A Proxy Statement, Prospectus and Consent Solicitation dated January 3, 1994
and forms of proxy relating to the 1993 Annual Meeting have been sent to Tesoro
Petroleum Corporation securityholders. The Proxy Statement/Prospectus should be
read before voting or exchanging your securities. All statements herein are
qualified in their entirety by reference to the Proxy/Statement Prospectus and
to the additional and more detailed information contained therein, including
information as to risk factors that securityholders should consider.
                   
                   TESORO PETROLEUM CORPORATION

                   A MESSAGE TO SECURITYHOLDERS

        12 3/4% SUBORDINATED DEBENTURES DUE MARCH 15, 2001
           $2.16 CUMULATIVE CONVERTIBLE PREFERRED STOCK
                           COMMON STOCK

 OFFER TO EXCHANGE 13% EXCHANGE NOTES DUE DECEMBER 1, 2000 FOR UP
    TO $54,500,000 AGGREGATE PRINCIPAL AMOUNT OF ITS EXISTING
        12 3/4% SUBORDINATED DEBENTURES DUE MARCH 15, 2001

1993 Annual Meeting of Stockholders at which a vote will be taken
  to reclassify 1,319,563 shares of $2.16 Cumulative Convertible
  Preferred Stock, including accrued and unpaid dividends, into
  approximately 6,465,859 shares of Common Stock and to approve
  amendments to the Certificate of Incorporation of the Company.

  YOU HAVE AN IMPORTANT DECISION TO MAKE. THE EXCHANGE OFFER FOR
THE 12 3/4% DEBENTURES IS SCHEDULED TO EXPIRE ON FEBRUARY 8, 1994
 AND THE RECAPITALIZATION WILL BE VOTED ON AT THE ANNUAL MEETING
                 TO BE HELD ON FEBRUARY 9, 1994. 

      ONLY THOSE STOCKHOLDERS WHO WERE RECORDHOLDERS AS OF 
  DECEMBER 15, 1993 ARE ENTITLED TO VOTE AT THE ANNUAL MEETING.
  RECENT PURCHASERS MUST RECEIVE A PROXY FROM THE SELLER OR HAVE
               THE SELLER VOTE THE PROXY FOR THEM.

Holders of Tesoro securities are being asked to participate in a
Recapitalization which will help determine Tesoro's future. Here
are some things you should know about the proposed
Recapitalization:

     1.   Holders of the 12 3/4% Subordinated Debentures can 
          increase their annual current income and improve the
          protection of their investment while maintaining 100%
          of principal amount by exchanging into the new 13%
          Exchange Notes. The 13% Exchange Notes will be senior
          debt and will have a higher coupon and earlier final
          maturity date than the existing 12 3/4% Subordinated
          Debentures.

     2.   On December 27, 1993, the day before the announcement
          of the final Recapitalization terms, the Common Stock
          and $2.16 Preferred Stock traded at $5.625 and $21.125,
          respectively. On January 21, 1994, the Common Stock and
          $2.16 Preferred Stock closed at $9.50 and $45.00,
          respectively.

     3.   The Board of Directors has unanimously approved the
          Recapitalization. The Company has obtained an opinion
          from a nationally-recognized investment bank that as of
          December 30, 1993, the terms of the Recapitalization
          are fair from a financial point of view to the holders
          of the $2.16 Preferred Stock and the Common Stock. The
          Company also has entered into an agreement in principle
          with Croyden Associates to settle a class action
          lawsuit challenging the Recapitalization.

     4.   A wholly-owned subsidiary of Metropolitan Life
          Insurance Company that holds shares of the $2.20
          Preferred Stock and Common Stock constituting
          approximately 28% of the outstanding shares of capital
          stock entitled to vote at the Annual Meeting has
          indicated to the Company that it intends to vote all of
          its shares in favor of the Recapitalization, subject to
          certain conditions.

     5.   Assuming the maximum acceptance of the Exchange Offer
          and consummation of the Reclassification, on a pro
          forma basis at September 30, 1993:

          *    the book value per common share would increase
               approximately 247% from $.80 to $2.78;

          *    long-term debt and redeemable preferred stock
               would be reduced from $257 million to $186
               million; and

          *    Common Stock and other stockholders' equity would
               increase from $44 million to $120 million.

     6.   The Recapitalization will increase the Company's
          financial flexibility by extending its debt
          amortization schedule, eliminating dividend arrearages
          and enhancing the Company's ability to undertake its
          investment program and obtain long-term financing.

                    FOR ADDITIONAL INFORMATION

          INFORMATION AGENT                       FINANCIAL ADVISOR

             GEORGESON                       SMITH BARNEY SHEARSON INC.
           & COMPANY INC.                  (415) 955-1593 (Call Collect)
           (800) 223-2064
(212) 440-9800 (Banks and Brokers)
(212) 509-6240 (Call Collect)