From the beginning of 2012, even before the European Union and the United States enforced sanctions on Iran's oil sector, the country was forced to halt production at some of its oilfields due to the gradually reduction in the EU's oil imports from Tehran.
Europe accounted for 18 per cent of Iran's total oil exports in 2011. Tehran's refining capacity has remained the same since 2012, however, by enforcing sanctions on Iran's oil exports in July 2012, Asian customers were also forced to reduce their oil purchases from Iran step by step.
The United States every six month has exempted some countries from the sanctions due to their continuous effort to cut their oil imports from Iran. This factor has forced Iran to accelerate shutting down oil wells at some of its fields.
But another factor that has been mainly ignored is the fact that the country faces with natural production decline because about the 80 per cent of Iran's active oil fields are in their second half-life.
How much does this factor in Iran's production decline level? In another words, if Iran re-opens up all oil wells, how much oil can the country produce?
The U.S. Energy Information Administration released its latest Short-Term Energy Outlook on Jan. 7. The report has presented some statistics about Iran's oil output in the previous year.
Based on the report, it's estimated that Iran produced 2.8 million barrels of oil per day (excluding gas condensates) in 2013, which is 170,000 barrels less than the preceding year.
The report also puts Iran's estimated unplanned crude oil production outages in the second half of 2012 at 800,000 barrels per day.
In other words, Iran cut the mentioned amount from its regular production by shutting down the wells in some oilfields. So the country produced 2,970 million barrels of oil per day in 2012, while it had the capacity to produce 3,770 million barrels.
EIA's reports also shows that Iran produced 2.8 million barrels of oil per day in 2013, while the amount of estimated unplanned crude oil production outages was 600,000 barrels per day.
So the country's total production capacity in the end of 2013 was around 3.4 million barrels per day, which is 370,000 barrels per day less than 2012.
Currently most of Iran's active oilfields are in the second half of their life span and each year they lose some of their production capacity due to natural causes.
Based on a report which was published by Iran's Majlis (Parliament) Research Center in October 2009, Iran's production capacity annually declines by an average of 10 per cent.
In the same year, Iran's oil production stood at 3.79 million barrels per day. Until the end of 2012 the country managed to compensate for the natural decline in its oil production by inaugurating new oilfields as well as injecting gas to old fields. Iran's production was reduced by only about 100,000 barrels per day for three consecutive years from 2009 to 2012.
EIA also reported in March that Iran's oil output capacity annually declines by an average of 8 to 13 per cent.
EIA's latest report published on Jan.7 shows that not only Iran has failed to compensate for its natural production decline by inaugurating new oilfields and using new production methods, but also the country's natural production decline has exceeded previous estimations.
The official reports and statistics released during last year also indicate a significant lack of progress in new projects aimed to increase the oil output level.
Dalga Khatinoglu is Trend Persian Service head
Edited by C.N.