By Erwin Seba

HOUSTON (Reuters] – Phillips 66 (NYSE 🙂 announced Tuesday that Mark Lashier will be its chief operating officer and take the 4th largest U.S. refiner over Chief Executive Greg Garland. This is effective July 1.

A company statement stated that Garland, the CEO of ConocoPhillips’ (NYSE:) refining, petroleum and pipeline company, will step down but continue to be executive chairman until his retirement, in 2024.

Lashier was a chemical engineer, who first joined the company as a member of its chemicals group three decades ago. After having been a runner, Lashier was elevated to president and COO last year. Chevron Phillips Chemical Co. (NYSE:) Since 2017, its joint venture with Chevron.

Garland considered refining a mature industry and has focused on building its energy pipeline, chemicals, as well as carving out a place in the development of components for electric-vehicle vehicles. Garland paid around $150 million to acquire a 16% interest in Novonix Ltd. last year. Novonix Ltd. is an Australian supplier for materials for lithium-ion cells.

Garland “created a leading diversified energy manufacturing and logistics company, while investing for the future and delivering strong financial returns,” said Glen Tilton, Philips 66’s lead independent director.

Although Houston’s investments in non-refinery have yielded strong shareholder returns, its shares are trailing larger competitors that have benefited from higher fuel margins after pandemic lockdowns and soaring motor fuel demand.

Garland will likely continue his strategy of diversifying into fuels like hydrogen, biodiesel, and the battery component. Lashier may follow that lead. However, he will need to show that he can meet the shareholders returns of Marathon Petroleum Corp. (NYSE:). Valero Energy Analysts stated that the (NYSE) raised returns by spinning off retail and moving into renewable diesel.

“Lashier’s challenge is to improve the company’s valuation,” said Matthew Blair, analyst at investment firm Tudor Pickering Holt & Co. “He will face questions about the valuation and what he can do to improve stock price performance and capitalize on the potential valuation” of its non-refining operations.