UPDATE 1-Indonesia tells oil majors to follow currency rules or stop exports

* Firms required to channel export revenues via local banks

* Regulator says firms have until June 30 to comply

JAKARTA, Feb 22 (Reuters) - Indonesia told oil and gas contractors they will have to stop shipments if they do not follow central bank rules to channel export revenues through local banks, despite earlier protests from Chevron and Total.

Southeast Asia's largest economy is pushing for massive expansion of its energy sector to meet rapidly expanding domestic demand. Indonesia's top oil producer Chevron has warned that investment will decline if confusing and sometimes overlapping regulations are not resolved, including the central bank regulation.

"If (oil and gas contractors) keep refusing, they will not be allowed to export," oil and gas regulator (SKKMigas) finance director Akhmad Syakhroza told Reuters on Friday.

He said firms had until June 30 to comply with the bank rules, a measure Indonesia wants to better gauge currency flows in the country at a time when there has been heavy downward pressure on the rupiah.

Chevron was not immediately available for comment on the latest warning. Total reiterated it was impossible for it to comply with the regulation

Major foreign energy firms argue that their production sharing contracts with the government allow them to decide how the earnings are channelled. Some are paid offshore directly.

Syahkroza said all proceeds from the sale of Indonesian natural resources must go through a local bank, regardless of where the transactions took place or what currency they were in.

Under production sharing agreement, oil companies bear all costs until production begins, at which point all their costs are reimbursed by the Indonesian government.

Then the production is divided up 85 percent to the government and 15 percent to the oil firms. For gas the split is usually 70-30, depending on the specific contract.

Two of the biggest production sharing contractors in Indonesia, Chevron and Total, have both said their contracts allow them to place exports earnings as they choose.

In 2012, Total was Indonesia's biggest exporter of natural gas, with production reaching 132,000 boe/day. The same year, Indonesia's gross revenue from the oil and gas sector reached approximately $61.1 billion, according to data from the regulator.

Other oil majors ConocoPhillips, BP PLC and CNOOC Ltd already complied with the regulation, Syakhroza said.