For immediate release                             For more information, contact:
                                                              Investor Relations
                                                                  (972) 699-4041
                                                       Email: investor@kaneb.com

                    KANEB Reports Excellent Results for 2004

DALLAS,  TX (March 10, 2005) - KANEB today  reported  results for the year ended
December 31, 2004. The KANEB  Companies are Kaneb  Services LLC (NYSE:  KSL) and
Kaneb Pipe Line Partners,  L.P. (NYSE: KPP, "the  Partnership").  Kaneb Services
LLC's wholly owned subsidiary, Kaneb Pipe Line Company LLC, is the Partnership's
General Partner.

"KANEB had an excellent year. The  Partnership's  strong  performance once again
demonstrated the value we have created and grown through strategic  acquisitions
and  effective  management.  That  value is the  foundation  of our  anticipated
transaction with Valero, which brings tremendous  advantages to Kaneb investors.
The combination of the transaction's favorable exchange ratio and the premium at
which Valero L.P. units are trading represents a substantial  increase in market
value for our KPP unitholders.  Our KSL shareholders will receive cash that also
represents a  substantial  premium,"  said John R.  Barnes,  chairman and CEO of
KANEB. "We are very pleased with the KANEB companies' performance in 2004, which
continued  to  build  value  and  deliver   growth  for  our   unitholders   and
shareholders."

On November 1, 2004,  Valero L.P. (NYSE: VLI) and the KANEB companies (NYSE: KPP
and NYSE: KSL) announced that they had executed  definitive  agreements to merge
Valero L.P.  and Kaneb Pipe Line  Partners,  L.P.,  and that  Valero  L.P.  will
purchase  all of Kaneb  Services'  shares  for  cash.  The date for the  special
meeting of the unitholders of Valero L.P. and Kaneb Pipe Line Partners, L.P. and
the shareholders of Kaneb Services LLC has been set for March 11, 2005.  Further
information  about the  transaction  is provided  on the Valero L.P.  website at
www.valerolp.com,  and a  link  to the  management  presentation  regarding  the
transaction is available on the KANEB website at www.kaneb.com.

2004 RESULTS FOR KANEB SERVICES LLC

For the year ended December 31, 2004 Kaneb Services LLC's distributions received
from KPP (see Supplemental Information in the attached table) increased to $27.9
million, compared with $25.2 million for 2003. KSL reported net income was $24.4
million, or $2.03 per share, for 2004, compared with $33.1 million, or $2.81 per
share for 2003.  Income  before  merger costs in 2004,  a $10.9  million gain on
issuance of units by KPP in 2003 and  cumulative  effect of change in accounting
principle in 2003 (see Supplemental Information in the attached table) was $25.9
million, or $2.16 per share, for 2004, compared with $22.5 million, or $1.91 per
share,  for  2003.  "This  represents  a  $3.4  million,  or  $0.25  per  share,
improvement over last year," said Mr. Barnes.

KSL is a unique  limited  liability  company,  the only  publicly  traded,  cash
distributing  entity  taxed  as a  partnership  that  owns the  general  partner
interest of another  publicly  traded  master  limited  partnership.  Its assets
include the KPP general  partner  interest and  incentive as well as 5.1 million
Partnership units, a wholesale petroleum product marketing company, and a wholly
owned  subsidiary that manages and operates the pipeline and terminaling  assets
of KPP.

2004 RESULTS FOR KANEB PIPE LINE PARTNERS, L.P.

Kaneb Pipe Line Partners,  L.P. reported revenues of $648.2 million for the year
ended  December 31, 2004,  compared with $570.4 million for 2003. Net income for
the year was $90.1 million (after merger costs), compared with $82.4 million for
the previous  year.  Net income per unit for the year was $2.84,  compared  with
$2.68 for the previous year. EBITDA increased (see  Supplemental  Information in
the attached table) to $193.4 million for 2004, compared with $181.7 million for
2003.

"The Partnership's 2004 acquisitions were strategic  additions to our assets and
strengthened  our position in the New York Harbor as well as in Scotland,  where
we are the leading  terminal  operator in that country," said Edward D. Doherty,
chairman  and CEO of Kaneb Pipe Line  Company  LLC,  the  Partnership's  General
Partner.

Michael L.  Rose,  chief  operating  officer  of Kaneb  Pipe Line  Company  LLC,
commented on KPP's 2004  performance:  "The  Partnership had a very strong year,
with significant gains in revenues and operating income from our terminaling and
product sales operations."

