Q+A-Indonesia energy policy a key issue ahead of election

By Muklis Ali

JAKARTA, July 1 (Reuters) - Indonesia has huge hydrocarbon resources, but has become a net crude oil importer and also suffers from frequent powercuts, making energy policy a critical issue for voters ahead of the July 8 election, and for investors.

President Susilo Bambang Yudhoyono and his rivals for the presidency, Megawati Sukarnoputri and Jusuf Kalla, have all highlighted the need to squeeze more from Indonesia's resources sector but have provided few details of how to achieve this.

Here are some questions and answers on energy policy:

WHAT ARE THE KEY ISSUES FOR INVESTORS?

Indonesia needs billions of dollars of investment to exploit its energy reserves -- now often offshore and difficult to access in deep waters -- with the huge Natuna D-Alpha gas project alone estimated to require about $40 billion investment.

Indonesia lacks the domestic funds and technical expertise to develop these fields, but the involvement of foreign investors, who bring capital and technology, is a sensitive political issue.

With presidential elections looming, some politicians have stirred up hopes of renegotiating past contracts, which they consider "unfair", in Indonesia's favour.

The key issues are control of the projects, the royalties, domestic use of energy, and the price paid for oil and gas by domestic consumers.