Tokyo, April 13 (Reuters): Japan began allocating rights for gas exploration in a disputed area of the East China Sea today, a move likely to rile China at a time when ties are at their worst in decades due to a dispute over Japan?s wartime past.

A senior Chinese official, calling the energy dispute one of the main problems plaguing Sino-Japanese relations, had warned Tokyo a day earlier not to award the test drilling rights and said doing so would ?fundamentally change the issue?.

Simmering tensions between the two Asian giants over a range of topics, especially what China sees as Japan?s failure to own up to wartime atrocities, erupted in China at the weekend, with thousands of people taking part in protests that turned violent.

Some concerns have risen about a backlash in Japan. Members of a Right-wing group shouted slogans at the Chinese embassy in Tokyo today and dragged Chinese flags behind two vans, a witness said.

Some Japanese media said officials had pressed for a decision on gas exploration before foreign minister Nobutaka Machimura goes to Beijing for a planned two-day visit from Sunday to seek a solution to the broader diplomatic impasse.

But top government spokesperson Hiroyuki Hosoda said the timing of the decision was coincidental. ?This (drilling rights) is an issue that was pursued as an industrial issue. It just happened that awarding exploration rights began today,? Hosoda told a news conference.

Prime Minister Junichiro Koizumi said Japan was not trying to be confrontational. ?The aim is to turn a sea of confrontation into a sea of cooperation,? he said.

China and Japan, respectively the world?s second- and third-biggest oil consumers and increasingly linked by trade and investment, are at odds over China?s exploration for natural gas near an area Japan claims as its exclusive economic zone.

Tokyo has demanded China halt its gas exploration project and provide data on its development projects in the area. Unless China provides the data, it would be hard for Japan to consider the possibility of joint development of gas fields, a senior Japanese foreign ministry official said.