<PAGE>   1
 
                                                                    EXHIBIT 10.3
 
                                AMENDMENT NO. 3
 
     AMENDMENT NO. 3, dated as of August 12, 1998 (this "Amendment"), to the
Second Amended and Restated Credit Agreement, dated as of March 23, 1995, as
amended and restated through December 13, 1996 (as amended, supplemented or
otherwise modified prior to the date hereof, the "Credit Agreement"), among
LEVIATHAN GAS PIPELINE PARTNERS, L.P., a Delaware limited partnership (the
"Borrower"), the banks and other financial institutions (the "Lenders") parties
hereto, THE CHASE MANHATTAN BANK, a New York banking corporation, as
administrative agent (in such capacity, the "Administrative Agent") for the
Lenders and ING (U.S.) CAPITAL CORPORATION, a Delaware corporation, as
co-arranger for the Lenders (the "Co-Arranger").
 
                                  WITNESSETH:
 
     WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make,
and have made, extensions of credit to the Borrower; and
 
     WHEREAS, the Borrower has requested that certain provisions of the Credit
Agreement be amended and waived in the manner provided for in this Amendment;
and
 
     WHEREAS, the consent of the Required Lenders has been obtained; and
 
     WHEREAS, the Administrative Agent, the Co-Arranger and the Required Lenders
are willing to agree to such amendments and waivers, but only on the terms and
subject to the conditions set forth in this Amendment;
 
     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
Borrower, the Administrative Agent, the Co-Arranger and the Required Lenders
hereby agree as follows:
 
     1. Definitions. Unless otherwise defined herein, terms defined in the
recitals to this Amendment have the meanings specified therein, and terms
defined in the Credit Agreement (including all amendments thereto) are used
herein as therein defined.
 
     2. Amendments to Credit Agreement.
 
     (a) Amendment to Recitals. The second "Whereas" clause in the recitals is
amended by deleting the amount "$300,000,000" and substituting therefor the
amount "$350,000,000."
 
     (b) The definition of "Management Agreement" is hereby deleted in its
entirety and replaced with the following new definition for the same defined
term:
 
          "Management Agreement": (i) the First Amended and Restated Management
     Agreement, dated as of June 27, 1994, between DeepTech and the General
     Partner, as amended by the First Amendment thereto dated as of January 1,
     1995, and as further amended, modified or supplemented from time to time in
     accordance with subsection 8.9 or (ii) any other agreement or arrangement,
     reasonably acceptable to the Administrative Agent, providing management,
     administrative, operational and other functions to the Borrower adequate to
     allow the Borrower to conduct operations consistent with prior practices.
 
     (c) Amendment to Revolving Credit Commitments. Schedule I is amended by
deleting the amounts contained in the Revolving Credit Commitment column and
substituting therefor the corresponding amounts contained in Schedule I attached
to this Amendment. On the Amendment Effective Date (as defined below) the
aggregate Revolving Credit Commitments will be increased to $350,000,000 and the
Revolving Credit Commitment of each Lender will be as set forth on Schedule I
attached hereto.
 
     3. Waivers to Credit Agreement. (a) It is the intention of the Borrower,
the Administrative Agent, the Co-Arranger and the Lenders that the provisions in
the Credit Agreement relating to the Incurrence
                                        1
<PAGE>   2
 
Limitation not be effective from the Amendment Effective Date through January
31, 1999. Each of the Administrative Agent, the Co-Arranger and the Lenders
hereby waives compliance by the Borrower with the requirements of subsections
2.4, 3.1(a), 4.1(c) and 7.2(b)(ii)(y) during the period beginning the Amendment
Effective Date through and including January 31, 1999 to the extent and only to
the extent that such subsections relate to the Incurrence Limitation. All
provisions waived as a result of this paragraph shall become binding once again
as of February 1, 1999.
 
     (b) Each of the Administrative Agent, the Co-Arranger and the Lenders
hereby waives compliance by the Borrower with the requirements of subsections
8.1(d) and 8.1(e) during the period beginning the Amendment Effective Date
through and including January 31, 1999.
 
