* Election comes after 10-month crisis with two competing PMs
* Control over huge resources-fuelled income boost at stake
* Large police, international presence aimed at preventing violence
PORT MORESBY, June 22 (Reuters) - Papua New Guinea goes to the polls on Saturday with almost 3,500 candidates battling for just over a hundred parliamentary seats and control of what will be an unprecedented boom in funds as projects to develop natural resources start coming on stream.
Voters hope the two-week-long election will end a prolonged political crisis which has left the South Pacific archipelago with two competing prime ministers for much of the past year after parliament backed Peter O‘Neill, defying the courts which supported elder statesman Michael Somare.
Analysts say it is impossible to predict a winner in a country where more than half of sitting lawmakers lose their seats at each election and where power goes to the leader who can cobble a coalition in post-election negotiations.
“There are really two elections,” Australian National University Papua New Guinea specialist Sinclair Dinnen told Reuters. “The first is where the people vote. Then after the elections, we see the process of coalition formulation.”
Adding to the uncertainty are the record number of 3,435 candidates from 46 political parties, all vying for just 111 seats in parliament.
Elections are highly charged events in Papua New Guinea, an often volatile Melanesian country of 6.5 million people with 700 languages groups, 600 tropical islands and a mainland divided by the rugged mountains of the volatile highlands region.
A massive police operation has been launched to prevent the violence that has marred previous votes, with neighbouring Australia and New Zealand lending assistance.
Despite its mineral wealth, successive governments have been unable to deliver infrastructure or services to the people, with around 80 percent of the population living on subsistence village farming and small cash crops.
The elections, held every five years, take on extra significance as lawmakers have access to millions of dollars worth of discretionary funds which they spend on development in their electorates, prompting often heated contests as clans jostle to get their candidate into parliament.
“Members of parliament have become the main engines of development,” Dinnen said. “If they get their man in, and it usually always is a man, then they may be rewarded.”
The country is home to a $15.7 billion Exxon Mobil gas export project, and the giant OK Tedi copper mine which began production in 1987, as well as the Frieda River copper project, run by Swiss-based global miner Xstrata.
Exxon’s LNG project is expected to start production in 2014 and boost GDP by about 20 percent.
Somare, the elder statesman of South Pacific politics at 76 and the country’s first prime minister in 1975, is re-contesting his seat despite being gravely ill for much of 2011.
More likely winners would be O‘Neill, a former deputy prime minister, and treasurer Don Poyle, and O‘Neill’s deputy prime minister, Belden Namah, who last month led armed police and soldiers into the Supreme Court to arrest the chief justice.
Around 1,000 police have been deployed around the country for voting, which runs until July 6, with more than 500 sent to the volatile Highlands regions.
“Unfortunately there is an expectation that there will be election-related violence both in the lead-up to the election, during the counting and in the immediate post-election period. That’s happened before,” said Annmaree O‘Keeffe, of the Lowy Institute think tank.
Australia, Papua New Guinea’s biggest aid donor, has issued a travel advisory warning that the election period could be violent.
Australia has sent 450 election observers, helicopters and set up a police communications base in the capital Port Moresby, while New Zealand has sent navy ships to help with election logistics.
The result is likely to be decided on July 27. (Writing by James Grubel in Canberra; Editing by Nick Macfie)