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                                                                    Exhibit 10.4

                               SUNOCO PARTNERS LLC
                              ANNUAL INCENTIVE PLAN

1. INTENT.

     The purpose of this Annual Incentive Plan (the "Plan") is to motivate
management and the employees of Sunoco Partners LLC (the "Company") and its
affiliates who perform services for Sunoco Logistics Partners L.P., a Delaware
limited partnership, and its subsidiaries (the "Partnership") to collectively
produce outstanding results, encourage superior performance, increase
productivity, and aid in attracting and retaining key employees.

2. PLAN GUIDELINES.

     The administration of the Plan and any potential awards granted pursuant to
the Plan is subject to the determination by the Compensation Committee of the
Company's Board of Directors that the performance goals for the applicable
periods have been achieved. The Plan is an additional compensation program
designed to encourage Plan participants (designated by the Company's
Compensation Committee) to exceed specified objective performance targets for
the designated period. The Compensation Committee will review the Partnership's
performance results for the designated performance period, and thereafter will
determine whether or not to approve awards under the Plan.

3. PERFORMANCE TARGETS.

         3.1 Designation of Performance Targets. The Company's Chief Executive
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     Officer shall recommend, subject to the Compensation Committee's approval,
     the performance measures and performance targets to be used for each
     calendar year (a "Plan Year") in determining the bonus amounts to be paid
     as a result of the Plan. Performance targets may be based on Partnership,
     business unit and/or individual achievements, or any combination of these,
     or on such other factors as the Company's Chief Executive Officer, subject
     to the approval of the Compensation Committee, may determine. Different
     performance targets may be established for different participants for any
     Plan Year. Satisfactory results, as determined by the Compensation
     Committee in its sole discretion, must be achieved in order for an award to
     be made pursuant to the Plan.

         3.2 Equitable Adjustment to Performance Targets. At its discretion, the
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     Compensation Committee may adjust actual performance measure results for
     extraordinary events or accounting adjustments resulting from significant
     asset purchases or dispositions or other events not contemplated or
     otherwise considered by the Compensation Committee when the performance
     measures and targets were set.

4. PARTICIPANTS.

     The Compensation Committee, in consultation with the Company's Chief
Executive Officer, will designate members of management and employees of the
Company and its affiliates as eligible to participate in the Plan. Employees so
designated shall be referred to as "Participants."

5. PARTICIPATION LEVELS.

     A Participant's designated level of participation in the Plan, or target
bonus, will be determined under criteria established or approved by the
Compensation Committee for that Plan Year or designated

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performance period. Levels of participation in the Plan may vary according to a
Participant's position and the relative impact such Participant can have on the
Company's and/or affiliates' operations. Care will be used in communicating to
any participant his performance targets and potential performance amount for a
Plan Year. The amount of target bonus a participant may receive for any Plan
Year, if any, will depend upon the performance level achieved (unless waived)
for that Plan Year, as determined by the Compensation Committee. No Participant
shall have any claim to be granted any award under the Plan, and there is no
obligation for uniformity of treatment of Participants. The terms and conditions
of awards need not be the same respecting each Participant.

6. AWARD PAYOUT.

     Awards typically will be determined after the end of the Plan Year or
designated performance period. Awards will be paid in cash annually, unless
otherwise determined by the Compensation Committee. The Compensation Committee
will have the discretion, by Participant and by grant, to reduce (but not to
increase) some or all of the amount of any award that otherwise would be payable
by reason of the satisfaction of the applicable performance targets. In making
any such determination, the Compensation Committee is authorized to take into
account any such factor or factors it determines are appropriate, including but
not limited to Company, business unit and individual performance; provided,
however, that the exercise of such negative discretion with respect to one
Participant may not be used to increase the amount of any award otherwise
payable to another Participant.

7. TERMINATION OF EMPLOYMENT.

     Termination of a Participant's employment for any reason prior to payout of
an award under the Plan will result in the Participant's forfeiture of any
right, title or interest in any such award, unless and to the extent waived by
the Compensation Committee in its sole discretion.

8. AMENDMENT AND TERMINATION.

     The Company's Compensation Committee, at its sole discretion, may amend the
Plan or terminate the Plan at any time.

