At issue is last week's agreement between India's Oil and Natural Gas Corp and PetroVietnam -- both state-owned companies--– which includes new investments, exploration and the supply of oil and natural gas between the two countries.
The India-Vietnam agreement came a day after China signed a six-point pact with Vietnam to end maritime disputes.
China maintains it has sovereignty over all the South China Sea, while Vietnam asserts competing claims over parts of the sea, including the Spratly Islands. The disputed waters are also claimed in whole or in part by the Philippines, Taiwan, Brunei and Malaysia.
"China has indisputable sovereignty over Nansha (Spratly) Islands and the surrounding waters. Our stance and related claims are constant and clear," Chinese Foreign Ministry spokesman Liu Weimin said in a China Daily newspaper report.
"We have noticed the reports and hope related parties instead take positive steps to ensure peace and stability in the South China Sea area," he said, referring to the India-Vietnam deal.
China escalated the pressure Sunday through an editorial in a newspaper affiliated with the Communist Party, saying that India was risking its own energy security.
"Challenging the core interests of a large, rising country for unknown oil at the bottom of the sea will not only lead to a crushing defeat for the Indian oil company but will also most likely seriously harm India's whole energy security and interrupt its economic development," warned China Energy News, a publication of the People's Daily.
The editorial further stated that Indian companies "must not enter the disputed waters of the South China Sea."
An editorial in China's Global Times, which is published under the authority of the central committee of the Chinese Communist Party, accused India's agreement with Vietnam as being politically motivated, warning that "China may consider taking actions to show its stance and prevent more reckless attempts in confronting China in the area."
The South China Sea has proven oil reserves of around 7.7 billion barrels, with estimates reaching to 28 billion barrels.
Vietnam faces a difficult choice on the issue, sources told the Times of India newspaper. If it cancels the exploration contract with India, it could have repercussions on oil deals with other countries; yet it is hard for Hanoi to resist pressures from China, a major trade partner.
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