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                                                                    EXHIBIT 10.8

                                 FIRST AMENDMENT
                                       TO
                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

         This First Amendment to Amended and Restated Employment Agreement (the
"Amendment") modifies that certain Amended and Restated Employment Agreement
(the "Agreement") dated November 1, 1997, by and between Bruce A. Smith
("Employee") and Tesoro Petroleum Corporation, a Delaware corporation (the
"Company"). This Amendment is effective as of October 28, 1998. Capitalized
terms used in this Amendment not specifically defined herein shall have the
meaning ascribed thereto in the Agreement.

         For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by the Company and Employee, the Company and
Employee agree to modify the Agreement as provided in this Amendment.

1.       Subsection 2(a) of the Agreement is hereby modified by replacing the
         base salary number of "$600,000" with "$700,000."

2.       The first paragraph of Section 5 of the Agreement is hereby modified
         with the addition of the following sentence at the end of the
         paragraph: "For purposes of this Section 5 and Section 8, the
         provisions of such sections shall not apply to awards under the 1998
         Performance Incentive Compensation Plan."

3.       Section 10 of the Agreement is hereby modified with the addition of the
         following sentence at the end of the section: "Notwithstanding the
         foregoing, nothing in this Agreement shall be construed to limit or
         modify any rights or benefits the Employee may have or be entitled to
         receive under any employee benefit plan, program, strategy or
         arrangement applicable to the Employee, including, without limitation,
         those listed in Exhibit A."

4.       Section 11 of the Agreement is hereby deleted in its entirety and
         replaced with the following:

                  "Employee shall be entitled to the greater of four weeks
                  vacation annually or the number of weeks annually in
                  accordance with Company policy as in effect from time to time.
                  In the event Employee does not use his entire vacation time in
                  any year, Employee shall be entitled to carry over unused
                  vacation into the following year until his accrued vacation
                  reaches six weeks or such greater period as may be permitted
                  under the Company's vacation policy for management
                  executives."

5.       The second paragraph of Subsection 15(f) of the Agreement is hereby
         deleted in its entirety and replaced with the following:

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                  "The Company further represents and warrants that sufficient
                  shares are available and will remain available under the
                  Company's stock option plan(s) to fund stock option awards
                  under the Prior Agreement and under the stock option
                  agreement(s) entered into in connection therewith. With
                  respect to such stock options, the Company warrants that
                  such plan(s) meets all of the requirements of Rule 16b-3
                  promulgated under the Securities Exchange Act of 1934, as
                  amended. The Company shall be in continuous compliance with
                  all applicable registration requirements with respect to the
                  Company's Common Stock issued under any such stock option
                  agreement. Upon exercise of such stock options, all shares
                  subject thereto will be fully paid and non-assessable."

         Except as specifically modified in this Amendment, the Agreement shall
remain as originally written. All references to the Agreement shall hereafter
mean such agreement as modified by this Amendment.

         IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.

                             COMPANY:  TESORO PETROLEUM CORPORATION



                                       /s/ JAMES C. REED, JR.
                                       -----------------------------------------
                                       James C. Reed, Jr.
                                       Executive Vice President, General
                                       Counsel and Secretary



                             EMPLOYEE: /s/ BRUCE A. SMITH
                                       -----------------------------------------
                                       Bruce A. Smith

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