Hanoi (Platts)--13Jul2012/511 am EDT/911 GMT

The Philippine Department of Energy is proceeding with the attempted licensing of offshore exploration blocks Area 3 and Area 4, for which it hopes to receive bids at the end of this month, Jose M Layug, Undersecretary of the Department told Platts Friday.

The Philippines will proceed with the plan to offer the two blocks despite recent tension with China in the South China Sea. "We are set to receive the bids on July 31, 2012, the deadline date," said Layug.

China and the Philippines have been locked in their most recent standoff over disputed waters -- this time near Scarborough Shoal -- since April.

A series of diplomatic meetings involving Southeast Asian nations this week in Cambodia broke up Friday with no joint statement being agreed to, AFP reported.

Foreign ministers from the Association of Southeast Asian Nations had been trying to agree to a draft code of conduct aimed at soothing tensions between China and several of its member nations over disputed waters.

China claims about 80% of the South China Sea, with some of its territorial claims coming within 100 km of the shorelines of the Philippines, Brunei, Malaysia and Vietnam.

The Philippine delegation said "it deplores the non-issuance of a joint communique...which was unprecedented in ASEAN's 45-year existence," AFP said.

The Philippines had insisted that the ASEAN joint statement specifically name its showdown with China over the Scarborough Shoal, AFP reported, with Cambodia resisting the inclusion of such details.

Cambodia is seen as China's closest ally in the region and some of the diplomats said it had acted for its benefactor in make sure any joint communique carried no specific allegations of infringement.

China has said that ASEAN is not the proper forum to deal with territorial disputes in the South China Sea, and it prefers to deal with competing claims in the sea on country-to-country basis.

Scarborough Shoal is about 200 km (125 miles) west of Subic Bay on Luzon island. Areas 3 and 4 are offshore northwest Palawan island, lying within about 80 km of the coast at their closest point.

China has protested the Philippine plans to invite foreign companies to explore in the two areas, saying they are part of the South China Sea region in waters where it has "historic titles" and "sovereign rights and jurisdiction", state-run China Daily reported earlier this year.

"It is unlawful for any country or company to explore oil and gas in sea areas under Chinese jurisdiction without the permission of the Chinese government," Chinese Foreign Ministry spokesman Hong Lei was quoted as saying.

Apart from Area 3 and 4, China also claims sovereignty over exploration area Service Contract 72, just to the southwest of the two blocks.

UK-listed Forum Energy, held 64.45% by Philippine explorer Philex Petroleum, is operator of SC72 and has said a discovery there could hold contingent resources of 37 million barrels of liquids and 1.5 Tcf of gas. The license's main prospectivity is in the Sampaguita gas field, which is near the disputed Reed Bank.

Philex Petroleum is itself held 64.79% by Philex Mining. Earlier in the year Philippine media reports said the chairman of Philex Mining had held discussions with a number of Chinese oil companies, including China National Offshore Oil Corp., about the potential for joint oil and gas exploration in the SC72 block. But those discussions have been reported as on-again-off-again, depending on developments on the diplomatic scene

Layug said the Department of Energy is not privy to any discussions between SC72 operator Forum and CNOOC.

"The Department of Energy does not interfere with the commercial arrangements of joint venture partners in any Philippine petroleum service contracts it has awarded," said Layug.

The Philippines has maintained that the Areas 3 and 4, as well as SC72, are not part of the disputed areas in the South China Sea and are well within its territory.

Vietnam, China, the Philippines, Malaysia, Brunei and Taiwan have all claimed sovereignty over overlapping areas in the South China Sea. Disputes over the region arise mostly because of its suspected vast oil and gas reserves.

The disputed region is also a key trading route for the US, which has expressed concern over sporadic flare-ups between the countries lining the edges of the sea.

Beside tensions with the Philippines, China is also locked in an ongoing conflict with Vietnam over the nine offshore oil and gas blocks offered by CNOOC last month, which are close to Vietnam's east central coast and overlap acreage already awarded by Hanoi to foreign companies.

--Dao Dang Toan, newsdesk@platts.com

--Thomas Hogue, thomas_hogue@platts.com

--Edited by Jeremy Lovell, jeremy_lovell@platts.com

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