     4. Commitment Fee. From the Amendment Effective Date through and including
January 31, 1999, the commitment fee under subsection 2.5 of the Credit
Agreement payable to each Lender shall be computed at the rate per annum equal
to the then Applicable Margin therefor as set forth under the column heading
"Commitment Fee" on the average daily amount of the Available Revolving Credit
Commitment of such Lender.
 
     5. Revolving Credit Notes. The Borrower will execute and deliver to the
Administrative Agent a new Revolving Credit Note for each Lender which requests
the same in the amount of the Revolving Credit Commitment of such Lender after
giving effect to this Amendment. Each such Lender will return the existing
Revolving Credit Note held by it to the Administrative Agent.
 
     6. Conditions to Effectiveness. This Amendment shall become effective on
the date (the "Amendment Effective Date") on which all of the following
conditions precedent have been satisfied or waived:
 
          (a) The Borrower, the Administrative Agent and the Required Lenders
     shall have executed and delivered to the Administrative Agent this
     Amendment, and the other Loan Parties shall have executed and delivered to
     the Administrative Agent the attached Acknowledgment ("Acknowledgment")
     approving this Amendment.
 
          (b) The Administrative Agent shall have received from the Borrower (i)
     for the account of each Lender which executes and delivers this Amendment
     on or prior to the Amendment Effective Date, the fees associated with this
     Amendment and (ii) for the account of the Administrative Agent and the Co-
     Arranger, such additional fees as are separately agreed with the Borrower.
 
          (c) The Administrative Agent shall have received a certificate of each
     of the Borrower, Leviathan and each Subsidiary of the Borrower which is a
     Loan Party, dated the Amendment Effective Date, as to the incumbency and
     signature of the officers of each such Person executing this Amendment and
     the Acknowledgment, satisfactory in form and substance to the
     Administrative Agent, executed by the Chief Executive Officer, Chief
     Operating Officer, Chief Financial Officer, President, Treasurer or any
     Vice President and the Secretary or any Assistant Secretary of each such
     Person.
 
          (d) The Administrative Agent shall have received the executed legal
     opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel to the
     Borrower and the other Loan Parties, in form and substance reasonably
     satisfactory to the Administrative Agent.
 
          (e) The Administrative Agent shall have received a copy of the
     resolutions, in form and substance satisfactory to the Administrative
     Agent, of the Board of Directors of the General Partner authorizing on
     behalf of the Borrower the execution, delivery and performance of this
     Amendment, certified by the Secretary or an Assistant Secretary of the
     General Partner on behalf of the Borrower as of the Amendment Effective
     Date, which certificate shall be in form and substance satisfactory to the
     Administrative Agent and shall state that the resolutions thereby certified
     have not been amended, modified, revoked or rescinded.
 
          (f) The Administrative Agent shall have received a copy of the
     resolutions, in form and substance satisfactory to the Administrative
     Agent, of the Board of Directors of Leviathan authorizing the execution,
     delivery and performance of the Acknowledgment, certified by the Secretary
     or an Assistant Secretary of Leviathan as of the Amendment Effective Date,
     which certificate shall be in form and
                                        2
<PAGE>   3
 
     substance satisfactory to the Administrative Agent and shall state that the
     resolutions thereby certified have not been amended, modified, revoked or
     rescinded.
 
          (g) The Administrative Agent shall have received a copy of the
     resolutions, in form and substance satisfactory to the Administrative
     Agent, of the Managing Member or the Board of Directors, as applicable, of
     each Subsidiary of the Borrower which is a party to the Acknowledgment
     authorizing the execution, delivery and performance of the Acknowledgment,
     certified by the Secretary or an Assistant Secretary of such Subsidiary as
     of the Amendment Effective Date, which certificate shall be in form and
     substance satisfactory to the Administrative Agent and shall state that the
     resolutions thereby certified have not been amended, modified, revoked or
     rescinded.
 
     7. General.
 
     (a) Representations and Warranties. After giving effect to this Amendment,
the Borrower represents that the representations and warranties made by the Loan
Parties in the Loan Documents are true and correct in all material respects on
and as of the Amendment Effective Date (unless such representations or
warranties are stated to refer to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date) as if made on and as of the Amendment
Effective Date and no Default or Event of Default will have occurred and be
continuing.
 
