Malcolm Turnbull will promise Australians cheaper gas by slapping tough new export restrictions on east coast suppliers responsible for sky-high domestic prices.
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While some progress was made, Mr Turnbull is said to have been underwhelmed by the companies' efforts, triggering the intervention, to be announced on Thursday and to come into effect by July 1.
An "Australian domestic gas security mechanism" will allow for export controls to be imposed on companies when there is a gas supply shortfall.
It is designed to put downward pressure on gas prices and to help households and businesses with high prices.
"By ending the shortage, and ensuring the domestic market has adequate supplies, we will ensure gas prices in Australia are lower and fairly reflect international export prices as they should," Mr Turnbull said ahead of the announcement.
"Australians are entitled to have access to the gas they need at prices they can afford.
"It is unacceptable for Australia to become the world's largest exporter of liquefied natural gas, but not have enough domestic supply for Australian households and businesses."
Mr Turnbull said gas companies could not maintain their "social licence" if "Australians are short-changed because of excessive exports".
"Securing supply in the domestic gas market will put downward pressure on retail prices in Australia," he said. "The government remains committed to LNG exports, but not at the expense of Australian interests."
The federal government will not prescribe how exporting gas companies, which are not net contributors to the market, make up the shortfall.
For example, an LNG exporter drawing from the domestic market will be ordered to limit exports to ensure local supply. Those exporters that do not draw more from the domestic market overall will be licensed to export according to their forecasts.
Australia is on track to be the world's largest exporter of gas by 2020, surpassing Qatar, but households and businesses have been hit hard by supply shortages and crippling prices.
The supply shortage has meant Australian gas has cost less in key export markets than it has for Australian users.
The move will probably draw the ire of the big gas companies, but will delight the Nick Xenophon Team, which recently struck a deal with the Turnbull government to take steps to put downward pressure on gas prices in exchange for its support for business tax cuts.
Labor and the union movement have called for a prospective gas reservation policy to help drive down prices.
Mr Turnbull warned gas industry chiefs at the March meeting that he was prepared to invoke the "enormous powers" the Commonwealth has in controlling exports.
Last week he admonished the group of chief executives for failing to "articulate how Australian households and business will get adequate supply at reasonable prices", and called in the competition watchdog to investigate the notoriously opaque gas market.
Australian Competition and Consumer Commission chief Rod Sims said there was a "crisis in the gas market" and that Australian businesses would go to the wall because of high domestic prices.
"I do think companies will go out of business because of this, and I think that will be a crying shame," he said.
A 2015 ACCC review of the east coast gas market found industrial gas users struggling to get supply contracts at any price because of the rush to export liquefied natural gas.
The $80 billion LNG export industry based in Gladstone, Queensland, has tripled east coast demand and pushed domestic contract prices higher than those paid by Australia's biggest customer, Japan.
It was revealed last week that Santos' $20 billion Gladstone LNG plant was taking nearly 60 per cent of its exported product from third parties – something that has been described as "sucking up" domestic supply at the expense of local industry.
The two other Gladstone exporters are Shell's Queensland Curtis LNG plant and the Australia-Pacific LNG plant run by Origin Energy and ConocoPhillips.
Both supply their projects from their own fields and sell a relatively small amount on the domestic market.
Australian Industry Group chief executive Innes Willox has consistently criticised the "gas price disaster" and recently asked Mr Turnbull to "hold open the door to dramatic intervention".
The move is designed to be temporary, until state governments start to allow access to more onshore gas.
The big gas companies were due to be briefed on the plan late on Wednesday evening. The move will only apply to east coast exporters.
The ACCC is monitoring the entire gas supply chain in Australia, while the government has also announced reforms to the pipeline and gas markets.
