The department's Energy Information Administration said the Iranian natural gas sector remains underdeveloped and most of those resources are used for domestic consumption.
"In contrast to the decreasing oil production, natural gas development has been slowly expanding," the assessment said. "Nonetheless, natural gas production has been lower than expected as a result of a lack of foreign investment and technology."
Iran ranks second in the world in terms of natural gas reserves but sanctions have kept foreign investors away. Production from major natural gas fields like the offshore South Pars complex in the Persian Gulf led to 5.4 trillion cubic feet of gas in 2011.
In terms of oil, the EIA said Iran saw "unprecedented drops" in exports because of U.S. and European sanctions imposed on the energy sector.
"International sanctions are redefining the Iranian energy sector, and the lack of foreign investment and technology is affecting the sector profoundly," the assessment said.
The U.S. government offers sanctions waivers to countries that reduce ties to the Iranian oil sector.
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