* Chevron suspends exploration work in eastern Romania
* Local protesters are blocking access to the site
* They say drilling could pollute water supply
* Chevron says its activities are safe, wants dialogue
By Luiza Ilie
PUNGESTI, Romania, Oct 27 (Reuters) - The small hilly town of Pungesti in eastern Romania could be sitting on vast reserves of shale gas and U.S. energy major Chevron wants to find it.
But the people of Pungesti want nothing to do with it.
Though most of them live off subsistence farming, social aid and cash from relatives working abroad, they would rather stay poor than run what they say is the risk of ruining their environment.
Villagers have set up camp outside the empty lot where Chevron aims to install its first exploratory well, blocking access and forcing the company to announce last week it was suspending work.
"Our kitchens are filled with homemade jams and preserves, sacks of nuts, crates of honey and cheese, all produced by us," said Doina Dediu, 47, a local and one of the protesters.
"We are not even that poor," she said. "Maybe we don't have money, but we have clean water and we are healthy and we just want to be left alone."
The decision to stop work at Pungesti - which was to have been Romania's first shale gas exploration well - matters because of the message it may send about how welcome shale gas is in eastern Europe.
Large parts of wealthier western Europe have shunned shale gas exploration because of fears about possible water pollution and seismic activity from the hydraulic fracturing or "fracking" process used to release it.
The industry says the risks can be avoided.
While Britain decided this year to support shale gas exploration, France has a total ban citing ecological concerns and Germany is reviewing its position on shale.
In poorer, ex-Communist parts of the continent the need to bring in tax revenues, cheaper fuel supplies and jobs has shown signs of trumping the concerns, but to what extent is not yet clear.
GROUNDED IN SCIENCE
Chevron, which has all the necessary permits for the exploration well at Pungesti, says it adheres to the highest safety standards.
The exploration phase would last around five years and not involve fracking, the process whereby large amounts of water mixed with chemicals is forced into rock formations under high pressure to crack them apart and release natural gas.
Company executives met Romanian Prime Minister Victor Ponta on Monday while he was making a scheduled visit to Washington.
"Emphasis was placed on continuing activities responsibly and safely for the environment, while at the same time giving communities the chance to have a conversation grounded in scientific data," Chevron said in a statement.
Asked to comment on local concerns, the company said it tests groundwater before and after drilling to make sure it is not affected, carries out geological seismic surveys and keeps the community informed at every stage.
In a detailed statement, it pointed to the widespread use of fracking in the United States and elsewhere and said it "is a proven technology that has been used safely for more than 60 years".
But it is struggling to convince the people of Pungesti.
Three public meetings held over the summer with Chevron and environment agency officials turned into shouting matches. Deputy mayor Vasile Voina says he believes people "were not sufficiently informed".
Sprawled along a bumpy road, the town of 3,420 people is made of eight villages with narrow houses behind short, chipped picket fences, fat orange pumpkins dotting small plots of land and apples drying in the sun behind window panes. It does not have central heating or a mains water supply.
Even in this remote town, 340 km (210 miles) northeast of the Romanian capital Bucharest, the global debate about the impact of "fracking" has permeated.
Several people said they had gone on YouTube to watch excerpts of the 2010 U.S. documentary "Gasland," which purported to show the environmental damage caused by shale gas production.
The energy industry disputes allegations made in the film, but it, and other sources, including activists and local clergy, have influenced opinion in Pungesti.
People say heavy equipment will ruin their roads. They fear fracking will cause earthquakes and pollute their water, risking their health, their cattle and their vegetable gardens.
"If they put wells they will destroy farming," said Andrei Popescu, 22.
Prime minister Ponta has spoken of potential shale benefits, especially for a poor area like Vaslui county, which includes Pungesti. It receives heavy subsidies from the state.
"Without investment, we can't pay wages and pensions. Projects can be improved ... but we cannot block investment," Ponta has said. He toppled a previous government in May 2012 partially on an anti-shale message but his government has since thrown his support behind the project.
Chevron said studies by the U.S. Environmental Protection Agency and the Ground Water Protection Council had confirmed no direct link between hydraulic fracturing operations and groundwater contamination.
It says direct benefits include jobs and payments to contractors and suppliers and, during the production phase, taxes and royalties.
Some local people say they doubt the project would generate many jobs, or that they are qualified for them. If there is to be progress and investment, they say they would prefer a vegetable processing plant, abattoir or wind energy park.
"They could do anything else, why settle on underground gas," said Daniel Ciobanu, a 40-year-old farmer.
For all the concerns in Pungesti, many people in eastern Europe welcome shale gas. Governments in Poland, Lithuania, Romania and Ukraine are all keen to encourage exploration, although in Bulgaria it is banned.
In Poland, the industry's biggest shale gas hope in mainland Europe, exploration drilling is underway on several concessions. The country, with a history of conflict with Moscow, sees shale gas as a way of reducing dependence on Russian gas imports.
Yet even in Poland, some local people, backed by environmental campaigners, have staged protests. At one of Chevron's Polish shale gas concessions, near the village of Zurawlow, local people occupied a work site when contractors started trying to erect a fence.
Around 800 locals, neighbours, activists and the clergy gathered for a protest next to Chevron's concession in Pungesti last week. In sunny but icy weather, they carried banners that read Stop Chevron, Resist and God is with us.
Clad in his black habit, Father Vasile Laiu, an Orthodox priest from the nearby city of Barlad and one of the most outspoken local opponents of fracking, asked people to kneel, then led them in prayer.
Up to 50 villagers that have been taking turns staging a round-the-clock vigil, blocking access to the lot, said they were preparing for a long haul. They have pitched tents and dug a lavatory pit.
"Can we live without water?" one of them asked the crowd on a microphone. The air carried faint smells of incense.
"No," the demonstrators replied.
"Can we live without Chevron?"