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    Refining Its Strategy

    Reduced demand causes Tesoro Petroleum to lower production in September.

    SAN ANTONIO -- Poor marketing conditions and higher oil prices caused Tesoro Petroleum Corp. yesterday to announce it would reduce its refinery runs to about 85 percent of crude capacity.

    Expected crude throughput rates will range between 475,000 to 480,000 barrels per day for September and between 500,000 to 505,000 barrels per day for the third quarter, said Bill Van Kleef, executive vice president and chief operating officer.

    "The decrease in planned production levels is a direct result of poor market fundamentals driven by higher crude prices," Van Kleef said. "Margins are currently below five-year lows and we will continue to evaluate the potential for further adjustments if fundamentals do not improve."

    Tesoro, an independent refiner and marketer, operates six refineries in the western United States with a combined capacity of nearly 560,000 barrels per day. Tesoro's growing retail marketing system includes nearly 750 branded convenience stores, of which more than 290 are company owned under the Tesoro and Mirastar brands.

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