South Korea's state-run oil company said Monday that it has decided to pull out of its eight-year-old exploration project in the Kurdistan region of Iraq, costing Korea National Oil Corp. about $130 million.

The company said its board of directors made the decision recently to withdraw from Sangaw South on the grounds that the project has no profitability.

The KNOC said on its website that it had obtained operatorship of Sangaw South in the Kurdistan region of Iraq with a 60 percent stake by signing a production-sharing contract with the Kurdistan Regional Government in 2008.

It said Iraq has the third largest oil reserves in the world and a significant portion of the reserves remain unexplored.

Sangaw South is one of five exploration blocks the KNOC secured in the Kurdistan region of Iraq in 2008 as part of its long-term strategic plan. (Yonhap)