SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from to

For the Quarterly Period                                        Commission File
Ended June 30, 2000                                             Number 001-10311

                         KANEB PIPE LINE PARTNERS, L.P.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                              75-2287571
(State or other jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

                          2435 North Central Expressway
                             Richardson, Texas 75080
          (Address of principle executive offices, including zip code)

                                 (972) 699-4000
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

         Yes    X                                             No

Number of Units of the Registrant outstanding at July 31, 2000:  18,310,000

<PAGE>
KANEB PIPE LINE PARTNERS, L.P.  AND SUBSIDIARIES


FORM 10-Q
QUARTER ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
                                                                        Page No.

                           Part I. Financial Information

Item 1.  Financial Statements (Unaudited)

         Consolidated Statements of Income -- Three and Six Months Ended
            June 30, 2000 and 1999                                          1

         Condensed Consolidated Balance Sheets -- June 30, 2000
            and December 31, 1999                                           2

         Condensed Consolidated Statements of Cash Flows -- Six
            Months Ended June 30, 2000 and 1999                             3

         Notes to Consolidated Financial Statements                         4

Item 2.  Management's Discussion and Analysis of
            Financial Condition and Results of Operations                   9

                           Part II.  Other Information

Item 6.  Exhibits and Reports on Form 8-K                                  13



<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(In Thousands -- Except Per Unit Amounts)
(Unaudited)

<TABLE>
<CAPTION>
                                           Three Months Ended       Six Months Ended
                                                 June 30,                June 30,
                                           --------------------    --------------------
                                             2000        1999        2000        1999
                                           --------    --------    --------    --------
<S>                                        <C>         <C>         <C>         <C>
Revenues                                   $ 38,438    $ 39,171    $ 75,118    $ 76,016
                                           --------    --------    --------    --------
Costs and expenses:
   Operating costs                           17,004      17,163      34,284      33,346
   Depreciation and amortization              3,961       3,770       7,936       7,385
   General and administrative                 2,514       2,771       5,017       4,674
                                           --------    --------    --------    --------
       Total costs and expenses              23,479      23,704      47,237      45,405
                                           --------    --------    --------    --------
   Operating income                          14,959      15,467      27,881      30,611
   Interest and other income, net                82          38         141         282
   Interest expense                          (2,961)     (3,785)     (5,980)     (7,294)
                                           --------    --------    --------    --------

Income before minority interest
     and income taxes                        12,080      11,720      22,042      23,599
Minority interest in net income                (120)       (115)       (217)       (230)
Income tax provision                            (78)       (192)       (376)       (600)
                                           --------    --------    --------    --------

Net income                                   11,882      11,413      21,449      22,769
General partner's interest in net income       (413)       (367)       (803)       (737)
                                           --------    --------    --------    --------
Limited partners' interest in net income   $ 11,469    $ 11,046    $ 20,646    $ 22,032
                                           ========    ========    ========    ========
Allocation of net income per Unit          $    .63    $    .69    $   1.13    $   1.37
                                           ========    ========    ========    ========
Weighted average number of Partnership
   Units outstanding                         18,310      16,060      18,310      16,060
                                           ========    ========    ========    ========
</TABLE>



                 See notes to consolidated financial statements.
                                        1
<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

                                                          June 30,   December 31
                                                            2000         1999
                                                        -----------  -----------
                                                        (Unaudited)
         ASSETS
Current assets:
     Cash and cash equivalents                            $  7,152     $  5,127
     Accounts receivable                                    16,743       16,929
     Prepaid expenses and other                              4,265        5,036
                                                          --------     --------
         Total current assets                               28,160       27,092
                                                          --------     --------
Property and equipment                                     442,370      439,537
Less accumulated depreciation                              130,070      122,654
                                                          --------     --------
     Net property and equipment                            312,300      316,883
                                                          --------     --------
Investment in affiliate                                     21,008       21,978
                                                          --------     --------
                                                          $361,468     $365,953
                                                          ========     ========

     LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
     Current portion of long-term debt                    $ 39,500     $   --
     Accounts payable and accrued expenses                  15,781       14,980
     Accrued distributions payable                          13,372       13,372
     Payable to general partner                              1,627        1,411
                                                          --------     --------
         Total current liabilities                          70,280       29,763
                                                          --------     --------

Long-term debt, less current portion                       117,678      155,987

Other liabilities and deferred taxes                        10,202       10,882

Minority interest                                              978        1,033

Commitments and contingencies

Partners' capital                                          162,330      168,288
                                                          --------     --------
                                                          $361,468     $365,953
                                                          ========     ========


                 See notes to consolidated financial statements.
                                        2
<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

<TABLE>
<CAPTION>
                                                                Six Months Ended
                                                                     June 30,
                                                              --------------------
                                                                2000        1999
                                                              --------    --------
<S>                                                           <C>         <C>
Operating activities:
   Net income                                                 $ 21,449    $ 22,769
   Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation and amortization                               7,936       7,385
     Minority interest in net income                               217         230
     Equity in earnings of affiliate, net of distributions         662      (1,556)
     Deferred income taxes                                         376         596
     Changes in working capital components                       1,973      (5,844)
                                                              --------    --------

         Net cash provided by operating activities              32,613      23,580
                                                              --------    --------

Investing activities:
   Capital expenditures                                         (2,883)     (4,074)
   Acquisitions of terminals                                      --       (37,206)
   Other, net                                                   (2,152)       (857)
                                                              --------    --------

         Net cash used in investing activities                  (5,035)    (42,137)
                                                              --------    --------

Financing activities:
   Changes in payable to general partner                          --        (5,000)
   Issuance of debt                                              4,500      48,719
   Payments of debt                                             (3,309)       --
   Distributions to partners, including minority interest      (26,744)    (23,456)

         Net cash provided by (used in)
               financing activities                            (25,553)     20,263
                                                              --------    --------

Increase in cash and cash equivalents                            2,025       1,706
Cash and cash equivalents at beginning of period                 5,127         849
                                                              --------    --------

Cash and cash equivalents at end of period                    $  7,152    $  2,555
                                                              ========    ========

Supplemental cash flow information - cash paid for interest   $  6,279    $  7,195
                                                              ========    ========

</TABLE>


                 See notes to consolidated financial statements.
                                        3

<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)


1.   SIGNIFICANT ACCOUNTING POLICIES

     The unaudited  condensed  consolidated  financial  statements of Kaneb Pipe
     Line Partners,  L.P. and its subsidiaries (the "Partnership") for the three
     and six month periods  ended June 30, 2000 and 1999,  have been prepared in
     accordance  with  generally  accepted  accounting  principles  applied on a
     consistent  basis.   Significant   accounting   policies  followed  by  the
     Partnership  are  disclosed  in the  notes  to the  consolidated  financial
     statements included in the Partnership's Annual Report on Form 10-K for the
     year  ended  December  31,  1999.  In  the  opinion  of  the  Partnership's
     management,  the accompanying  condensed  consolidated financial statements
     contain the adjustments, consisting of normal recurring accruals, necessary
     to present fairly the consolidated financial position of the Partnership at
     June 30,  2000 and the  consolidated  results of its'  operations  and cash
     flows for the periods ended June 30, 2000 and 1999.  Operating  results for
     the three and six months ended June 30, 2000 are not necessarily indicative
     of the results that may be expected for the year ending December 31, 2000.


2.   ACQUISITION OF TERMINALS

     On February 1, 1999, the  Partnership,  through two  wholly-owned  indirect
     subsidiaries,  acquired  six  terminals  in the  United  Kingdom  from GATX
     Terminal Limited for (pound)22.6 million (approximately $37.2 million) plus
     transaction   costs  and  the  assumption  of  certain   liabilities.   The
     acquisition,  which was initially  financed by term loans from a bank,  has
     been accounted for using the purchase  method of accounting.  $13.3 million
     of the term loans were repaid in July 1999 with the proceeds  from a public
     unit offering (see Note 3). The remaining portion ($25.9 million) is due in
     January 2002.


