Centrica has said that it is planning to scrap its plans for building two major new storage projects in the UK after the government did not agree to offer subsidies to boost country's gas supplies.

The decision by the company to cancel plans to build new facilities in East Yorkshire and the North Sea with a proposed investment of £240 million comes after the company, in January, withdrew itself from a consortium to build a new nuclear power generator at Hinkley Point in Somerset. The British Gas owner's decision comes after chief executive, Sam Laidlaw reportedly had a heated exchange with the Energy minister Michael Fallon.

The development raises concerns that the UK might face severe supply shortages in future years as the reserves fall in the North Sea and the country becomes dependent on suppliers in the Middle East region, which has seen political instability in recent years. Estimates showed that the country had only six hours' worth of gas supplies in March during the winter season.

Experts have said that storage infrastructure not only allows governments to safeguard against shortages but also allows them to stabilise prices by buying the supplies in build during the summer season.