UPDATE 3-Valero readying for slowdown, Q1 beats Street

* Q1 profit 59 cents/share vs Wall St view 49 cents/share

* Shares rise 1 pct

* Valero preparing capital projects for shutdown (Recasts first paragraph; changes dateline from NEW YORK; adds byline, details and quotes from conference call; updates share price)

By Anna Driver and Erwin Seba

HOUSTON, April 28 (Reuters) - Valero Energy Corp (VLO.N: Quote, Profile, Research) reported a higher-than-expected first-quarter profit, but the largest U.S. oil refiner said it is prepared to shut down major projects should the recession continue to hit demand for fuel.

The global economic downturn has prompted a number of refining companies to cut capacity and spending or delay projects until energy use bounces back and costs come down.

"We have to be lean, mean, and very efficient," Bill Klesse, Valero's chief executive, said on a conference call with investors.

Earlier in the call, he said the company was preparing big capital projects for shutdown if the recession worsened, although the San Antonio company also said it had no current plans to shutter any refineries in operation.

Valero's future expansion plans include the addition of a $2.5 billion coke gasification unit at its Port Arthur, Texas, plant by 2012 and a $1.4 billion expansion at its St. Charles refinery in Louisiana by 2010.