Indonesia rejected a proposal to increase crude output from the Cepu Block, which is operated by Exxon Mobil Corp. (NYSE: XOM), to up to 200,000 barrels per day (Mbbl/d), the country's upstream oil and gas regulator SKKMigas told parliament on June 14.

SKKMigas disagrees with Exxon's analysis of the potential for the project based on environmental and subsurface considerations, SKKMigas's CEO, Amien Sunaryadi, said.

Exxon proposed the increase to 200 Mbbl/d last month, noting potential in the project's reservoirs, but said the decision was in the government's hands.

An Exxon spokesman declined to comment on the regulator's decision and said the Cepu Block was currently producing more than 165 Mbbl/d.

Output from the Banyu Urip project in the Cepu Block in East Java province is crucial to Indonesia's long-term efforts to meet rising domestic oil demand as production declines at other aging fields.