The UK's gas storage capacity could increase by 30%, as the Government issued the first licence under a new regime to encourage the construction of more gas storage.

The Gateway Project, located in the east Irish Sea, would create twenty new salt caverns each the size of the Albert Hall.

Energy and Climate Change Minister Lord Hunt said: "The successful performance of the UK’s gas system, even during the severely cold weather seen this winter, shows that we have one of the most resilient gas systems in the world.

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"But we do want to encourage more gas storage capacity, like Gateway, to provide flexibility in the future at times of high demand.

"This shows the Energy Act 2008 is proving its worth by enabling the Government to license an important new gas storage project."

Chairman of Gateway Storage Company George Grant said: "The support and encouragement given by DECC to bring the Gateway Storage project forward through the new consenting process has been invaluable, as was the Crown Estate’s agreement of the offshore site licence.

"We are now fully engaged with the project’s engineering design and are targeting 2014 for the start of commercial storage operations."

The Crown Estate, which has already agreed and issued the lease for the Gateway project, welcomed the decision.

(CD/GK)