EXHIBIT 99.1


                            NOTICE OF REDEMPTION AND
                         TERMINATION OF CONVERSION RIGHT

             TO HOLDERS OF 5% CUMULATIVE CONVERTIBLE PREFERRED STOCK

                         REDEMPTION DATE: March 18, 1998

             CONVERSION RIGHT EXPIRES: 5:00 p.m. New York City Time,
                                 March 18, 1998

                              (CUSIP NO. 904000205)

Ultramar Diamond Shamrock  Corporation,  a Delaware  corporation (the "Company")
hereby notifies you that it has elected to call for redemption on March 18, 1998
(the "Redemption Date") its 5% Cumulative  Convertible  Preferred Stock (the "5%
Preferred  Stock") pursuant to the provisions of the Certificate of Designations
(the  "Designation")  under  which the 5%  Preferred  Stock was  issued.  The 5%
Preferred Stock will be redeemed by issuance of the Company's common stock, $.01
par value (the "Redemption Shares") in the amount described below.

     The  number  of  Redemption  Shares  issuable  upon  redemption  of  the 5%
Preferred Stock is determined by dividing the $50 per share liquidation price of
the 5% Preferred Stock by the $25.98 per share price at which 5% Preferred Stock
is currently convertible into shares of the Company's common stock, and rounding
the result to the nearest  1/100th of a share.  Based on the foregoing  formula,
each  share  of 5%  Preferred  Stock  is  redeemable  for  approximately  1.9246
Redemption Shares. Accrued but unpaid dividends on the 5% Preferred Stock to the
Redemption  Date will be paid on the  Redemption  Date, and will cease to accrue
thereafter.  No fractional  Redemption  Shares will be issuable upon conversion.
Instead,  a cash payment for each fractional  share will be made on the basis of
the last reported sale price of the Company's common stock on the New York Stock
Exchange - composite  tape on the last  trading day  immediately  preceding  the
Redemption Date.  Conversion  rights with respect to the 5% Preferred Stock will
expire at the close of business on the Redemption Date.



In order to  receive  the  Redemption  Shares,  certificates  evidencing  the 5%
Convertible Preferred must be surrendered to the redemption agent, Registrar and
Transfer Company (the "Agent") as follows:

         By Mail:          Registrar and Transfer Company
                           P. O. Box 1010
                           Cranford, NJ  07016-1010

         By Hand:          Registrar and Transfer Company
                           10 Commerce Drive
                           Cranford, NJ  07016

The method of  delivery of the 5%  Preferred  Stock is at the option and risk of
the  holder  of the 5%  Preferred  Stock,  but if mail  is  used,  certified  or
registered mail, properly insured, is recommended.

Additional  copies of this Notice of Redemption and the  accompanying  Letter of
Transmittal may be obtained from the Agent.

ULTRAMAR DIAMOND SHAMROCK CORPORATION





March 3, 1998.