Iran's efforts to slow the steady decline of its oil fields, some of which have been producing for six decades, is being seriously hampered by international sanctions imposed because Tehran refuses to abandon its contentious nuclear program.

"A lot is at stake," the Middle East Economic Digest, published in Dubai, reported this week. "Iran risks becoming a net oil importer if output rates continue to fall."

In 2010, Iranian Oil Minister Masoud Mirkazemi warned that the hydrocarbons sector needed investment of $150 billion-$200 billion over the 5-6 years to stem the decline in production.

But Tehran doesn't have that kind of money and the sanctions prohibit Western oilmen investing. MEED observed that Mirkazemi was "not alone in warning that Iran is on course for a meltdown in the energy sector."

Iran is the second largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.

The Oil Ministry declared in October 2010 that the country's reserves had risen to 150.31 billion barrels from 138 billion.

The decline of Iran's aging oil fields, which began producing in the 1940s and 50s, is rapidly becoming a serious problem that could have dramatic long-term implications for the Islamic Republic.

"The natural rate of decline in Iran's crude oil production is estimated at 8-11 percent a year," MEED reported.

"Against the backdrop of rising domestic demand and a lack of foreign investors, Iran's ambitious targets of lifting production from 4.1 million barrels per day to 5 million bpd over the long term have been missed and pushed back.

"This was the case even before foreign investment in Iran started drying up."

Under the threat of U.N. sanctions imposed in June 2010, reinforced by U.S. and EU measures, European majors such as Royal Dutch Shell, Total of France, Statoil of Norway and Eni of Italy have cut all investment in Iran.

Japanese oil developer Inpex Corp. announced Oct. 2, 2010, it was withdrawing from a key oil project, development of the giant Azadegan field in southwestern Iran. Inpex, in which the Japanese government effectively holds a 30 percent stake, had invested $148.8 million for drilling rights at Azadegan.

The field is believed to hold 26 billion barrels, one of the largest reserves in the world.

Japan imports around 11 percent of its oil from Iran and the loss of Azadegan, Iran's largest onshore oil field project, was a serious blow.

Not so long ago, Shell and Total were falling over themselves to help develop South Pars, the world's biggest natural gas field off southern Iran with estimated reserves of 436 trillion cubic feet.

But these days, the only taker is the China National Petroleum Corp. The Financial Times observed that South Pars "has turned into a symbol of how Iran's oil and gas fields have been damaged by sanctions and unattractive energy deals."

Shell, along with Spain's Repsol, had been scheduled to develop phases 13 and 14 of South Pars but pulled out. Total withdrew from phase 11.

The situation is becoming a problem for domestic companies as well. Khatam al-Anbiya, the engineering and construction arm of the elite Revolutionary Guards Corps, was reported to have withdrawn from South Pars as well.

The reason remains unexplained beyond a statement that the enterprise wanted to avoid endangering unspecified "national interests."

Industry analysts suspect the withdrawal is related to the sanctions, which allow international assets held by Khatam al-Anbiya to be frozen.

"Iran's hydrocarbon production is now locked in a downward trajectory, as high-quality Western technology is off-limits," the Financial Times reported.

Prior to sanctions, oil exports accounted for roughly half of Iran's budget revenue, so the "production decline will sting," the newspaper said.

Importing enhanced oil recovery systems to arrest the damaging production decline has been blocked by the sanctions. This has led Iran to fall back on older methods to boost production.

This mainly involves injecting massive quantities of gas into oil reservoirs to force the crude to the surface.

"Conservative estimates suggest Iran needs to replace at least 300,000 bpd of oil production a year as its fields mature," MEED reported.

"By 2015, crude oil production is expected to fall to 3.8 million bpd from 4 .2 million bpd in 2010. Production capacity could fall faster if sanctions continue."

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