     (b) Payment of Expenses. The Borrower agrees to pay or reimburse the
Administrative Agent for all of its out-of-pocket costs and reasonable expenses
incurred in connection with this Amendment, any other documents prepared in
connection herewith and the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent.
 
     (c) No Other Amendments; Confirmation. Except as expressly amended,
modified and supplemented hereby, the provisions of the Credit Agreement, the
Notes and the other Loan Documents are and shall remain in full force and
effect.
 
     (d) Governing Law; Counterparts. (i) THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
 
     (ii) This Amendment may be executed by one or more of the parties to this
Amendment on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
 
        [The remainder of this page has been left blank intentionally.]
 
                                        3
<PAGE>   4
 
     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first above written.
 
                                            LEVIATHAN GAS PIPELINE PARTNERS,
                                            L.P.
 
                                            By       /s/ KEITH FORMAN
                                             -----------------------------------
                                             Name: Keith Forman
                                             Title: Chief Financial Officer
 
                                            THE CHASE MANHATTAN BANK,
                                            as Administrative Agent and Lender
 
                                            By      /s/ PETER M. LING
                                             -----------------------------------
                                             Name: Peter M. Ling
                                             Title: Vice President
 
                                            ING (U.S.) CAPITAL CORPORATION, as
                                            Co-Arranger and Lender
 
                                            By     /s/ FRANK P. FERRARA
                                             -----------------------------------
                                             Name: Frank P. Ferrara
                                             Title: Senior Associate
 
                                            DEN NORSKE BANK ASA
 
                                            By     /s/ BYRON L. COOLEY
                                             -----------------------------------
                                             Name: Byron L. Cooley
                                             Title: Senior Vice President
 
                                            By     /s/ CHARLES E. HALL
                                             -----------------------------------
                                             Name: Charles E. Hall
                                             Title: Senior Vice President
 
                                        4
<PAGE>   5
 
                                            WELLS FARGO BANK TEXAS, N.A.
 
                                            By      /s/ CHRISTINA FAITH
                                               ---------------------------------
                                             Name: Christina Faith
                                             Title: Assistant Vice President
 
                                            MEESPIERSON CAPITAL CORP.
 
                                            By    /s/ DARRELL W. HALLEY
                                             -----------------------------------
                                             Name: Darrell W. Halley
                                             Title: Senior Vice President
 
                                            By            /s/ KL
                                             -----------------------------------
                                             Name: KL
                                             Title: Managing Director
 
                                            BANK OF SCOTLAND
 
                                            By       /s/ JANET TAFFE
                                             -----------------------------------
                                             Name: Janet Taffe
                                             Title: Assistant Vice President
 
                                            PARIBAS
 
                                            By    /s/ DOUGLAS R. LIFTMAN
                                             -----------------------------------
                                             Name: Douglas R. Liftman
                                             Title: Vice President
 
                                            By    /s/ MARIAN LIVINGSTON
                                             -----------------------------------
                                             Name: Marian Livingston
                                             Title: Vice President
 
                                        5
<PAGE>   6
 
                                            CREDIT LYONNAIS CAYMAN ISLAND BRANCH
 
                                            By     /s/ WALTER N. BRENNER
                                               ---------------------------------
                                             Name: Walter N. Brenner
                                             Title: Authorized Signatory
 
                                            FIRST UNION NATIONAL BANK
 
                                            By   /s/ ROBERT R. WETTEROFF
                                             -----------------------------------
                                             Name: Robert R. Wetteroff
                                             Title: Senior Vice President
 
                                            ARAB BANKING CORPORATION (B.S.C.)
 
