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Related Party Agreements and Transactions (Tables)

12 Months Ended

Dec. 31, 2019

Schedule Of Entity Wide Information Allocated Related Party Employee Benefit Costs By Income Statement Line [Table Text Block]

Related Party Expenses

MPC provides executive management services and certain general and administrative services to MPLX under the terms of our omnibus agreements. Omnibus charges included in “Rental cost of sales - related parties” primarily relate to services that support MPLX’s rental operations and maintenance of assets available for rent. Omnibus charges included in “Purchases - related parties” primarily relate to services that support MPLX’s operations and maintenance activities, as well as compensation expenses. Omnibus charges included in “General and administrative expenses” primarily relate to services that support MPLX’s executive management, accounting and human resources activities. MPLX also obtains employee services from MPC under employee services agreements (“ESA charges”). ESA charges for personnel directly involved in or supporting operations and maintenance activities related to rental services are classified as “Rental cost of sales - related parties.” ESA charges for personnel directly involved in or supporting operations and maintenance activities related to other services are classified as “Purchases - related parties.” ESA charges for personnel involved in executive management, accounting and human resources activities are classified as “General and administrative expenses.” In addition to these agreements, MPLX purchases products from MPC, makes payments to MPC in its capacity as general contractor to MPLX, and has certain rent and lease agreements with MPC.

Expenses incurred from MPC under the omnibus and employee services agreements as well as other purchases from MPC included on the Consolidated Statements of Income are as follows:



(In millions)	2019		2018		2017
Rental cost of sales - related parties	$	165	$	31	$	2
Purchases - related parties
MPC	1,210		919		455
Other	21		6		—
General and administrative expenses	243		199		138
Total	$	1,639	$	1,155	$	595

Some charges incurred under the omnibus and ESA agreements are related to engineering services and are associated with assets under construction. These charges are added to “Property, plant and equipment, net” on the Consolidated Balance Sheets. For 2019, 2018 and 2017, these charges totaled $169 million, $152 million and $42 million, respectively.

MPLX engages in transactions with both MPC and certain of its equity method investments as part of its normal business; however, transactions with MPC make up the majority of MPLX’s related party transactions. Transactions with related parties are further described below.

MPLX has various long-term, fee-based commercial agreements with MPC. Under these agreements, MPLX provides transportation, terminal, fuels distribution, marketing, storage, management, operational and other services to MPC. MPC has committed to provide MPLX with minimum quarterly throughput volumes on crude oil and refined products and other fees for storage capacity; operating and management fees; as well as reimbursements for certain direct and indirect costs. MPC has also committed to provide a fixed fee for 100 percent of available capacity for boats, barges and third-party chartered equipment under the marine transportation service agreement. In addition, MPLX has obligations to MPC for services

provided to MPLX by MPC under omnibus and employee services type agreements as well as other various agreements as discussed below.

The commercial agreements with MPC include:


•	MPLX has fuels distribution agreements with MPC under which MPC pays MPLX for marketing and selling MPC’s products. This can include MPC paying MPLX a tiered monthly fee based on the volume of products sold or thought margin support under a related product supply agreement. Agreements are subject to minimum volume commitments and are subject various terms and renewal periods.

•

MPLX has various pipeline transportation agreements under which MPC pays MPLX fees for transporting crude and refined products on MPLX’s pipeline systems. These agreements are subject to minimum throughput volumes under which MPC will pay MPLX deficiency payments for any period in which they do not ship the minimum committed volume. These deficiency payments can be applied as credits to future periods in which MPC ships volumes in excess of the minimum volume, subject to a limited period of time. These agreements are subject to various terms and renewal periods.


•	MPLX has a six-year marine transportation agreement under which MPC pays MPLX fees for providing marine transportation of crude oil, feedstock and refined petroleum products, and related services.

•

MPLX has various trucking transportation services agreements with terms ranging from month-to-month to 10 years, under which MPC pays MPLX fees for gathering barrels and providing trucking, dispatch, delivery and data services. Most of these agreements are subject to minimum volume commitments and have various terms regarding carry-forward of deficiency payments as credits towards excess volumes shipped in future periods. These agreements are subject to various terms and renewal periods.

•

MPLX has numerous storage services agreements governing storage services at various types of facilities including terminals, pipeline tank farms, caverns and refineries, under which MPC pays MPLX per-barrel fees for providing storage services. Some of these agreements provide MPC with exclusive access to storage at certain locations, such as storage located at MPC’s refineries or storage in certain caverns. Under these agreements, MPC pays MPLX a per-barrel fee for such storage capacity, regardless of whether MPC fully utilizes the available capacity. Many of the refinery storage agreements also contain provisions for logistical services to be provided by MPLX, for which MPC pays monthly fees. These agreements are subject to terms ranging from three to 17 years and are subject to various renewal periods.

