UPDATE: Repsol To Cut Petronor's Refinery Output by 42%

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Spanish oil company Repsol YPF SA (REP) will reduce the output at its Basque refining subsidiary Petronor by nearly 42% as a result of the current economic situation.

The company will halt output at five out of 12 units of the refinery, meaning the 250,000-barrel-a-day refinery will produce about 104,000 barrels a day less in oil products, a Repsol spokesman said Tuesday.

Repsol's profit in the second quarter had plunged on much lower refining margins. Refining margins in Repsol's core Spanish market fell 94% to $0.5 per barrel in the second quarter from a year earlier, due to a reduction in spreads for diesel, and a recent tightening of the gap in prices paid for light and heavy crude, the company said in July.

To improve refining margins, Repsol from April to July had already mothballed its 100,000-barrels-a-day Cartagena refinery in southern Spain.

In a press release on Petronor's Web site, the refinery said operations at the production units of plant 2 will be halted as of Monday and added that for the time being there's no scheduled resumption of those operations.

Petronor is 85% owned by Repsol, while Basque savings bank BBK owns the other 15%.

-By Enza Tedesco and Bernd Radowitz, Dow Jones Newswires, [e-mail];