LIMA, Nov 3 (Reuters) - Peruvian oil firm Upland Oil and

Gas said on Monday it would ask the South American nation's

regulator to review its application to operate in Block 192,

once Peru's largest Amazon oilfield, after it was disqualified

days earlier.

State agency Perupetro disqualified Upland, which operates

other reserves in the country's Amazon region, on grounds it did

not demonstrate financial capacity, but Upland said it did have

sufficient capital to invest and resume exploitation.

The now dormant block has been the site of protests by local

Indigenous communities demanding remediation for extensive

damage to the surrounding forest, soil and waterways.

But Block 192, which is located near the border with

Ecuador, is considered key to supplying the Talara refinery of

state-oil firm Petroperu, which is battling a debt

crisis following its expensive modernization of the plant.

A Perupetro commission determined late last week that

the financial solvency presented by Upland was "insufficient to

prove its economic and financial capacity to assume 79% of the

license contract for Block 192."

"Upland Oil and Gas reiterates that it has sufficient

capital and financing to comply with the investment program

indicated by Perupetro - despite considering it excessive,"

Upland responded in a statement.

It added that it was willing to provide a credit line to

the embattled state oil firm.

Petroperu, which would be a minority partner in the

block, has previously said it expects to produce up to 12,000

barrels per day of crude oil from the reserve.

"This important asset for the country has been paralyzed

for more than five years, causing the Peruvian government to

lose more than $1 billion in taxes and royalties," Upland said.

Once Peru's largest - and

leakiest

- field, Block 192's production was put on hold largely as

a result of a number of oil spills permeating the tropical

topsoil, native plants and streams that flow to the Amazon

River.