Iran has discovered oil in its Caspian Sea waters for the first time in more than a century, the state-run Fars news agency reported.
The deposit was found at a depth of 2.5km during drilling on a natural-gas field and may contain 10 billion barrels of crude, Fars said, citing the National Iranian Oil Co. That's equal to 7 per cent of Iran's known reserves.
While Iran is the second-largest oil producer in the Organisation of Petroleum Exporting Countries (Opec), most existing fields are in the south and the Arabian Gulf. Hampered by sanctions over nuclear ambitions, it doesn't yet extract crude in the Caspian, where nations including Azerbaijan are tapping deposits and demarcation lines over territory are disputed.
"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," said Robin Mills, head of consulting at Dubai-based Manaar Energy Consulting and Project Management.
"Ten billion barrels is certainly something to talk about. The question is whether Iran has the technology to develop it."
The oil strike is Iran's first in the Caspian Sea for 104 years, Fars cited Khazar Exploration and Production Co. Managing Director Ali Osouli as saying.
Iran has proven reserves of 151 billion barrels, according to figures on the Opec website based on 2010 data. The maximum estimated deposit at the Caspian Sea site would be slightly less than in the whole of Algeria, with 12.2 billion, the data shows. The Caspian basin may hold 17 billion to 33 billion barrels of oil, compared with the North Sea's 17 billion, the Iranian oil ministry news website, Shana, said in 2009. It may also hold 8,000 billion cubic metres of gas, Shana said.
International oil and gas companies such as Royal Dutch Shell and Total have exited Iran to comply with US sanctions over its nuclear programme.