Tesoro Corp.'s Hawaii refinery is “;still a focus”; in assessing how to improve profitability while remaining sustainable.

Bruce Smith, chairman, president and chief executive officer of Tesoro, made his comments yesterday morning during a conference call on the company's earnings. The company lost $155 million in the first quarter due to weak fuel demand.

Tesoro is “;closer to being able to potentially unlock some additional value”; at the Hawaii refinery, one of two in the state. The Tesoro refinery is independent, which means it does not own its crude oil.

“;So I think Hawaii (is) still a focus for us, a lot of effort going into determining how we can improve the profitability of that on a sustainable basis,”; Smith said. “;And I think we'll end up being successful in coming back to describe some of the things we've been able to do.”;

Tesoro's chief economist and senior vice president for external affairs, Lynn Westfall, said in March that the company's refineries have been losing money due to increased demand in China.

The San Antonio-based firm attributed its first-quarter loss to “;seasonally weak product demand”; along the West Coast. The company announced Thursday that it is temporarily shutting down all processing units at its Washington State refinery following an April 2 fire that killed seven employees.

Tesoro has not committed to a time line on whether any adjustments would be made at the refinery. Any changes to Hawaii operations would have a large impact on the company's other Pacific-area refineries, including California and Washington state.

About 260 of Tesoro's 600-strong work force are at the refinery.

The refining margin in Tesoro's Hawaii operation shrunk to 5 cents a barrel last quarter from $8.53 a barrel in first quarter last year. Refining margin is the spread between the cost of crude oil and price of refined products.

“;Since excess capacity among U.S. refiners has limited margin expansion, our entire organization is focused on financial and operational excellence,”; Smith said yesterday.