EXHIBIT 99.1

                Tesoro Prepays $297.5 Million in Debt

    SAN ANTONIO--(BUSINESS WIRE)--July 2, 2004--Tesoro Petroleum
Corporation (NYSE:TSO) announced that it prepaid, on July 1, 2004, the
remaining $297.5 million principal balance of its 9% Senior
Subordinated Notes due 2008, at a price of 103% pursuant to the
indenture. The Company will record a pretax charge in the third
quarter totaling approximately $16 million related to the prepayment,
including $9 million for the related redemption premiums and $7
million for the non-cash write-off of the unamortized discount and
deferred financing costs related to the notes.
    The Company stated it had over $136 million of cash invested and
that it had no cash borrowings on its revolving credit facility after
the repayment on July 1.
    "As of close of business on July 1, we estimate that our debt to
total capitalization ratio should be in the range of 52% to 53%," said
Bruce A. Smith, Chairman, President and CEO of Tesoro. "As a result of
this prepayment, our future annual pre-tax interest expense will be
reduced by about $27 million."
    "When we acquired the Golden Eagle refinery a little over two
years ago, we clearly stated our intention to de-lever our balance
sheet to strengthen our financial profile. In that short period of
time, despite a terrible economic environment in 2002, we have repaid
approximately $800 million or, nearly 40% of our debt. We believe this
performance confirms our expectation that we will continue to generate
strong free cash flow, which will enable us to further reduce debt to
a level in line with others in our peer group," added Smith.
    Tesoro Petroleum Corporation, a Fortune 500 Company, is an
independent refiner and marketer of petroleum products. Tesoro
operates six refineries in the western United States with a combined
capacity of nearly 560,000 barrels per day. Tesoro's retail-marketing
system includes approximately 550 branded retail stations, of which
over 200 are company operated under the Tesoro(R) and Mirastar(R)
brands.

    This news release contains certain statements that are
"forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. These forward-looking statements concern the company's
anticipated debt-to-capitalization ratio, expected pre-tax annual
interest expense savings due to the redemption of its 9% Senior
Subordinated Notes due 2008, along with expectations with respect to
free cash flow and further reductions of debt. Factors which can cause
actual results to differ from these forward-looking statements
include: changes in general economic conditions, the timing and extent
of changes in demand for refined products, availability and cost of
crude oil, other feedstocks or refined products, throughput and yield
levels, disruptions due to equipment interruptions or failure at our
or third-party facilities, and other factors beyond our control. For
more information concerning these factors and other factors that could
cause such a difference, see our annual report on Form 10-K and
quarterly reports on Form 10-Q, filed with the Securities and Exchange
Commission. We undertake no obligation to publicly release the result
of any revisions to any such forward-looking statements that may be
made to reflect events or circumstances that occur, or which we become
aware of, after the date hereof.

    CONTACT: Tesoro Petroleum Corporation, San Antonio
             Investors:
             John Robertson, 210-283-2687
             or
             Media:
             Tara Payne, 210-283-2676