Russia’s Lukoil may consider spinning off or selling its downstream assets in Europe to focus on exploration both in Russia and abroad, Chief Executive Vagit Alekperov told Reuters in an interview.

Lukoil, which is pumping around 2 million barrels of oil per day (bpd) – a little less than OPEC member Venezuela does – is refocusing on upstream both at home and abroad, Alekperov said.

“Most likely, in the future, we will consider the following step: Spinning off (the European downstream business to) a European downstream company or selling the assets. In the medium-term, the company will focus on geological exploration.”

Lukoil is not alone in the move: Global oil majors Chevron Corp and Royal Dutch Shell are putting small refineries on sale as they look to trim lower-margin assets in the face of headwinds from rising crude oil prices.

“This is downstream only – in upstream we are developing and target Mexico, Iran, Norway,” Alekperov said. “Downstream business is very volatile. When we actively entered that (in Europe), it was on its peak, then we survived a trough, now it is good again. Maybe this is a time to withdraw?”

The split of upstream and downstream is something several oil majors have performed in recent years including the third largest U.S. oil company ConocoPhillips, which at one point owned a major stake in Lukoil.

Conoco is now mostly focusing on upstream while its refining division was spun off in a separate unit called Phillips66.

Alekperov said Lukoil will start a drilling program in Western Siberia in September with the aim of slowing down the rate of decline of oil production to 1.5-2.5 percent in 2017 from 6.5-7 percent expected in the region this year.

Production declines in West Siberia will be compensated by Lukoil’s new assets, including the Filanovsky field in the Caspian sea, to be launched this year. Lukoil also runs the giant West Qurna-2 project in Iraq, as well as other assets abroad.

Lukoil’s production in Russia is seen at around 86.5 million tonnes of oil this year and 87.5-88 million in 2017, he said. Lukoil’s investments are seen at around $8 billion this year and slightly down next year.

GROWING BIGGER

Lukoil is interested in the state’s sale of a 50 percent stake in mid-sized oil producer Bashneft scheduled for later this year and will compete with other domestic players for the asset which produces around 20 million tonnes of oil a year.

Alekperov said that Lukoil would be interested to buy into the entire Bashneft, to get a ‘synergy effect.’

Yet, he said, at Bashneft’s current market price of around $9 billion and the premium that the state wants to get during the sale, “this asset becomes less interesting for us.”

Bashneft’s market capitalization stood at $9.4 billion on Friday.

“Have you seen our financial report? We have around $5 billion in cash – so we have 60 percent of cash (for a potential deal) and banks are ready to finance us. Private Western banks – Russian private banks of course don’t have such money.”

Alekperov, 65, owns a bit over 20 percent in Lukoil, which he co-founded in the 1990s and turned into a company with a presence in more than a dozen countries around the world.

His partner, vice-president Leonid Fedun, owns a little less than a 10 percent stake.

Lukoil’s board will manage Alekperov’s stake in the event he is incapacitated, he said. “If, God forbid, the lion breathes his last and the hyenas eat him, I think that it (the stake) should remain in one piece,” Alekperov said.

“Lukoil will always remain a global company. It will always remain on London and Moscow exchanges. My heirs would not be able to split the stake I own. In my will it is spelled out, they would not manage it. The board will manage it.”

Alekperov added that Fedun and his heirs have to offer Alekperov their holdings first if they decide to sell.