JX Nippon Oil & Energy Corp., Japan’s largest oil refiner, is considering shrinking its presence at home and expanding elsewhere in Asia as the government squeezes the industry in the face of declining domestic fuel demand.

The company is targeting Indonesia and Vietnam as the countries welcome foreign investments along the fuel supply chain, from refining to distribution to retail sales, Tsutomu Sugimori, the president of the company, said in an interview. JX Energy would seek partners for any expansion abroad, he said.

Japanese refiners are moving away from their traditional businesses of refining crude oil into products for domestic use as the country’s fuel demand slides. The industry has shuttered 26% of its capacity since 2000 and may have to cut about 10% more within three years to meet the government rules meant to improve efficiency and spur mergers.

“We have to build new business pillars,” Sugimori said in the July 2 interview. “We may diversify our domestic energy business or tap into oil refining and retailing business abroad. We will consider whether we can do both or only one of them.”

The company is turning its focus at home to power generation, said Sugimori, who became president on June 26. JX plans to nearly triple its capacity to 4 gigawatts by 2030, from 1.4 gigawatts now, he said.

JX Energy is among companies seeking to form a partnership with Tokyo Electric Power Co., Japan’s biggest power utility, to cooperate on thermal power. Sugimori declined to comment on what JX Energy has proposed to Tokyo Electric.

The company and its domestic refining competitors face a difficult choice after the Ministry of Economy, Trade and Industry earlier this week proposed new efficiency targets to be met by March 2017.

JX Energy may reduce its refining capacity by about 10% to meet the target proposed by the ministry, which oversees the industry, Sugimori said. The company, which owns 7 refineries, can process about 1.43 million bpd, which accounts for 36.1% of the country’s total, according to data compiled by the trade and industry ministry.

“We want to strengthen refineries with potential and enable them to run neck and neck with companies in South Korea and other countries,” Sugimori said. “We are considering shutting or merging those that we cannot strengthen.”

JX Energy is building a solvent de-asphalting unit at its Kashima refinery, which will provide feedstock for a 100-megawatt power generation unit at a neighboring plant, Sugimori said. The company is also considering doubling capacity of its 840-megawatt Kawasaki natural gas fired facility, jointly owned by JX and Tokyo Gas Co., Sugimori said.