•

MPLX has a 10-year terminal services agreement governing certain terminals under which MPC pays MPLX fees for terminal storage for refined petroleum products. Under this agreement MPC pays MPLX agreed upon fees relating to MPC product deliveries as well as any viscosity surcharges, loading, handling, transfers or other related charges. This agreement is subject to minimum volume throughput commitments under which MPC pays a deficiency payment for any period in which they do not meet the minimum committed volume. The terminal services agreement with MPC includes automatic renewal terms ranging from one to five years. MPLX also has numerous additional terminal services agreements governing terminals acquired through the Merger. Under these agreements, MPC pays MPLX agreed upon fees relating to various terminal activities including throughput, blending, on and offloading and additives. Many of these agreements contain various minimum commitments for some or all of these activities. Some of these agreements allow for deficiency payments to be applied as credits to future periods with excess throughput volumes. These agreements have terms ranging from one to 10 years with varying renewal terms.


•	MPLX has a year to year keep-whole commodity agreement with MPC under which MPC pays us a processing fee for NGL’s related to keep-whole agreements and delivers shrink gas to the producers on our behalf. We pay MPC a marketing fee in exchange for assuming the commodity

risk. The pricing structure under this agreement provides for a base volume subject to a base rate and incremental volumes subject to variable rates which are calculated with reference to certain of our costs incurred as processor of the volumes. The pricing for both the base and incremental volumes are subject to revision each year.

In many cases, agreements are location-based hybrid agreements, containing provisions relating to multiple of the types of agreements and services described above.

Operating Agreements

MPLX operates various pipelines owned by MPC under operating services agreements. Under these operating services agreements, MPLX receives an operating fee for operating the assets and is reimbursed for all direct and indirect costs associated with operating the assets. Most of these agreements are indexed for inflation. These agreements range from one to five years in length and automatically renew unless terminated by either party.

Co-location Services Agreements

MPLX is party to co-location services agreements with MPC’s refineries, under which MPC provides management, operational and other services to the subsidiaries of Refining Logistics. Refining Logistics pays MPC monthly fixed fees and direct reimbursements for such services calculated as set forth in the agreements. These agreements have initial terms of 50 years.

Ground Lease Agreements

MPLX is party to ground lease agreements with certain of MPC’s refineries under which MPLX is the lessor of certain sections of property which contain facilities owned by Refining Logistics and are within the premises of MPC’s refineries. Refining Logistics pays MPC monthly fixed fees under these ground leases. These agreements have initial terms of 50 years.

Management Services Agreement

MPLX, through its subsidiary, HSM, has a management services agreement with MPC under which it provides management services to assist MPC in the oversight and management of the marine business. HSM receives a fixed annual fee for providing the required management services. This fee is adjusted annually on the anniversary of the contract for inflation and any changes in the scope of the management services provided. This agreement is set to expire on January 1, 2021 and automatically renews for two additional renewal terms of 5 years each unless terminated by either party.

Omnibus Agreements

MPLX has omnibus agreements with MPC that address MPLX’s payment of fixed annual fees to MPC for the provision of executive management services by certain executive officers of the general partner and MPLX’s reimbursement of MPC for the provision of certain general and administrative services to it. They also provide for MPC’s indemnification to MPLX for certain matters, including environmental, title and tax matters; as well as our indemnification of MPC for certain matters under these agreements. Certain environmental indemnifications related to the Los Angeles Logistics Assets Acquisition are excluded from coverage under omnibus agreements and are instead covered by a Carson Assets Indemnity Agreement.

Employee Services Agreements

MPLX has various employee services agreements and secondment agreements with MPC under which MPLX reimburses MPC for employee benefit expenses, along with the provision of operational and management services in support of both our L&S and G&P segments’ operations.

Loan Agreement

MPLX is party to a loan agreement with MPC Investment (the “MPC Loan Agreement”). Under the terms of the agreement, MPC Investment makes a loan or loans to MPLX on a revolving basis as requested by MPLX and as agreed to by MPC Investment. On April 27, 2018, MPLX and MPC Investment entered into an amendment to the MPC Loan Agreement to increase the borrowing capacity under the MPC Loan Agreement from $500 million to $1 billion. In connection with the Merger, on July 31, 2019, MPLX and MPC Investment entered into a second amendment to the MPC Loan Agreement to increase the borrowing capacity under the MPC Loan Agreement to $1.5 billion in aggregate principal amount of all loans outstanding at any one time. The entire unpaid principal amount of the loan, together with all accrued and unpaid interest and other amounts (if any), shall become due and payable on July 31, 2024, provided that MPC Investment may demand payment of all or any portion of the outstanding principal amount of the loan, together with all accrued and unpaid interest and other amounts (if any), at any time prior to July 31, 2024. Borrowings under the MPC Loan Agreement prior to July 31, 2019 bore interest at LIBOR plus 1.50 percent, while borrowings as of and after July 31, 2019 will bear interest at LIBOR plus 1.25 percent or such lower rate as would be applicable to such loans under the MPLX Credit Agreement. Activity on the MPC Loan Agreement was as follows:



(In millions)	December 31, 2019			December 31, 2018
Borrowings	$	8,540		$	3,962
Average interest rate of borrowings	3.441		%	3.473		%
Repayments	$	7,946		$	4,347
Outstanding balance at end of period	$	594		$	—