Pipeline revenues for 2004 (see Supplemental  Information in the attached table)
were  $119.8  million,  compared  with $119.6  million  for last year.  Pipeline
operating  income for 2004 was $48.9  million,  compared with $51.9 million last
year. Pipeline operating income for 2004 was $3.0 million below 2003, due to our
planned  integrity  management  program,  as well as increases in power and fuel
costs.  Petroleum  pipeline  barrel  miles  shipped  in 2004 were 22.2  billion,
compared with 21.3 billion in 2003.

Terminaling  revenues  for 2004 (see  Supplemental  Information  in the attached
table) were $259.4 million,  compared with $235.0 million for 2003.  Terminaling
operating  income  increased to $74.7 million,  compared with $66.5 million last
year.  Terminaling  average annual barrels of tankage utilized were 48.9 million
for 2004,  compared  with 46.7  million  last year,  and the average  annualized
revenues per barrel of tankage  utilized for the year were $5.30,  compared with
$5.02 for the previous year.

Product sales  revenues for 2004 (see  Supplemental  Information in the attached
table) were $269.1 million, compared with $215.8 million for 2003. Product sales
operating  income for the year was $13.3  million,  compared  with $10.1 million
last year.

ABOUT KANEB

KANEB is a single business  represented by two separate publicly traded entities
on the New York Stock Exchange. KANEB's business is focused on mid-stream energy
assets -- refined  petroleum  product  pipelines,  and  petroleum  and specialty
liquids  storage and  terminaling  facilities.  KANEB is a major  transporter of
refined petroleum  products in the Midwest and is the third largest  independent
liquids  terminaling  company  in  the  world.   Worldwide   operations  include
facilities  in 29 states,  Canada,  the  Netherlands  Antilles,  Australia,  New
Zealand and the United Kingdom.  Its publicly traded entities are Kaneb Services
LLC  (NYSE:  KSL)  and  Kaneb  Pipe  Line  Partners,   L.P.,  (NYSE:  KPP,  "the
Partnership"). For more information, visit www.kaneb.com.

Kaneb Services LLC was formed as a limited liability company in 2001 from assets
previously held by Kaneb Services,  Inc. (now Xanser Corporation).  Those assets
include the KPP general  partner  interest and  incentive as well as 5.1 million
Partnership units, a wholesale petroleum product marketing company, and a wholly
owned  subsidiary,  Kaneb Pipe Line Company  LLC,  that manages and operates the
pipeline  and  terminaling  assets  of KPP.  KSL is a unique  limited  liability
company,  the  only  publicly  traded,  cash  distributing  entity  taxed  as  a
partnership  that owns the general partner  interest of another  publicly traded
master limited partnership.

Kaneb Pipe Line Partners, L.P., a master limited partnership, was formed in 1989
to own a 2,075 mile common carrier  pipeline  system from Kansas to North Dakota
that has been  managed  by Kaneb  Pipe Line  Company  LLC since  1953.  Pipeline
acquisitions  in 1995 and 1998 added 725 miles of  pipeline in  Colorado,  Iowa,
South  Dakota  and  Wyoming.  In 2002,  the  Partnership  acquired  the  largest
fertilizer  pipeline in the country, a 2,000-mile pipeline system that runs from
the Louisiana  Gulf Coast to the upper Midwest  states.  In December  2002,  the
Partnership  acquired a 400 mile products  pipeline and four  terminals in North
Dakota and Minnesota.  The Partnership entered the liquids terminaling  business
with a large  acquisition  in 1993,  and has more than  tripled the size of this
operation through subsequent acquisitions.  In 2001, the Partnership completed a
$165 million  acquisition  of seven West Coast,  U.S.  terminals.  In 2002,  the
Partnership completed a $300 million acquisition of two world-class  terminaling
facilities located in Point Tupper, Nova Scotia, Canada and on the island of St.
Eustatius in the  Netherlands  Antilles and the acquisition of eight bulk liquid
storage terminals in Australia and New Zealand.