9. Administration.

     The Compensation Committee may delegate the responsibility for the
administration and operation of the Plan to the Chief Executive Officer (or
designee) of the Company or any participating affiliate. The Compensation
Committee (or the person(s) to which administrative authority has been
delegated) shall have the authority to interpret and construe any and all
provisions of the Plan, including all performance targets and whether and to
what extent achieved. Any determination made by the Compensation Committee (or
the person(s) to which administrative authority has been delegated) shall be
final and conclusive and binding on all persons.

10. INDEMNIFICATION.

     Neither the Company, any participating affiliate, nor the Board of
Directors, or any member or any committee thereof, of the Company or any
participating affiliate, nor any employee of the Company or any participating
affiliate shall be liable for any act, omission, interpretation, construction or
determination made in connection with the Plan in good faith; and the members of
the Company's Board of Directors, the Compensation Committee and/or the
employees of the Company or any participating affiliate shall be entitled to
indemnification and reimbursement by the Company to the maximum extent

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permitted by law in respect of any claim, loss, damage or expense (including
counsel's fees) arising from their acts, omission and conduct in their official
capacity with respect to the Plan.

11. GENERAL PROVISIONS.

         11.1 Non-Guarantee of Employment. Nothing contained in this Plan shall
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     be construed as a contract of employment between the Company and/or a
     participating affiliate and a Participant, and nothing in this Plan shall
     confer upon any Participant any right to continued employment with the
     Company or a participating affiliate, or to interfere with the right of the
     Company or a participating affiliate to terminate a Participant's
     employment, with or without cause.

         11.2 Interests Not Transferable. No benefits under the Plan shall be
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     subject in any manner to alienation, sale, transfer, assignment, pledge,
     attachment or other legal process, or encumbrance of any kind, and any
     attempt to do so shall be void.

         11.3 Facility Payment. Any amounts payable hereunder to any person
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     under legal disability or who, in the judgment of the Compensation
     Committee or its designee, is unable to properly manage his or her
     financial affairs, may be paid to the legal representative of such person,
     or may be applied for the benefit of such person in any manner which the
     Compensation Committee or its designee may select, and each participating
     affiliate shall be relieved of any further liability for payment of such
     amounts.

         11.4 Controlling Law. To the extent not superseded by federal law, the
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     law of the Commonwealth of Pennsylvania shall be controlling in all matters
     relating to the Plan.

         11.5 No Rights to Award. No person shall have any claim to be granted
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     any award under the Plan, and there is no obligation for uniformity of
     treatment of participants. The terms and conditions of awards need not be
     the same with respect to each recipient.

         11.6 Severability. If any Plan provision or any award is or becomes or
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     is deemed to be invalid, illegal, or unenforceable in any jurisdiction or
     as to any person or award, or would disqualify the Plan or any award under
     the law deemed applicable by the Compensation Committee, such provision
     shall be construed or deemed amended to conform to the applicable laws, or
     if it cannot be construed or deemed amended without, in the determination
     of the Compensation Committee, materially altering the intent of the Plan
     or the award, such provision shall be stricken as to such jurisdiction,
     person or award and the remainder of the Plan and any such award shall
     remain in full force and effect.

         11.7 No Trust or Fund Created. Neither the Plan nor any award shall
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     create or be construed to create a trust or separate fund of any kind or a
     fiduciary relationship between the Company or any participating affiliate
     and a Participant or any other person. To the extent that any person
     acquires a right to receive payments from the Company or any participating
     affiliate pursuant to an award, such right shall be no greater than the
     right of any general unsecured creditor of the Company or any participating
     affiliate.

         11.8 Headings. Headings are given to the sections of the Plan solely as
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     a convenience to facilitate reference. Such headings shall not be deemed in
     any way material or relevant to the construction or interpretation of the
     Plan or any provision of it.

         11.9 Tax Withholding. The Company and/or any participating affiliate
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     may deduct from any payment otherwise due under this Plan to a Participant
     (or beneficiary) amounts required by law to be withheld for purposes of
     federal, state or local taxes.

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