Environmentalists welcomed yesterday a decision by Shell to pull out of a joint venture with Premier Oil to explore for gas within a Pakistani national park, saying Shell had bowed to public pressure.

Premier said earlier it had reached agreement in principle with Royal Dutch Shell to acquire Shell's 49.9 per cent holding in the venture, Premier and Shell Pakistan BV (PSP), in return for a proportion of its holding in the Bhit natural gas field. Premier already holds 50.1 per cent in PSP.

"This sends a signal to Premier Oil that this is not a safe project to invest in because there is so much pressure from civil society," Sarjan Anwar, executive memeber of Karachi-based environmental group Shehri, told Reuters. "We feel that it is this pressure that has caused Shell to pull out."

Shell denied the asset swap was related to Shehri's campaign to stop PSP's exploration in the Kirthar National Park, a 3,000-square-kilometre protected area of mountain desert in the southern Sindh province.

"This is about portfolio management," Shell International spokesman Dave Stuart told Reuters. "Since the middle of last year, we've been changing the emphasis on the concessions we have there. We're moving out of exploratory concession in this national park into something which is a bit nearer fruition, the Bhit project, which is coming up to production."

International green lobby group Friends of the Earth, which is pursuing a legal case against PDP and Pakistani local and national governments in the Pakistani courts to prevent environmental impact assessment in Kirthar park, said it had greeted the news of the asset swap "with delight."

"Friends of the Earth International (FOEI) was concerned that Shell was seeking to avoid respecting the wildlife law," it said in a statement, adding the park was protected under the Sindh Wildlife Protection Ordinance, which had been amended without reference to Pakistan's parliament.

FOEI spokesman Craig Bennett said the court case would continue as long as PSP continued its activites in Kirthar. "Until Premier tells us otherwise we have to assume it's full steam ahead on their proposals to explore for gas in this park and therefore we will push full steam ahead with our campaign and with the court case," he said.

Shell said in an earlier statement the proposed asset swap with Premier Oil remained subject to Islamabad government approval and final agreement of the parties involved, which it expects by the third quarter of this year.

Shell's stake in the Bhit gas development project - also in Sindh province but not within a national park - will increase to 28 per cent from 20 per cent, taking Premier's current 20 per cent stake down to 12 per cent.

Pakistan has in recent years discovered gas reserves of up to six trillion cubic feet (170 billion cu metres) that would add more than one billion cubic feet a day of output over the next seven years.

Pakistan's current gas output, which has a 39 per cent share of total energy supply against 43 per cent for oil, is estimated at 2.4 billion cubic feet (67.96 million cubic metres) a day, which falls short of domestic demand of 3.4 billion cubic feet a day.