Veteran head of Russian oil region says to quit

* Bashkortostan leader Rakhimov says will step down

* Kremlin pushing for new generation of leaders

By Conor Humphries

MOSCOW, July 13 (Reuters) - The veteran leader of Russia's oil-producing region of Bashkortostan said on Tuesday he would step down after 17 years in power following a Kremlin call for a new generation of leaders.

Murtaza Rakhimov, 76, has led the mainly Muslim region in the Urals since 1993. He is one of a generation of powerful regional heads who managed to survive under the centralised rule of Vladimir Putin and his successor, President Dmitry Medvedev.

Medvedev says his call for new leaders is aimed at weeding out corruption but critics say it is part of Kremlin efforts to consolidate power across the world's biggest country.

In a statement posted a day after Rakhimov's meeting with the head of Medvedev's administration, Sergei Naryshkin, the Bashkortostan government said Rakhimov would leave when his term ends next year.

"As a result of Murtaza Rakhimov's intention not to remain as head of the region for a new term... consultations on possible candidates as the new president of Bashkortostan have begun," said the statement.

Relations between Rakhimov and the Kremlin soured in recent years, partly due to bickering over the fate of local oil producer Bashneft (BANE.RTS) and several major refineries.

The assets were initially controlled by the Rakhimov's government, but were later transferred to firms close to his son Ural. Russia's Federal Tax Service opened a tax evasion investigation into some of the new owners, which had been seen as an attempt by the Kremlin to confiscate the assets.

The probe was later closed and telecoms holding Sistema (SSAq.L) holding bought the assets for $2.5 billion with a government loan.

In addition to Bashneft, Sistema bought refiners Novoil (NUNZI.RTS), Ufimsky (UNPZI.RTS), Ufaneftekhim UFNC.RTS, Ufaorgsintez UFOS.RTS and retailer Bashkirnefteproduct (BANPI.RTS).

Medvedev's call for new leaders was followed by the resignation of the long-serving governors of Volgograd and Sverdlovsk regions. That has led to speculation the Kremlin also sought to replace Moscow Mayor Yuri Luzhkov, Russia's most influential regional leader. (Editing by Maria Golovnina)