalance to a newly assertive China in the South China Sea, part of his campaign to "pivot" U.S. foreign policy more intensely on Asia after a decade of war in Iraq and Afghanistan. The United States says stability is its concern in the waterway, which carries $5 trillion in ship-borne trade, accounting for half the world's shipping tonnage. Several countries are seeking a maritime code of conduct for the seas. "The United States is going to be very clear in our determination to see progress on the code of conduct between those negotiations that are taking place between China and ASEAN," a senior U.S. State Department official told reporters earlier this week. Foreign ministers from the 10-state Association of Southeast Asian Nations (ASEAN) bloc have been joined in Phnom Penh by their counterparts from China, the United States and the European Union. Before going into a meeting with Chinese Foreign Minister Yang Jiechi on Thursday, Clinton told reporters the two superpowers would work together to find common ground to ensure proper handling of sensitive issues in Asia. China has sought to keep the disputes out of the five days of ASEAN meetings, offering a mix of conciliatory words while ramping up the rhetoric in Beijing. A commentary in Tuesday's overseas edition of the Communist Party mouthpiece, the People's Daily, said efforts by Vietnam and the Philippines to tackle the issue in Phnom Penh were tantamount to "international kidnapping" and warned of "calamity." The United States has found itself caught up in the dispute as a consequence of recent announcements of military cooperation deals with Vietnam and the Philippines. Clinton's sweep though Asia, which included visits to Mongolia, Laos and Vietnam, comes just weeks after Washington announced plans to dramatically reshape its relations in the region. The U.S. moves are seen as a veiled attempt to counter China's influence in the region. Additional reporting by Prak Chan Thul and Angie Teo; Editing by Jason Szep and Jeremy Laurence