Prior to the Merger, ANDX was also party to a loan agreement with MPC (“ANDX-MPC Loan Agreement”). This facility was entered into on December 21, 2018, with a borrowing capacity of $500 million. In connection with the Merger, on July 31, 2019, MPLX repaid the entire outstanding balance and terminated the ANDX-MPC Loan Agreement. There was no activity on the ANDX-MPC Loan Agreement in 2018. Activity on the agreement during 2019 prior to the Merger was as follows:



(In millions)	December 31, 2019
Borrowings	$	773
Average interest rate of borrowings	4.249		%
Repayments	$	773
Outstanding balance at end of period	$	—

Related Party Revenue

Related party sales to MPC consist of crude oil and refined products pipeline and trucking transportation services based on tariff/contracted rates; storage, terminal and fuels distribution services based on contracted rates; and marine transportation services. Related party sales to MPC also consist of revenue related to volume deficiency credits.

MPLX also has operating agreements with MPC under which it receives a fee for operating MPC’s retained pipeline assets and a fixed annual fee for providing oversight and management services required to run the marine business. MPLX also receives management fee revenue for engineering, construction and administrative services for operating certain of its equity method investments.

Revenue received from related parties included on the Consolidated Statements of Income was as follows:



(In millions)	2019		2018		2017
Service revenue
MPC	$	3,455	$	2,404	$	1,082
Rental income
MPC	1,196		846		279
Product sales⁽¹⁾
MPC	140		87		8
Other	2		—		—
Total Product sales - related parties	142		87		8
Other income
MPC	47		41		40
Other	67		58		52
Total Other income - related parties	$	114	$	99	$	92


(1)	There were additional product sales to MPC that net to zero within the consolidated financial statements as the transactions are recorded net due to the terms of the agreements under which such product was sold. For 2019, 2018 and 2017, these sales totaled $1,120 million, $607 million and $254 million, respectively.

Related Party Expenses

Expenses incurred from MPC under the omnibus and employee services agreements as well as other purchases from MPC included on the Consolidated Statements of Income are as follows:



(In millions)	2019		2018		2017
Rental cost of sales - related parties	$	165	$	31	$	2
Purchases - related parties
MPC	1,210		919		455
Other	21		6		—
General and administrative expenses	243		199		138
Total	$	1,639	$	1,155	$	595

Related Party Assets and Liabilities



	December 31,
(In millions)	2019		2018
Current assets - related parties
Receivables - MPC	$	621	$	542
Receivables - Other	22		9
Prepaid - MPC	9		5
Lease Receivables - MPC	4		—
Total	656		556
Noncurrent assets - related parties
Long-term receivables - MPC	21		24
Right of use assets - MPC	232		—
Long-term lease receivables - MPC	43		—
Unguaranteed residual asset - MPC	7		—
Total	303		24
Current liabilities - related parties
Payables - MPC	911		360
Payables - Other	37		76
Operating lease liabilities - MPC	1		—
Deferred revenue - Minimum volume deficiencies - MPC	42		57
Deferred revenue - Project reimbursements - MPC	16		9
Deferred revenue - Project reimbursements - Other	1		—
Total	1,008		502
Long-term liabilities - related parties
Long-term operating lease liabilities - MPC	230		—
Long-term deferred revenue - Project reimbursements - MPC	53		46
Long-term deferred revenue - Project reimbursements - Other	7		—
Total	$	290	$	46

From time to time, MPLX may also sell to or purchase from related parties assets and inventory at the lesser of average unit cost or net realizable value. Sales to related parties during the years ended December 31, 2019 and 2018 were $10 million and $6 million, respectively. Purchases from related parties during the years ended December 31, 2019 and 2018 were approximately $5 million and $8 million, respectively.

Schedule of Long-term Debt Instruments [Table Text Block]

Loan Agreement



(In millions)	December 31, 2019			December 31, 2018
Borrowings	$	8,540		$	3,962
Average interest rate of borrowings	3.441		%	3.473		%
Repayments	$	7,946		$	4,347
Outstanding balance at end of period	$	594		$	—



(In millions)	December 31, 2019
Borrowings	$	773
Average interest rate of borrowings	4.249		%
Repayments	$	773
Outstanding balance at end of period	$	—

Revenue from Related Parties

Related Party Revenue

Revenue received from related parties included on the Consolidated Statements of Income was as follows:



(In millions)	2019		2018		2017
Service revenue
MPC	$	3,455	$	2,404	$	1,082
Rental income
MPC	1,196		846		279
Product sales⁽¹⁾
MPC	140		87		8
Other	2		—		—
Total Product sales - related parties	142		87		8
Other income
MPC	47		41		40
Other	67		58		52
Total Other income - related parties	$	114	$	99	$	92

(1)

There were additional product sales to MPC that net to zero within the consolidated financial statements as the transactions are recorded net due to the terms of the agreements under which such product was sold. For 2019, 2018 and 2017, these sales totaled $1,120 million, $607 million and $254 million, respectively.

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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+ Details