3.   PUBLIC OFFERING OF UNITS

     In July 1999, the Partnership issued 2.25 million limited partnership units
     in a public  offering at $30.75 per Unit,  generating  approximately  $65.6
     million in net  proceeds.  A portion of the  proceeds  was used to repay in
     full the  Partnership's  $15.0 million  promissory  note, the $25.0 million
     revolving  credit facility and $18.3 million in term loans (including $13.3
     million  in  term  loans   resulting  from  the  United  Kingdom   terminal
     acquisition referred to in Note 2.)


4.   COMPREHENSIVE INCOME

     Comprehensive  income for the three and six months  ended June 30, 2000 and
     1999 is as follows:

<TABLE>
<CAPTION>
                                                         Three Months  Ended                 Six Months Ended
                                                              June 30,                           June 30,
                                                     ---------------------------        ---------------------------
                                                         2000           1999                2000           1999
                                                     -----------     -----------        -----------     -----------
                                                                             (in thousands)
     <S>                                             <C>             <C>                <C>             <C>
     Net income                                      $    11,882     $    11,413        $    21,449     $    22,769
     Other comprehensive income (loss)
         - foreign currency translation
         adjustment                                       (1,080)           (348)              (925)         (657)
                                                     -----------     -----------        -----------     ---------

     Comprehensive income                            $    10,802     $    11,065        $    20,524     $    22,112
                                                     ===========     ===========        ===========     ===========
</TABLE>


5.   CASH DISTRIBUTIONS

     The  Partnership  makes  quarterly  distributions  of 100% of its Available
     Cash,  as  defined  in the  Partnership  Agreement,  to  holders of limited
     partnership units  ("Unitholders") and the general partner.  Available Cash
     consists  generally of all the cash receipts of the  Partnership,  plus the
     beginning cash balance less all of its cash disbursements and reserves. The
     Partnership  expects to make  distributions of all Available Cash within 45
     days  after  the  end of each  quarter  to  Unitholders  of  record  on the
     applicable record date. A cash distribution of $0.70 per unit for the first
     quarter of 2000 was paid on May 15, 2000. A cash  distribution of $0.70 per
     unit for the second  quarter of 2000 was  declared  to holders of record on
     July 31, 2000 and is payable on August 14, 2000.


6.   CONTINGENCIES

     Certain  operations of the  Partnership  are subject to Federal,  state and
     local laws and  regulations  relating  to  protection  of the  environment.
     Although  the  Partnership  believes  that its  operations  are in  general
     compliance with applicable  environmental  regulation,  risks of additional
     costs and liabilities  are inherent in its operations,  and there can be no
     assurance that  significant  costs and liabilities  will not be incurred by
     the  Partnership.  It is possible that other  developments  could result in
     substantial costs and liabilities to the Partnership. These include but are
     not limited to  increasingly  stringent  environmental  laws,  regulations,
     enforcement  policies  thereunder,  and claims for  damages to  property or
     persons resulting from the operations of the Partnership.

     Certain subsidiaries of the Partnership were sued in a Texas state court in
     1997 by Grace  Energy  Corporation  ("Grace"),  the  entity  from which the
     Partnership   acquired   ST  Services   in  1993.   The  lawsuit   involves
     environmental  response and remediation  allegedly  resulting from jet fuel
     leaks in the early 1970's from a pipeline. The pipeline,  which connected a
     former  Grace  terminal  with Otis Air  Force  Base in  Massachusetts,  was
     abandoned in 1976,  when the  connecting  terminal was sold to an unrelated
     entity.

     The lawsuit involves environmental response and remediation required by the
     State of Massachusetts.  Grace alleged that subsidiaries of the Partnership
     acquired the abandoned pipeline,  as part of the acquisition of ST Services
     in 1993, and assumed  responsibility  for  environmental  damages allegedly
     caused by the jet fuel leaks. Grace sought a ruling that these subsidiaries
     are responsible for all present and future  remediation  expenses for these
     leaks and that Grace has no obligation to indemnify these  subsidiaries for
     these expenses.