Certain  of the  Company's  statements  in this  press  release  are not  purely
historical,  and as such are "forward-looking  statements" within the meaning of
the Private  Securities  Litigation Reform Act of 1995. These include statements
regarding management's intentions,  plans, beliefs,  expectations or projections
of the  future.  Forward-looking  statements  involve  risks and  uncertainties,
including  without  limitation,  the various  risks  inherent  in the  Company's
business,  and other risks and  uncertainties  detailed from time to time in the
Company's  periodic  reports filed with the Securities and Exchange  Commission.
One or more of these factors have  affected,  and could in the future affect the
Company's  business and  financial  results in future  periods,  and could cause
actual results to differ materially from plans and projections.  There can be no
assurance that the  forward-looking  statements made in this document will prove
to be accurate,  and issuance of such  forward-looking  statements should not be
regarded as a  representation  by the  Company,  or any other  person,  that the
objectives  and  plans of the  Company  will be  achieved.  All  forward-looking
statements  made in this  press  release  are  based  on  information  presently
available to  management,  and the Company  assumes no  obligation to update any
forward-looking statements.

<PAGE>
                               KANEB SERVICES LLC
                       CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share amounts)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                        Three Months                       Year
                                                                     Ended December 31,              Ended December 31,
                                                                 --------------------------    --------------------------
                                                                     2004           2003          2004           2003
                                                                 -----------    -----------    -----------    ------------

<S>                                                              <C>            <C>            <C>            <C>
Consolidated revenues:
        Services                                                 $    98,501    $    88,897    $   379,155    $   354,591
        Products                                                     197,124        125,179        676,093        511,200
                                                                 -----------    -----------    -----------    -----------
                Total consolidated revenues                          295,625        214,076      1,055,248        865,791
                                                                 -----------    -----------    -----------    -----------
Consolidated costs and expenses:
        Cost of products sold                                        189,480        119,779        647,733        486,310
        Operating costs                                               44,386         43,190        177,829        169,380
        Depreciation and amortization                                 14,975         13,350         56,676         53,195
        General and administrative, including Sarbanes-
                Oxley costs                                           11,465          7,933         33,315         28,402
        Valero merger costs                                            2,916           --            2,916           --
                                                                 -----------    -----------    -----------    -----------
                Total consolidated costs and expenses                263,222        184,252        918,469        737,287
                                                                 -----------    -----------    -----------    -----------
Consolidated operating income                                         32,403         29,824        136,779        128,504

Consolidated interest and other income                                    95            157            336            365

Consolidated interest expense                                        (11,300)       (10,760)       (43,579)       (39,576)
                                                                 -----------    -----------    -----------    -----------
Consolidated income before gain on issuance of units by KPP,
        income taxes, interest of outside non-controlling
        partners in KPP's net income and cumulative effect of
        change in accounting principle                                21,198         19,221         93,536         89,293

Gain on issuance of units by KPP                                        --             --             --           10,898

Income tax expense                                                      (223)        (1,290)        (3,251)        (4,887)

Interest of outside non-controlling partners in KPP's net income     (16,824)       (12,757)       (65,933)       (61,908)
                                                                 -----------    -----------    -----------    -----------
Income before cumulative effect of change in accounting principle      4,151          5,174         24,352         33,396

Cumulative effect of change in accounting principle - adoption of
        new accounting standard for asset retirement obligations        --             --             --             (313)
                                                                 -----------    -----------    -----------    -----------
Net income                                                       $     4,151    $     5,174    $    24,352    $    33,083
                                                                 ===========    ===========    ===========    ===========
Earnings per share:
   Basic:
    Before cumulative effect of change in accounting principle   $      0.35    $      0.44    $      2.07    $      2.89
    Cumulative effect of change in accounting principle                 --             --             --            (0.03)
                                                                 -----------    -----------    -----------    -----------
                                                                 $      0.35    $      0.44    $      2.07    $      2.86
                                                                 ===========    ===========    ===========    ===========
   Diluted:
    Before cumulative effect of change in accounting principle   $      0.34    $      0.43    $      2.03    $      2.84
    Cumulative effect of change in accounting principle                 --             --             --            (0.03)
                                                                 -----------    -----------    -----------    -----------
                                                                 $      0.34    $      0.43    $      2.03    $      2.81
                                                                 ===========    ===========    ===========    ===========
</TABLE>
<PAGE>

