Centrica, Britain’s largest energy supplier, is planning to invest significant sums in new gas storage projects and could develop facilities in the Irish Sea, close to its main gasfields.

The company owns the UK’s largest gas storage facilities, after buying the North Sea Rough operation five years ago, and has seen the value of these assets increase fivefold. However, it is frustrated by the difficulty of developing storage facilities onshore and believes that offshore might provide a better long-term solution.

Sam Laidlaw, chief executive of Centrica, said: “We are now exploring options to make further investments in storage for the longer term, both offshore and onshore. As the UK increases its reliance on imported gas, and introduces the proposed legislation to streamline planning for new energy infrastructure, we think there will be more opportunities for investing in gas storage.”

Centrica made £220 million operating profit from Rough last year and expects even better figures this year. This week, gas was flowing from storage facilties at Rough for the first time this winter.

Gas storage has become a key tool in Britain’s efforts to maintain security of supply, but the country is undersupplied compared with other states in the European Union. Britain delivers only 5 per cent of its total demand from storage. Germany can supply 20 per cent of demand from storage and France 16 per cent.

The need for gas storage arises because in future Britain will import gas through pipelines from Norway, the Netherlands and, potentially, Russia. Storage facilities are needed so that extra gas can be brought into the system to meet peak demand.

By 2010, Britain’s gas storage capacity should have nearly doubled to meet about 9 per cent of the country’s annual demand. However, as many new power stations that are being built are gas-fired, there is a need for a bigger range of gas storage sites.

One reason that Britain has been slow to develop gas storage has been because of the state of the North Sea gas reserves, which only now are becoming depleted. Another factor has been that when wholesale gas prices are low, there is no real incentive to invest in new storage. However, when prices are high, producers are reluctant to use gas to fill new storage sites and would rather sell it on the market.

Planning has also been a significant impediment, with several onshore storage projects being rejected on planning and on safety grounds.

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