     In the lawsuit,  Grace also sought indemnification for expenses that it has
     incurred  since  1996  of  approximately  $3.5  million  for  response  and
     remediation  required  by the  State of  Massachusetts  and for  additional
     expenses that it expects to incur in the future. The consistent position of
     the  Partnership's  subsidiaries is that they did not acquire the abandoned
     pipeline as part of the 1993 ST  transaction,  and therefore did not assume
     any responsibility for the environmental  damage nor any liability to Grace
     for the pipeline.

     At the end of the  trial on May 19,  2000,  the  jury  returned  a  verdict
     including  findings  that  Grace  had  breached  a  provision  of the  1993
     acquisition agreement and that the pipeline was abandoned prior to 1978. On
     July 17, 2000, the Judge entered  judgment,  which is not yet final, in the
     case that Grace take nothing from the subsidiaries on its claims, including
     claims for future expenses.  Although the  Partnership's  subsidiaries have
     not incurred any expenses in  connection  with the  remediation,  the court
     also ruled, in effect,  that the  subsidiaries  would not be entitled to an
     indemnification  from  Grace  if any such  expenses  were  incurred  in the
     future.  However,  the Judge let stand a prior summary judgment ruling that
     the pipeline was an asset of the  Partnership  acquired as part of the 1993
     ST transaction. The Judge also awarded attorney fees to Grace.

     While the  judgment  means  that the  subsidiaries  have no  obligation  to
     reimburse  Grace for the  approximately  $3.5 million it has  incurred,  as
     required  by the State of  Massachusetts,  the  Partnership's  subsidiaries
     intend  to  appeal  the  judgment   finding  that  the  Otis  Pipeline  was
     transferred to them and the award of attorney fees.

     The Otis Air Force Base is a part of the Massachusetts Military Reservation
     ("MMR"),  which  has  been  declared  a  Superfund  Site  pursuant  to  the
     Comprehensive  Environmental Response,  Compensation and Liability Act. The
     MMR Site contains nine groundwater  contamination  plumes, two of which are
     allegedly associated with the pipeline,  and various other waste management
     areas of  concern,  such as  landfills.  The United  States  Department  of
     Defense and the United States Coast Guard, pursuant to a Federal Facilities
     Agreement,  have been responding to the Government  remediation  demand for
     most of the  contamination  problems at the MMR Site. Grace and others have
     also  received and  responded to formal  inquiries  from the United  States
     Government in connection with the environmental damages allegedly resulting
     from the jet fuel leaks. The  Partnership's  subsidiaries  have voluntarily
     responded  to an  invitation  from the  Government  to provide  information
     indicating  that  they  do not  own  the  pipeline.  In  connection  with a
     court-ordered mediation between Grace and the subsidiaries,  the Government
     advised  the  parties  in April 1999 that it has  identified  the two spill
     areas that it believes to be related to the pipeline that is the subject of
     the Grace suit. The Government  advised the parties that it believes it has
     incurred costs of approximately  $34 million,  and expects in the future to
     incur costs of  approximately  $55 million,  for  remediation of one of the
     spill areas. This amount was not intended to be a final accounting of costs
     or to include all  categories  of costs.  The  Government  also advised the
     parties that it could not at that time allocate its costs  attributable  to
     the second spill area. The  Partnership  believes that the ultimate cost of
     the  remediation,  while  substantial,  will be considerably  less than the
     Government has indicated.

     The  Government  has made no claims  against the  Partnership  or any other
     person on account of this matter. The Partnership believes that if any such
     claims were made, its subsidiaries would have substantial  defenses to such
     claims. Under Massachusetts law, the party responsible for remediation of a
     facility  is the last  owner  before  the  abandonment,  which  was a Grace
     company.  The Partnership does not believe that either the Grace litigation
     or any claims that may be made by the Government will adversely  affect its
     ability to make cash distributions to its unitholders,  but there can be no
     assurances in that regard.