                               KANEB SERVICES LLC
                            SUPPLEMENTAL INFORMATION
                    (In thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                        Three Months                       Year
                                                                     Ended December 31,              Ended December 31,
                                                                 --------------------------    --------------------------
                                                                     2004           2003           2004           2003
                                                                 -----------    -----------    -----------    -----------
<S>                                                              <C>            <C>            <C>            <C>
Income before cumulative effect of change in
        accounting principle                                     $     4,151    $     5,174    $    24,352    $    33,396
Parent Company Valero merger costs *                                   1,510           --            1,510           --
Gain on issuance of units by KPP                                        --             --             --          (10,898)
                                                                 -----------    -----------    -----------    -----------
Income before Parent Company Valero merger costs, gain
        on issuance of units by KPP and cumulative effect of
        change in accounting principle                           $     5,661    $     5,174    $    25,862    $    22,498
                                                                 ===========    ===========    ===========    ===========
Diluted earnings per share before Parent Company Valero merger
        costs, gain on issuance of units by KPP and cumulative
        effect of change in accounting principle                 $      0.47    $      0.43    $      2.16    $      1.91
                                                                 ===========    ===========    ===========    ===========
Weighted average diluted shares outstanding                           12,095         11,914         11,981         11,792
                                                                 ===========    ===========    ===========    ===========
Consolidated revenues (including KPP):
        Pipeline                                                 $    30,701    $    30,826    $   119,803    $   119,633
        Terminaling                                                   67,800         58,071        259,352        234,958
        Product Marketing                                            197,124        125,179        676,093        511,200
                                                                 -----------    -----------    -----------    -----------
                                                                 $   295,625    $   214,076    $ 1,055,248    $   865,791
                                                                 ===========    ===========    ===========    ===========
Consolidated operating income (including KPP):
        Pipeline                                                 $    14,050    $    12,824    $    48,853    $    51,860
        Terminaling                                                   16,122         14,965         74,663         66,532
        Product Marketing                                              4,475          2,599         17,262         12,233
        General and administrative, including Sarbanes-
              Oxley costs                                               (734)          (564)        (2,489)        (2,121)
        Parent Company Valero merger costs                            (1,510)          --           (1,510)          --
                                                                 -----------    -----------    -----------    -----------
                                                                 $    32,403    $    29,824    $   136,779    $   128,504
                                                                 ===========    ===========    ===========    ===========
Supplemental cash flow information:
        Distributions received from KPP                          $     7,097    $     6,838    $    27,867    $    25,239
        General and administrative, including Sarbanes-Oxley
              costs                                                     (471)          (564)        (2,050)        (2,121)
        Parent Company Valero merger costs                            (1,510)          --           (1,510)          --
        Parent Company interest expense                                 (160)          (139)          (577)          (613)
                                                                 -----------    -----------    -----------    -----------
                                                                 $     4,956    $     6,135    $    23,730    $    22,505
                                                                 ===========    ===========    ===========    ===========
</TABLE>


*       Does not include allocated portion of KPP's Valero merger costs.

<PAGE>
                         KANEB PIPE LINE PARTNERS, L.P.
                       CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per unit amounts)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                        Three Months                       Year
                                                                     Ended December 31,              Ended December 31,
                                                                 --------------------------    --------------------------
                                                                     2004           2003           2004           2003
                                                                 -----------    -----------    -----------    -----------
Revenues:
<S>                                                              <C>            <C>             <C>            <C>
        Services                                                 $    98,501    $    88,897    $   379,155    $   354,591
        Products                                                      81,669         53,408        269,054        215,823
                                                                 -----------    -----------    -----------    -----------
                Total revenues                                       180,170        142,305        648,209        570,414
                                                                 -----------    -----------    -----------    -----------
Costs and expenses:
        Cost of products sold                                         74,656         49,065        246,858        195,100
        Operating costs                                               44,254         42,973        176,976        168,537
        Depreciation and amortization                                 14,971         13,341         56,648         53,155
        General and administrative, including Sarbanes-Oxley
             costs                                                    10,451          7,080         29,531         25,121
        Valero merger costs                                            1,406           --            1,406           --
                                                                 -----------    -----------    -----------    -----------
                Total costs and expenses                             145,738        112,459        511,419        441,913
                                                                 -----------    -----------    -----------    -----------
Operating income                                                      34,432         29,846        136,790        128,501

Interest and other income                                                102            129            267            261

Interest expense                                                     (11,083)       (10,579)       (42,750)       (38,757)
                                                                 -----------    -----------    -----------    -----------
Income before minority interest, income taxes and cumulative
        effect of change in accounting principle                      23,451         19,396         94,307         90,005

Minority interest in net income                                         (232)          (180)          (910)          (848)

Income tax expense                                                      (227)        (1,408)        (3,282)        (5,223)
                                                                 -----------    -----------    -----------    -----------
Income before cumulative effect of change in accounting principle     22,992         17,808         90,115         83,934

