Labor's domestic gas reservation scheme will force producers to set aside 20 per cent of their annual exports for Australian consumers, giving the country's market a modest oversupply.
Originally pitched as a way to lower electricity prices, the government is now dressing the policy as a win for manufacturing in a scramble to get stakeholders on side.
The change will be rammed through the federal lower house by Labor's thumping parliamentary majority on Thursday.
"Twenty years overdue ... this is fundamental reform which will put Australian industry on a better competitive foot, and will ensure that the gas which belongs to all Australians is used by Australians first," Energy Minister Chris Bowen told reporters in Canberra.
"Australia is the last country with a gas industry in the world without an effective reservation policy - that'll be fixed."
Liberal frontbencher Kevin Hogan signalled the scheme would meet little coalition resistance, which may also let it sail through the Senate.
"(We) obviously support the deal in principle, but there's some things regarding Western Australia ... want new gas to come online as well," he told News24.
The Greens have bristled at what they see as an unneeded windfall for gas companies encouraging more environmental harm and distracting from a need to more stringently tax the resources sector.
"It may potentially promote some of the most damaging projects," Greens leader David Shoebridge said.
"It's important that we step it through ... we're still having discussions with the government."
The Greens leader was also spruiking a much talked-about 25 per cent tax on gas exports, which Labor has so far ruled out, at a National Press Club address on Wednesday.
Labor has already watered down reservation plan from imposing a fixed 20 per cent domestic supply obligation to a cap, meaning producers would be allowed to set aside less gas if given approval by the government.
Western Australia, which has administered its own reservation policy for 20 years, has demanded Canberra carve it out from the new policy, and lobbyists have sounded the alarm over being dictated to about where to sell their gas.
The prime minister on Wednesday attempted to mollify those concerns by touting the policy as a way to stave off more shutdowns of heavy industry, who are being promised cheaper electricity under the scheme.
Those shutdowns included Tasmania's Liberty Bell Bay in August, torching more than 200 jobs, and South Australia's Whyalla steelworks blast furnace in September, which shed 500 workers.
That industry pressure has been costly for taxpayers, with Canberra in August chipping $2.5 billion over 10 years along with the NSW government to save Australia's largest aluminium smelter - Tomago.
Bell Bay has also secured a $200 million bailout, jointly funded by the Tasmanian and federal governments.
