Sunoco 2013 Annual Report Download - page 75

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Service and Commodity Sales Agreements
The Partnership is party to various agreements with its affiliates including agreements to provide pipeline and
terminalling services and to supply crude oil and refined products. Some of these agreements are long-term and expire at
various times as described below, while others short-term in nature or subject to termination by either party. Affiliated revenues
in the consolidated statements of comprehensive income relate to services including pipeline transportation, terminalling,
storage and blending, and the sale of crude oil and refined products.
The Partnership had the following material agreements with its affiliated entities at December 31, 2013:
• Product Terminal Services Agreement: The Partnership has a five-year product terminal services agreement with
Sunoco under which Sunoco may throughput refined products through the Partnership's terminals. The agreement
contains no minimum throughput obligations for Sunoco. The agreement runs through February 2017.
• Fort Mifflin Terminal Services Agreement: The Partnership has an agreement with PES relating to the Fort Mifflin
Terminal Complex. Under this agreement, PES will deliver an average of 300,000 barrels per day of crude oil and
refined products per 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 ten-year
agreement with PES in September 2012. The Partnership had a previous agreement with Sunoco with terms
similar to those contained in the agreement with PES.
• Eagle Point Terminal Services Agreement: 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.
• Inter-Refinery Pipeline Lease: In September 2012, Sunoco assigned its lease for the use of the Partnership's inter-
refinery pipelines between the Philadelphia refinery and the Marcus Hook Facility 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 the years 2011 through 2013.
• Butane Storage and Terminalling Services Agreement: In connection with the second quarter 2013 acquisition of
the Marcus Hook Facility, the Partnership assumed an agreement to provide butane storage and terminal services
to PES at the facility. The 10 year agreement extends through September 2022.
• Refined Product Sales: 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 2014.
• Crude Oil Sales: 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. 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. All pipeline 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. Management expects that Sunoco will continue to utilize these
services for the foreseeable future.
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 provided by the Partnership's third-
party money market investments, while amounts due to Sunoco bear interest at a rate equal to the interest rate on the
Partnership's $1.50 billion Credit Facility (Note 10). In the fourth quarter 2013, the Partnership established separate cash
accounts to process its own cash receipts and disbursements. Upon completion of the transition for the Partnership's customers
and vendors in 2014, the Partnership will cease participation in Sunoco's cash management program.