                                            By      /s/ SHELDON TILNEY
                                             -----------------------------------
                                             Name: Sheldon Tilney
                                             Title: Deputy General Manager
 
                                            CREDIT AGRICOLE INDOSUEZ
 
                                            By       /s/ DEAN BALICE
                                             -----------------------------------
                                             Name: Dean Balice
                                               Title: Senior Vice President
                                                Branch Manager
 
                                            By       /s/ DAVID BOUNL
                                             -----------------------------------
                                             Name: David Bounl, F.V.P.
                                               Title: Head of Corporate Banking
                                                Chicago
 
                                            PNC BANK, NATIONAL ASSOCIATION
 
                                            By       /s/ JOHN R. WAY
                                             -----------------------------------
                                             Name: John R. Way
                                             Title: Assistant Vice President
 
                                        6
<PAGE>   7
 
                                            THE BANK OF NOVA SCOTIA
 
                                            By        /s/ F.C.W. ASHBY
                                               ---------------------------------
                                             Name: F.C.W. Ashby
                                             Title: Senior Manager Loan
                                               Operations
 
                                            HIBERNIA NATIONAL BANK
 
                                            By    /s/ GARY C. CULBERTSON
                                             -----------------------------------
                                             Name: Gary C. Culbertson
                                             Title: Assistant Vice President
 
                                        7
<PAGE>   8
 
                                 ACKNOWLEDGMENT
 
     The undersigned guarantors hereby consent and agree to the foregoing
Amendment and confirm that their respective obligations under the Loan Documents
remain in full force and effect and, among other things, apply to the increase
in the Revolving Credit Commitments effected by the Amendment:
 
                                            LEVIATHAN GAS PIPELINE COMPANY
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            DELOS OFFSHORE COMPANY, L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            EWING BANK GATHERING COMPANY, L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            FLEXTREND DEVELOPMENT COMPANY,
                                            L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                        8
<PAGE>   9
 
                                            GREEN CAYNON PIPELINE COMPANY,
                                            L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            LEVIATHAN OIL TRANSPORT SYSTEMS,
                                            L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            MANTA RAY GATHERING COMPANY, L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            POSEIDON PIPELINE COMPANY, L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            SAILFISH PIPELINE COMPANY, L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                        9
<PAGE>   10
 
                                            STINGRAY HOLDING, L.L.C.
 
                                            By:       /s/ KEITH FORMAN
                                                --------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            TARPON TRANSMISSION COMPANY
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            TRANSCO HYDROCARBONS COMPANY, L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            TEXAM OFFSHORE GAS TRANSMISSION,
                                            L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                            TRANSCO OFFSHORE PIPELINE
                                            COMPANY, L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name: Keith Forman
                                              Title:
 
                                       10
<PAGE>   11
 
                                            VK DEEPWATER GATHERING COMPANY,
                                            L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name:
                                              Title:
 
                                            VK-MAIN PASS GATHERING COMPANY,
                                            L.L.C.
 
                                            By:      /s/ KEITH FORMAN
                                              ----------------------------------
                                              Name:
                                              Title:
 
                                       11
<PAGE>   12
 
                                                                      SCHEDULE I
 
                LENDERS, COMMITMENTS AND COMMITMENT PERCENTAGES
 
<TABLE>
<CAPTION>
                                                              REVOLVING CREDIT     COMMITMENT
LENDER NAME AND ADDRESS                                          COMMITMENT        PERCENTAGE
-----------------------                                       ----------------   --------------
<S>                                                           <C>                <C>
The Chase Manhattan Bank....................................   $33,083,333.34    9.45238095429%
ING (U.S.) Capital Corporation..............................   $33,083,333.34    9.45238095429%
Den norske Bank ASA.........................................   $30,333,333.33    8.66666666571%
Wells Fargo Bank (Texas), N.A. .............................   $30,333,333.33    8.66666666571%
MeesPierson N.V. ...........................................   $30,750,000.00    8.78571428571%
Credit Lyonnais Cayman Island Branch........................   $30,750,000.00    8.78571428571%
Bank of Scotland............................................   $25,000,000.00    7.14285714286%
Bank of Nova Scotia.........................................   $23,750,000.00    6.78571428571%
Paribas.....................................................   $23,333,333.33    6.66666666571%
First Union Bank of North Carolina..........................   $23,333,333.33    6.66666666571%
PNC Bank....................................................   $23,750,000.00    6.78571428571%
Credit Agricole.............................................   $17,500,000.00    5.00000000000%
Hibernia National Bank......................................   $15,000,000.00    4.28571428571%
Arab Banking Corporation (B.S.C.)...........................   $10,000,000.00    2.85714285714%
</TABLE>