Sunoco 2014 Annual Report Download - page 78

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4. Related Party Transactions
Acquisition of Sunoco
The general and limited partner interests that were previously owned by Sunoco were contributed to ETP in connection
with the acquisition of Sunoco by ETP (Note 1). As a result of the acquisition, both the Partnership and Sunoco became
consolidated subsidiaries of ETP. The Partnership has various operating and administrative agreements with ETP and its
affiliates, including the agreements described below. ETP and its affiliates perform the administrative functions defined in such
agreements on the Partnership’s behalf.
Service and Commodity Sales Agreements
The Partnership is party to various agreements with ETP and its affiliates to provide pipeline, terminalling and storage
services, in addition to agreements for the purchase and sale of crude oil, refined products and NGLs. This activity is reflected
in affiliated revenues in the consolidated statements of comprehensive income.
The Partnership is party to the following commercial agreements with its affiliated entities:
• 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 the 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.
These agreements also 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.
• 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 Industrial Complex to PES. Under the
twenty-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
2012 through 2014.
• Marcus Hook Industrial Complex Storage and Terminalling Services: In connection with the second quarter 2013
acquisition of the Marcus Hook Industrial Complex, 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.
• Purchase and Sale Agreements: The Partnership has agreements for the purchase and sale of crude oil, refined
products and NGLs. These agreements are negotiated at market-based rates, do not extend beyond 2015, and can
be terminated by either party in certain cases.
• Terminalling Services: The Partnership has agreements with affiliates for the use of its terminal assets, as well as
its use of an affiliated terminal asset to facilitate the Partnership's acquisition and marketing activities. The
agreements are based on market terms and negotiated based on the respective term. These agreements vary in
duration and can be terminated by either party in certain cases.
• Pipeline Agreements: The Partnership has agreements with affiliated parties to utilize its pipelines to supply their
business needs. All pipeline movements are on the same terms that would be available to an unrelated party and
are based on published tariff rates on the respective pipeline.
Advances to/from Affiliate
Through the third quarter 2014, the Partnership participated in Sunoco's centralized cash management program pursuant
to a treasury services agreement. Under the program, the Partnership's cash receipts and cash disbursements were 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. In the fourth quarter 2013, the Partnership established separate cash accounts and began to transition to