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The federal government will extend the life of the so-called gas trigger until January 2030 as it seeks to shore up supply for the domestic market following the release of a "damning" report.
Following the regulations being put in place to extend the Australian Domestic Gas Security Mechanism (ADGSM), Resources Minister Madeleine King will issue a notice of intention to use the trigger - which she described as a "blunt instrument" - in 2023.
"These measures announced today will safeguard Australia's energy supplies," she told reporters in Canberra on Monday.
"They are designed to work hand in glove with work being done by the energy ministers.
"The Albanese government will do whatever is needed to make sure Australians have ongoing access to the gas and energy sources that belong to the people of Australia."
Ms King said after the notice of intention is released, gas producers will have the opportunity to provide information on gas production, plant export volumes and the market outlook.
"This is their opportunity to demonstrate that there won't be a domestic shortfall next year," she said.
There will be a further review of the mechanism, which was due to expire in January 2023, in 2025.
The government has also opened consultation on reform to the trigger "to ensure that it is an effective tool and fit for purpose", the minister said.
"The government wants to make sure that the ADGSM is improved, is fit for purpose and can be activated at short notice to help with the potential shortfall," she said.
The government will also start negotiations on a new heads of agreement with major gas producers.
The heads of agreement is a deal that ensures uncontracted gas is offered to Australian users in the first instance to help avoid a forecast shortfall.
The announcement comes after the Australian Competition and Consumer Commission released its report into the nation's gas supplies on Monday, showing a shortfall would occur in 2023 if all the excess gas produced by exporters was sent overseas.
Ms King labelled the report "damning".
ACCC chair Gina Cass-Gottlieb said in a statement the watchdog was concerned about the high level of market concentration, noting LNG exporters and associates had influence over almost 90 per cent of the proven and probable reserves in the east coast in 2021.
"Increasingly, LNG exporters have diverted most of their excess gas to overseas spot markets, with as much as 70 per cent of the excess volume going overseas in recent years," Ms Cass-Gottlieb said.
"If LNG exporters were to provide all of their excess gas to overseas markets, the east coast gas market would be facing a supply shortfall of 56 petajoules."
The Australian Petroleum Production and Exploration Association (APPEA) said the ACCC report showed 167PJ of uncontracted gas was available for supply into the domestic market next year.
"This is more than enough gas to ensure that no shortfall occurs," APPEA acting chief executive Damian Dwyer said.
"There has never been an actual shortfall and there will not be one next year - this is the ACCC signalling that action is needed, and the industry will act."
Meanwhile, opposition energy spokesman Ted O'Brien asked in parliament whether Labor was providing "false hope" by promising before the election to cut energy bills by $275.
Prime Minister Anthony Albanese said the government would honour its election commitments.
"What we know is that renewables will lead to cheaper power prices," he said.
"We stand by our modelling."