* Firms required to channel export revenues via local banks
* Regulator says firms have until June 30 to comply
* Total says 'not possible' under current exportarrangements
By Fergus Jensen
JAKARTA, Feb 22 (Reuters) - Indonesia told oil and gascontractors they will have to stop shipments if they do notfollow central bank rules to channel export revenues throughlocal banks, despite earlier protests from Chevron andTotal.
Southeast Asia's largest economy is pushing for massiveexpansion of its energy sector to meet rapidly rising domesticdemand, but its top oil producer Chevron has warned it couldreduce its investment if the bank regulation and other issuesare not resolved.
"If (oil and gas contractors) keep refusing, they will notbe allowed to export," oil and gas regulator (SKKMigas) financedirector Akhmad Syakhroza told Reuters on Friday, referring tothe Bank Indonesia regulation.
He said firms had until June 30 to comply with the rules, ameasure Indonesia wants to better gauge currency flows at a timeof heavy downward pressure on the rupiah.
Chevron was not immediately available for comment on thelatest warning. In a written statement, Total said under itsproduction sharing contract it had the legal right to "freelylift and dispose of its entitlement and retain its exportproceeds abroad."
The subject of natural gas exports is politically charged inIndonesia, where many perceive exports as removing much-neededgas from the domestic market.
The warning underscores tensions between oil majors and theformer OPEC member, as pressure mounts over how best to manageits resources in the lead up to presidential elections in 2014.
It also throws into question earlier assurances from theregulator that Indonesia could not afford to cancel gas exports.
"If we breach a contract in the name of nationalism or inthe name of ownership it would not be fair. We must adopt acollaborative approach with other countries. I think that iswhat's best for Indonesia," SKKMigas chief Rudi Rubiandini saidlast month.
Total, banking proceeds from its gas sales via HSBC in NewYork, said it was "not possible to match the amount of netbackto parties, including the contractors, with the amount of gasexport proceed mentioned in export documents."
Syahkroza said all proceeds from the sale of Indonesiannatural resources must go through a local bank, regardless ofwhere the transactions took place or what currency they were in.
"If you sell via your seller in the UK, and they give you $1billion, does that money get transported in cash in a containerback to Indonesia? No way. It just gets transferred betweenbanks. What's so difficult about that?"
"TEXAS POKER BLUFF"
In 2012, Total was Indonesia's biggest exporter of naturalgas, with production reaching 132,000 boe/day, while Chevron wasits biggest producer of crude, accounting for 45 percent ofproduction. The same year, Indonesia's gross revenue from theoil and gas sector reached approximately $61.1 billion,according to data from the regulator.
Under production sharing agreement, oil companies bear allcosts until production begins, at which point all their costsare reimbursed by the Indonesian government.
Then the production is divided up 85 percent to thegovernment and 15 percent to the oil firms. For gas the split isusually 70-30, depending on the specific contract.
Several other oil majors operating in Indonesia -ConocoPhillips, BP PLC and CNOOC Ltd -already complied with the regulation, Syakhroza said.
Japan and South Korea are the top buyers of Indonesian crudeand took 77 percent of the country's natural gas exports in2010.
Several traders also said the central bank could damage oiland gas investment. One questioned why the rule, introduced in2011, had not been implemented earlier.
"It would have been reasonable if the rule was implementedright at the start, not when it's introduced halfway," he said.
"What they do now will affect future production," a secondtrader said. "If the companies cannot get their revenue out,they are not likely to invest more."
Earlier, Chevron said the regulation added risk to newinvestment because it "fundamentally changes the fiscal terms ofthe production sharing contract by impacting the free flow ofshare cash movement."
Despite the fears, Indonesia remained an attractive placebecause of its cost recovery structure, energy investorBaduraman Dorpi Parlindungan told Reuters. "Where else can youget a cost-recovery structure like you do in Indonesia?"
When every oilman knows there is 100 percent uncertainty inthe industry, Dorpi said, Chevron was playing "Texas pokerbluff."
BP (BP.)