Sunoco 2012 Annual Report Download - page 86

contract year at the Fort Mifflin facility. PES does not have exclusive use of the Fort Mifflin Terminal
Complex; however, the Partnership is obligated to provide the necessary tanks, marine docks and
pipelines for PES to meet its minimum requirements under the agreement. The Partnership executed a
10-year agreement with PES in September 2012. The Partnership had a previous agreement with
Sunoco which included terms similar to those contained in the agreement with PES.
• The Partnership has a three-year agreement with Sunoco to provide approximately 2.0 million barrels
of storage capacity and terminalling services to Sunoco at the Eagle Point tank farm. The agreement
expires in June 2014. Sunoco does not have exclusive use of the Eagle Point tank farm.
• In September 2012, Sunoco assigned its lease for the use of the Partnership’s inter-refinery pipelines
between the Philadelphia and Marcus Hook refineries to PES. Under the 20-year lease agreement
which expires in February 2022, PES leases the inter-refinery pipelines for an annual fee which
escalates at 1.67 percent each January 1 for the term of the agreement. The lease agreement also
requires PES to reimburse the Partnership for any non-routine maintenance expenditures, as defined,
incurred during the term of the agreement. There were no material reimbursements under this
agreement during 2010 through 2012.
• Sunoco is a shipper on our refined products pipelines. All movements are on the same terms that would
be available to an unrelated third party and are based on published tariff rates on the respective
pipelines.
Commodity Sales Agreements
• The Partnership has agreements with Sunoco whereby Sunoco purchases refined products, at market-
based rates, at certain of the Partnership’s terminal facilities. These agreements are negotiated annually
and currently do not extend beyond 2013.
• The Partnership has agreements with PES whereby PES purchases crude oil, at market-based rates, for
delivery to the Partnership’s Fort Mifflin and Eagle Point terminal facilities. These agreements contain
minimum volume commitments and extend through 2014.
The renegotiated terms of the agreements with PES, provide PES with the option to purchase the Fort
Mifflin and Belmont terminals if certain triggering events occur including a sale of substantially all of the assets
or operations of the Philadelphia refinery, an initial public offering or a public debt filing of more than $200
million. If either option is exercised before December 31, 2013, the purchase price is established based on a
defined EBITDA multiple for each terminal facility. After this date, the purchase price for each facility would be
established based on a fair value amount determined by designated third parties.
Sunoco continues to utilize the Partnership’s pipeline and terminal assets to supply its retail marketing
network in an efficient manner. Management expects that Sunoco will continue to utilize these services for the
foreseeable future. However, if Sunoco reduces its use of the Partnership’s facilities, it could adversely affect the
Partnership’s results of operations, financial condition or cash flows.
Advances to/from Affiliate
The Partnership has a treasury services agreement with Sunoco pursuant to which it, among other things,
participates in Sunoco’s centralized cash management program. Under this program, all of the Partnership’s cash
receipts and cash disbursements are processed, together with those of Sunoco and its other subsidiaries, through
Sunoco’s cash accounts with a corresponding credit or charge to an affiliated account. The affiliated balances are
settled periodically, but no less frequently than monthly. Amounts due from Sunoco earn interest at a rate equal
to the average rate of the Partnership’s third-party money market investments, while amounts due to Sunoco bear
interest at a rate equal to the interest rate provided in the Partnership’s $350 million Credit Facility (Note 10).
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