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                                                                    EXHIBIT 99.1


                              [TESORO LETTERHEAD]



MEDIA RELEASE



FOR IMMEDIATE RELEASE

CONTACT:

         SUSAN PIROTINA, VICE PRESIDENT, COMMUNICATIONS (210) 283-2631



       TESORO TO EXPLORE STRATEGIC OPTIONS FOR MARINE SERVICES OPERATIONS

         SAN ANTONIO -- AUGUST 27, 2001 -- Tesoro Petroleum Corporation
(NYSE:TSO) today announced that the Company is investigating various strategic,
value-creating opportunities for its Gulf of Mexico-based Marine Services
operations.

         "Since we announced that we were going to focus on refining and
marketing in 1999, our strategic goal has been to become the premier refining
and marketing company in the western United States. While pursuing this goal, we
have made significant financial and operational improvements to our Marine
Services operations, and therefore believe it is appropriate to evaluate how the
company can capitalize on the value of these assets. Our objective is to provide
the financial flexibility and operational focus to further expand in the western
United States," stated Bruce A. Smith, President, Chairman and CEO.

         Tesoro's Marine Services segment is the premier provider of fuels,
lubricants and logistical services to the marine and offshore drilling industry
operating in the Gulf of Mexico. Marine Services operates 16 terminals at 12
Gulf of Mexico ports and is headquartered in Houston, Texas. During 2000, this
operation generated $13 million in EBITDA and $10 million in operating profit on
fuel sales of 170 million gallons.


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TESORO 2/2/2/2




         Tesoro has engaged Credit Suisse First Boston to act as its financial
advisor in this process.

         Tesoro Petroleum Corporation is an independent refiner and marketer of
petroleum products. The Company recently announced that it has reached an
agreement to acquire BP's Mandan, North Dakota, and Salt Lake City, Utah,
refineries and associated storage, pipeline, distribution and gasoline marketing
operations. After closing, the Company will operate five refineries in the
western U.S. with a combined capacity of approximately 390,000 barrels per day,
making it the second largest independent refiner and marketer in the region.
Tesoro's marketing system will include approximately 600 branded retail
stations, of which approximately 160 will be company-owned.

         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 contain goals and objectives. Factors which may
cause actual results to differ from those forward-looking statements include,
changes in general economic conditions, disruptions due to equipment
interruptions or failure at Company or third-party facilities, and other factors
beyond the Company's control. For more information concerning factors that could
cause such a difference, see the Company's annual report on Form 10-K and other
of the Company's reports filed with the Securities and Exchange Commission. The
Company undertakes 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 the Company becomes aware of, after the date
hereof.



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