For the first time ever after more than a century, Iran discovered oil in the waters of the Caspian Sea, state-run Fars news agency reported.

Quoting the National Iranian Oil Co., the news agency said Iran discovered a deposit that is tantamount to 7 per cent of its existing known reserves. It was drilled on a natural-gas field at 2.5 kilometers or 1.5 miles deep. It may yield a production equivalent to 10 billion barrels of crude oil.

"Iran has never found anything in its section of the Caspian because it's deep water, so these would be the first wells ever drilled," Robin Mills from the Dubai-based Manaar Energy Consulting and Project Management said.

"Ten billion barrels is certainly something to talk about. The question is whether Iran has the technology to develop it.

Major oil and gas companies have withdrawn their interests and investments in Iran in compliance to sanctions imposed by the U.S. over the country's nuclear program plans. This has put a dent on the country to depend on its own technology in order to continue its oil and gas exploration and production.

Based on 2010 data from the Organization of Petroleum Exporting Countries (OPEC), Iran's proven reserves stand at 151 billion barrels. Listed as OPEC's second-largest oil producer, Iran, as with the other members, drills its oil in the south and the Persian Gulf. It has not ventured into drilling in the Caspian Sea due to nuclear sanctions and territory line disputes.

In 2009, according to the Shana, the news website of the Iranian oil ministry, the Caspian basin may hold some 17 billion to 33 billion barrels of oil versus the 17 billion capacity of the North Sea.

The Caspian Sea site's maximum estimated deposit may be a little less than 12.2 billion, OPEC data showed.

As a result of the U.S. sanctions, Iran's oil contribution to the world market is seen to dive to 4.5 per cent in 2015 from 4.9 per cent in 2010, Bloomberg News reported, sourcing data from the International Energy Agency.

In fact, in April this year alone, total output had registered below 3.3 million barrels a day versus the 4.1 million barrels a day in 2008, data compiled by Bloomberg showed.