The Physical Delivery Point Architecture
Subic Bay is designed as Asia's first fully-functioning gas delivery point — combining open-access physical infrastructure, standardized contracts, a traded forward curve, and centrally cleared derivatives.
The Subic Bay Delivery Point
A delivery point is the physical location where a commodity changes hands under a standardized contract. Henry Hub (U.S. natural gas) and Cushing, Oklahoma (WTI crude) are the canonical examples — both are physical hubs where pipelines converge, open access is mandated, and financial contracts settle against actual delivery.
Subic Bay replicates this architecture for Asian LNG. The FSRU terminal, connected to the Luzon pipeline grid, becomes the primary delivery location. Open-access rules prevent any single participant from controlling throughput. Standardized contract specifications allow multiple counterparties to trade the same product without bespoke negotiation.
Delivery Point Architecture
Interactive — click any node to explore its role in the market structure.
Select a node above to see details.
Contract Specifications
Standardized terms are the foundation of a liquid market. The following specifications are modeled on other successful physically settled gas contracts, adapted for Philippine LNG.
| Term | Specification |
|---|---|
| Product | Natural Gas (LNG equivalent, regasified) |
| Delivery Points | All eligible Luzon Delivery Points. Batangas to start and Subic Bay on FID. |
| Unit | MMBtu (million British thermal units) |
| Contract Size | 10,000 MMBtu per lot |
| Quotation | USD per MMBtu with FX Conversion to PHP |
| Trading Hours | SGX / CME linked session, 23 hrs/day |
| Settlement | Physical delivery. Financial contracts to emerge after sufficient liquidity in physical. |
| Clearing | GTM Clear |
| Margin | Initial + variation margin per CCP schedule |
| Tenor | Spot month through 10-year forward |
The Forward Curve
A forward curve is the market's consensus view of future prices across delivery months. It enables producers to lock in revenue, buyers to hedge procurement costs, and financiers to underwrite long-term project cash flows with confidence.
Asia currently lacks a long-dated, cleared forward curve for natural gas. JKM (Japan-Korea Marker) provides a spot and near-term assessment, but it is not a delivery-point price and does not support long-dated hedging. The Subic delivery point is designed to anchor a curve that trades out to ten years.
A functioning forward curve changes the economics of gas infrastructure investment. When a developer can show a lender a hedged revenue stream against a cleared price, project finance becomes available at terms that are not possible against floating spot exposure.
Curve Tenor Structure
How Subic Compares to Established Hubs
Open Access Rules
Open access is the regulatory foundation that prevents hub capture. Under open-access rules, no single participant — including the terminal owner — can deny throughput to a third party willing to pay the published tariff. This is the model used at Henry Hub, Cushing, and all major European gas hubs. Without open access, a delivery point cannot function as a market benchmark because the owner can manipulate physical flows to influence the price.
Required Conditions
Ready to go deeper?
Download the full executive briefing for detailed contract specs, phase timeline, and financing structure.