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US marine fuel supplier Tesoro Corporation has reported a net loss for the first quarter of 2008 despite a $45 million pre-tax benefit from a legal settlement, as weak oil refining margins continued to impact on the company's bottom line.

San Antonio-based Tesoro posted a net loss of $82 million, or $0.60 per share, on revenues of $6.5 billion for the quarter ended March 31st 2008. This compares to net income of $116 million, or $0.84 per share, on revenues of $3.9 billion for the same period last year.

In a company statement, Tesoro said declining margins for gasoline and bottom-of-the-barrel products including fuel oil, asphalt and petroleum coke drove West Coast benchmark margins down from $30/barrel in the first quarter of 2007 to an average of $14 per barrel in the first quarter of 2008. Reported gross refining margins decreased 52 percent to $6.54 per barrel in the first quarter of 2008 compared to $13.50 per barrel from a year ago.

Bruce Smith [pictured], Chairman, President and CEO of Tesoro, said since Tesoro acquired the Los Angeles refinery in May 2007, the company had embarked on an initiative aimed at reducing costs. "We’ve already developed and initiated changes that are expected to improve profitability in Hawaii and Los Angeles and have accelerated our review of costs and capital commitments across the system in response to the market environment," said Smith.

The company's aim is to realize approximately $750 million to $1 billion of cash through these initiatives in 2008.

Tesoro has already revised its 2008 capital spending plan from $1.1 billion to $870 million. Most projects impacted by this reduction have been delayed or adjusted in scope rather than cancelled, according to the company.

Tesoro sells heavy fuels and oils for a wide range of uses, including marine, commercial and industrial customers, and the utility market. The company is a significant supplier of bunker fuel to cruise ships in the Seattle area, many of which are bound for Alaska. It also supplies liquid asphalt for asphalt and construction companies.