UPDATE 1-Republican U.S. Senator Kyl to resign on Dec. 31 -Arizona governor

Republican U.S. Senator Jon Kyl, who was appointed to replace the late John McCain, will step down from office on Dec. 31, Arizona Governor Doug Ducey said in a statement on Friday.

Kyl was only expected to serve as a short-term placeholder to occupy the seat until after the November 2018 election.

"Arizona needed someone who could hit the ground running from day one and represent our state with experience and confidence – and that’s exactly what Senator Kyl has done," Ducey said in a statement.

Kyl, who served 18 years in the Senate before retiring in 2013, was appointed to the seat in August after McCain's death from brain cancer. At the time, he indicated he had no interest in running for another term. Kyl was working at the Washington law firm Covington & Burling, where he was a lobbyist for corporate clients including Northrop Grumman, JW Aluminum and Qualcomm.

Ducey is expected to replace Kyl with a Republican - meaning the replacement will not affect the balance of power in the Senate - who will hold the seat until a special election can be held in 2020.

The governor could fill the seat with a Republican who has a better chance of winning election to the seat in 2020. Or he could opt for another placeholder who would not seek the seat during the special election.

Likely to be atop a short list of potential candidates is Martha McSally, who ran unsuccessfully this year for the other Senate seat from Arizona. McSally, a Republican and former member of the U.S. House, was defeated by Democrat Krysten Sinema in November.

Ducey did not provide a timeline for naming a replacement. (Reporting by David Schwartz in Phoenix, Arizona Writing by Ginger Gibson and Scott Malone Editing by Chizu Nomiyama and Jonathan Oatis)