     The  Partnership   has  other   contingent   liabilities   resulting  from
     litigation,  claims and  commitments  incident  to the  ordinary  course of
     business.  Management  believes,  based on the advice of counsel,  that the
     ultimate  resolution  of such  contingencies  will  not  have a  materially
     adverse  effect on the  financial  position or results of operations of the
     Partnership.


7.   BUSINESS SEGMENT DATA

     The Partnership  conducts  business through two principal  operations;  the
     "Pipeline  Operations,"  which consists  primarily of the transportation of
     refined  petroleum  products in the Midwestern  states as a common carrier,
     and the  "Terminaling  Operations,"  which  provide  storage for  petroleum
     products, specialty chemicals and other liquids.

     The Partnership  measures segment profit as operating income.  Total assets
     are those controlled by each reportable segment.

<TABLE>
<CAPTION>
                                                         Three Months  Ended                 Six Months Ended
                                                              June 30,                           June 30,
                                                     ---------------------------        ---------------------------
                                                         2000           1999                2000           1999
                                                     -----------     -----------        -----------     -----------
                                                                             (in thousands)
     <S>                                             <C>             <C>                <C>             <C>
     Business segment revenues:
       Pipeline operations                           $    17,483     $    16,182        $    32,731     $    31,346
       Terminaling operations                             20,955          22,989             42,387          44,670
                                                     -----------     -----------        -----------     -----------
                                                     $    38,438     $    39,171        $    75,118     $    76,016
                                                     ===========     ===========        ===========     ===========
     Business segment profit:
       Pipeline operations                           $     9,230     $     8,712        $    16,467     $    16,068
       Terminaling operations                              5,729           6,755             11,414          14,543
                                                     -----------     -----------        -----------     -----------
         Operating income                                 14,959          15,467             27,881          30,611
       Interest and other income, net                         82              38                141             282
       Interest expense                                   (2,961)         (3,785)            (5,980)         (7,294)
                                                     -----------     -----------        -----------     -----------
         Income before minority interest
           and income taxes                          $    12,080     $    11,720        $    22,042     $    23,599
                                                     ===========     ===========        ===========     ===========

                                                                                          June 30,     December 31,
                                                                                            2000           1999
                                                                                        ------------    ------------
     Total assets:
        Pipeline operations                                                             $    104,370    $    104,774
        Terminaling operations                                                               257,098         261,179
                                                                                        ------------    ------------
                                                                                        $    361,468    $    365,953
                                                                                        ============    ============
</TABLE>

<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition
and Results of Operations

     This  discussion  should  be  read in  conjunction  with  the  consolidated
     financial statements of Kaneb Pipe Line Partners,  L.P. (the "Partnership")
     and notes thereto included elsewhere in this report.

     Operating Results:

     Pipeline Operations
<TABLE>
<CAPTION>
                                                         Three Months  Ended                 Six Months Ended
                                                              June 30,                           June 30,
                                                     ---------------------------        ---------------------------
                                                         2000           1999                2000           1999
                                                     -----------     -----------        -----------     -----------
                                                                             (in thousands)

     <S>                                             <C>             <C>                <C>             <C>
     Revenues                                        $    17,483     $    16,182        $    32,731     $    31,346
     Operating costs                                       6,028           5,411             11,842          11,203
     Depreciation and amortization                         1,291           1,274              2,584           2,538
     General and administrative                              934             785              1,838           1,537
                                                     -----------     -----------        -----------     -----------
         Operating income                            $     9,230     $     8,712        $    16,467     $    16,068
                                                     ===========     ===========        ===========     ===========
</TABLE>


     Pipeline revenues are based on volumes shipped and the distances over which
     such volumes are  transported.  For the three and six months ended June 30,
     2000, revenues increased 8% and 4%, respectively, compared to the same 1999
     periods,  due to an overall increase in short-haul volumes shipped.  Barrel
     miles  totaled 4.5 billion and 4.6 billion for the three  months ended June
     30,  2000 and 1999,  respectively,  and 8.4 billion and 8.6 billion for the
     six months ended June 30, 2000 and 1999, respectively.