Cumulative effect of change in accounting principle - adoption of
        new accounting standard for asset retirement obligations        --             --             --           (1,577)
                                                                 -----------    -----------    -----------    -----------
Net income                                                            22,992         17,808         90,115         82,357

General partner's interest in net income                              (2,478)        (2,252)        (9,718)        (8,426)
                                                                 -----------    -----------    -----------    -----------
Limited partners' interest in net income                           $  20,514    $    15,556    $    80,397    $    73,931
                                                                 ===========    ===========    ===========    ===========
Allocation of net income per unit:
        Before cumulative effect of change in accounting         $      0.72    $      0.55    $      2.84    $      2.74
              principle
        Cumulative effect of change in accounting principle             --             --             --            (0.06)
                                                                 -----------    -----------    -----------    -----------
                                                                 $      0.72    $      0.55    $      2.84    $      2.68
                                                                 ===========    ===========    ===========    ===========
Weighted average number of Partnership units outstanding              28,328         28,318         28,322         27,633
                                                                 ===========    ===========    ===========    ===========
</TABLE>
<PAGE>

                         KANEB PIPE LINE PARTNERS, L.P.
                            SUPPLEMENTAL INFORMATION
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                        Three Months                       Year
                                                                     Ended December 31,              Ended December 31,
                                                                 --------------------------    --------------------------
                                                                     2004           2003           2004           2003
                                                                 -----------    -----------    -----------    -----------
<S>                                                              <C>            <C>            <C>            <C>
Revenues (in 000s):
        Pipeline                                                 $    30,701    $    30,826    $   119,803    $   119,633
        Terminaling                                                   67,800         58,071        259,352        234,958
        Product sales                                                 81,669         53,408        269,054        215,823
                                                                 -----------    -----------    -----------    -----------
                                                                 $   180,170    $   142,305    $   648,209    $   570,414
                                                                 ===========    ===========    ===========    ===========

Operating income (in 000s):
        Pipeline                                                 $    14,050    $    12,824    $    48,853    $    51,860
        Terminaling                                                   16,122         14,965         74,663         66,532
        Product sales                                                  4,260          2,057         13,274         10,109
                                                                 -----------    -----------    -----------    -----------
                                                                 $    34,432    $    29,846    $   136,790    $   128,501
                                                                 ===========    ===========    ===========    ===========
Depreciation and amortization (in 000s):
        Pipeline                                                 $     3,666    $     3,569    $    14,538    $    14,117
        Terminaling                                                   11,070          9,556         41,232         38,089
        Product sales                                                    235            216            878            949
                                                                 -----------    -----------    -----------    -----------
                                                                 $    14,971    $    13,341    $    56,648    $    53,155
                                                                 ===========    ===========    ===========    ===========
Capital expenditures (in 000s):
        Maintenance and environmental                            $    13,414    $     6,782    $    30,853    $    20,327
        Expansion                                                      3,046          5,906         11,361         24,414
                                                                 -----------    -----------    -----------    -----------
                                                                 $    16,460    $    12,688    $    42,214    $    44,741
                                                                 ===========    ===========    ===========    ===========
EBITDA (in 000s):
        Income before cumulative effect of change in
                accounting principle                             $    22,992    $    17,808    $    90,115    $    83,934
        Interest expense                                              11,083         10,579         42,750         38,757
        Income tax expense                                               227          1,408          3,282          5,223
        Depreciation and amortization                                 14,971         13,341         56,648         53,155
        Interest and other income                                       (102)          (129)          (267)          (261)
        Minority interest in net income                                  232            180            910            848
                                                                 -----------    -----------    -----------    -----------
                                                                 $    49,403    $    43,187    $   193,438    $   181,656
                                                                 ===========    ===========    ===========    ===========
Pipeline operating statistics:
         Barrel miles shipped on petroleum
                pipelines (in billions)                                  5.5            5.5           22.2           21.3
                                                                 ===========    ===========    ===========    ===========
        Volumes shipped on anhydrous ammonia
                pipeline (in thousands of tons)                          301            281          1,123          1,157
                                                                 ===========    ===========    ===========    ===========
Terminaling operating statistics:
        Average barrels of tankage
             utilized (in millions)                                     49.3           45.9           48.9           46.7
                                                                 ===========    ===========    ===========    ===========
        Average annualized revenues per barrel
             of tankage utilized                                 $      5.48    $      5.02    $      5.30    $      5.02
                                                                 ===========    ===========    ===========    ===========

</TABLE>