Exxon Mobil wants to pull out of its contract to develop the supergiant West Qurna-1 oilfield in southern Iraq, diplomatic sources said on Thursday, because of concerns over the profitability of the project.

Exxon has informed Iraqi Deputy Prime Minister for Energy Hussain al-Shahristani and the U.S. State Department of its intentions, said a Western diplomat.

"Exxon is telling Baghdad: 'We are letting you know we're looking to leave'," said a second Western diplomat. "They are shopping around and looking at all the options."

Exxon declined to comment. (Reporting by Peg Mackey; editing by Jane Baird)