     Operating  costs,  which  include  fuel  and  power  costs,  materials  and
     supplies,  maintenance  and  repair  costs,  salaries,  wages and  employee
     benefits,  and property and other taxes, increased by $0.6 million for both
     the three and six month periods ended June 30, 2000, when compared to 1999,
     due to unusually low costs incurred in the second quarter of 1999.  General
     and  administrative  costs,  which  include  managerial,   accounting,  and
     administrative  personnel  costs,  office  rental  and  expense,  legal and
     professional costs and other  non-operating costs increased by $0.1 million
     and $0.3  million for the three and six month  periods  ended June 30, 2000
     over the comparable prior year periods.

     Terminaling Operations
<TABLE>
<CAPTION>

                                                         Three Months  Ended                 Six Months Ended
                                                              June 30,                           June 30,
                                                     ---------------------------        ---------------------------
                                                         2000           1999                2000           1999
                                                     -----------     -----------        -----------     -----------
                                                                             (in thousands)
     <S>                                             <C>             <C>                <C>             <C>
     Revenues                                        $    20,955     $    22,989        $    42,387     $    44,670
     Operating costs                                      10,976          11,752             22,442          22,143
     Depreciation and amortization                         2,670           2,496              5,352           4,847
     General and administrative                            1,580           1,986              3,179           3,137
                                                     -----------     -----------        -----------     -----------
         Operating income                            $     5,729     $     6,755        $    11,414     $    14,543
                                                     ===========     ===========        ===========     ===========
</TABLE>

     On February 1, 1999, the  Partnership  acquired six terminals in the United
     Kingdom from GATX Terminals  Limited for  approximately  $37.2 million plus
     transaction  costs and the assumption of certain  liabilities  (the "United
     Kingdom Terminal Acquisition"). The acquisition of the six locations, which
     have an aggregate  tankage capacity of 5.4 million  barrels,  was initially
     financed  by term loans from a bank.  $13.3  million of the term loans were
     repaid in July 1999 with the  proceeds  from a public  unit  offering  (See
     Liquidity  and  Capital  Resources).  Three  of  the  terminals,   handling
     petroleum products, chemicals and molten sulfur,  respectively,  operate in
     England.  The  remaining  three  facilities,  two in  Scotland  and  one in
     Northern Ireland, are primarily petroleum terminals.  All six terminals are
     served by deepwater marine docks.

     Terminaling   revenues   decreased  by  $2.0  million  and  $2.3   million,
     respectively,  for the three and six month  periods  ended  June 30,  2000,
     compared to the same 1999 periods.  Revenue  increases  resulting  from the
     United Kingdom and other 1999 terminal  acquisitions  were more than offset
     by  decreases  in  tank  utilization  due to  unfavorable  domestic  market
     conditions.  Average annual tankage  utilized for the six months ended June
     30, 2000 decreased to 20.8 million barrels,  down from 22.3 million barrels
     for the  comparable  prior year period,  primarily  the result of unusually
     high utilization at the Partnership's largest petroleum storage facility in
     1999. For the six months ended June 30, 2000, average  annualized  revenues
     per barrel of tankage utilized  increased to $4.10 per barrel,  compared to
     $4.00 per barrel for the same prior year period,  the result of the storage
     of  a  higher  proportionate  volume  of  specialty  chemicals,  which  are
     historically at higher per barrel rates than petroleum products.

     For the three months ended June 30, 2000, operating costs decreased by $0.8
     million,  when compared to the second  quarter of 1999, due to decreases in
     costs  resulting from the overall  decline in volumes  stored.  For the six
     months ended June 30, 2000, operating costs increased by $0.3 million, when
     compared  to the same  1999  period,  due to the  United  Kingdom  Terminal
     Acquisition,  partially  offset by  decreases  resulting  the from  storage
     volume declines. General and administrative costs decreased by $0.4 million
     for the three months ended June 30, 2000,  when compared to 1999,  due also
     to decreases resulting from lower volumes stored.

