What is the main purpose of the new Terminal Services Agreement?

The primary purpose of the new Terminal Services Agreement is to simplify and standardize the terms under which MPLX's subsidiaries provide terminal services to Marathon Petroleum Corporation's (MPC) subsidiaries. It replaces several older, more complex agreements with a single, streamlined contract.

How will MPLX generate revenue from this agreement?

MPLX will generate revenue through a combination of monthly throughput fees, which are based on the volume of products handled at each terminal, and fixed monthly storage fees for terminals where storage services are provided.

What is the duration of the new agreement?

The initial term of the agreement varies by terminal, generally ranging from one to approximately six years. Additionally, there are options to extend the terms for up to two renewal periods, each lasting five years.

Is this a new business relationship between MPLX and MPC?

No, this is not a new relationship. MPC owns the general partner and the majority of the limited partnership interests in MPLX. This agreement serves to update and consolidate existing service arrangements between subsidiaries of these related entities.

MPLX/MPLXP 8-K: Material Agreements

Summary

MPLX LP (MPLX) announced on November 4, 2020, that its wholly owned subsidiaries entered into a new Terminal Services Agreement with subsidiaries of its parent company, Marathon Petroleum Corporation (MPC), effective November 1, 2020. This agreement streamlines and replaces several existing agreements for terminal services, including storage, handling, and transshipment of petroleum products. The new agreement is designed to simplify and standardize the terms for services provided by MPLX to MPC across various terminals. The agreement establishes a clear fee structure based on monthly throughput volumes and fixed storage fees, providing predictable revenue streams for MPLX. The initial terms are generally between one and six years, with options for extensions, offering a degree of long-term visibility for these services. This strategic move by MPLX and MPC aims to enhance operational efficiency and contractual clarity between the related entities.

Key Highlights

1MPLX entered into a new Terminal Services Agreement with Marathon Petroleum Corporation (MPC) subsidiaries, effective November 1, 2020.
2The agreement consolidates and simplifies multiple existing terminal services agreements.
3MPLX will provide MPC with a range of terminal services, including storage, handling, and transshipment of petroleum products.
4Revenue for MPLX will be generated through monthly throughput fees based on product volumes and fixed monthly storage fees.
5The initial contract term varies by terminal, generally ranging from 1 to 6 years.
6The agreement includes renewal options, potentially extending the terms by up to two periods of five years each.
7MPC holds the general partner and majority limited partnership interests in MPLX, indicating a related-party transaction.

MPLX LP 8-K Report, Material Agreement (Nov 5, 2020)

Summary

Key Highlights

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