Arabian Oil Co., Japan's largest oil producer, announced Monday that it will cut its Japanese workforce by 45 percent as part of its operational restructuring efforts following the loss of oil drilling concessions in Saudi Arabia.

The planned cutback of about 150 workers will be carried out by offering early retirement packages aimed at encouraging workers to apply for voluntary retirement from Monday through March 17, Arabian Oil sources said.

The estimated cost of the retirement packages will be 700 million yen in the current business year, which ends in December.

Arabian Oil lost the drilling concessions in the Khafji oil field -- located near the former neutral zone between Saudi Arabia and Kuwait -- on Feb. 27 after Tokyo failed to iron out differences with Riyadh over the renewal of the contract.

As a result, the Tokyo-based company's operations in the Khafji field have been halved, limiting them to the Kuwait-controlled portion of the field.

Arabian Oil's restructuring plan also includes a cut in the number of board members to seven in April from the current 12, the amalgamation of seven sections at the company's headquarters into three in May and the closure of three offices in Saudi Arabia at the end of March.

The restructuring is estimated to cut annual expenses at the firm's head office by 60 percent to 2.1 billion yen.

Arabian Oil expects an unconsolidated pretax profit of 41 billion yen on sales of 128 billion yen for the current business year, rising to 46 billion yen on sales of 133 billion yen in the following year.

Sales of oil in those respective years are projected to be 150,000 and 165,000 barrels per day.