     Total tankage  capacity  (28.8 million  barrels at June 30, 2000) has been,
     and is  expected  to remain,  adequate to meet  existing  customer  storage
     requirements.  Customers consider factors such as location,  access to cost
     effective  transportation  and quality of service,  in addition to pricing,
     when selecting terminal storage.


     Liquidity and Capital Resources

     During  the first six months of 2000,  the  Partnership's  working  capital
     requirements for operations,  capital  expenditures and cash  distributions
     were funded through the use of internally generated funds.

     Cash provided by operations was $32.6 million and $23.6 million for the six
     months  ended June 30, 2000 and 1999,  respectively.  Capital  expenditures
     (excluding  acquisitions)  were $2.9  million for the six months ended June
     30,  2000,  compared  to $4.1  million  during  the same 1999  period.  The
     Partnership  anticipates that routine maintenance capital expenditures will
     total approximately $10 million to $15 million (excluding acquisitions) for
     the year ending  December 31, 2000. At June 30, 2000, the Partnership had a
     working capital deficit of $42.1 million, due primarily to $35.0 million of
     mortgage  notes due in June 2001  shifting from  non-current  to current in
     June 2000.  Management  expects to refinance  the  mortgage  notes prior to
     maturity with long-term bank financing or through a public unit offering.

     In July 1999, the Partnership issued 2.25 million limited partnership units
     in a public  offering at $30.75 per Unit,  generating  approximately  $65.6
     million in net  proceeds.  A portion of the  proceeds  was used to repay in
     full the  Partnership's  $15.0 million  promissory  note, the $25.0 million
     revolving  credit facility and $18.3 million in term loans (including $13.3
     million  in  term  loans   resulting  from  the  United  Kingdom   Terminal
     Acquisition.)

     The  Partnership  makes  distributions  of  100% of its  Available  Cash to
     Unitholders and the general partner.  Available Cash consists  generally of
     all  the  cash   receipts  less  all  cash   disbursements   and  reserves.
     Distributions  of $0.70 per unit were  declared to all  Unitholders  in the
     first and second  quarters  of 2000 and $2.80 per unit was  declared in the
     calendar year 1999.

     The Partnership  expects to fund future cash  distributions and maintenance
     capital  expenditures  with cash and cash flows from operating  activities.
     Expansionary  capital  expenditures  are  expected  to  be  funded  through
     additional Partnership borrowings and/or future public unit offerings.

     Additional information relative to sources and uses of cash is presented in
     the financial statements included in this report.


     Allocation of Net Income and Earnings

     Net income or loss is allocated  between limited partner  interests and the
     general   partner  pro  rata  based  on  the   aggregate   amount  of  cash
     distributions declared (including general partner incentive distributions).
     Beginning in 1997,  distributions  by the  Partnership  of  Available  Cash
     reached  the Second  Target  Distribution,  as  defined in the  Partnership
     Agreement,  which entitled the general partner to receive certain incentive
     distributions at different levels of cash distributions.  Earnings per Unit
     shown on the  consolidated  statements of income are calculated by dividing
     the limited partners' interest in net income by the weighted average number
     of Units  outstanding.  If the allocation of income had been made as if all
     income  had been  distributed  in cash,  earnings  per Unit would have been
     $0.64 and $0.69 for the three months and $1.16 and $1.38 for the six months
     ended June 30, 2000 and 1999, respectively.

<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES





                           Part II - Other Information

     Item 6.      Exhibits and Reports on Form 8-K

         (a)      Exhibits.
                         27.        Financial Data Schedule

(b)      Reports on  Form 8-K

                           None.


                                    Signature


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned.



                                         KANEB PIPE LINE PARTNERS, L.P.
                                         (Registrant)
                                         By  KANEB PIPE LINE COMPANY
                                         (Managing General Partner)


Date:   August 14, 2000                       //s//
                                         ---------------------------------------
                                         Jimmy L. Harrison
                                         Vice President and Controller