--------------------------------------------------------------------------------

                       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

                  For the Quarterly Period Ended March 31, 2002

                                       OR

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


                        Commission File 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 principal executive offices, including zip code)

                                 (972) 699-4062
              (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 April 30, 2002: 21,535,090

--------------------------------------------------------------------------------



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


FORM 10-Q
QUARTER ENDED MARCH 31, 2002
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


<S>               <C>                                                                                    <C>
                                                                                                         Page No.
                           Part I. Financial Information

Item 1.           Financial Statements (Unaudited)

                  Consolidated Statements of Income - Three Months Ended
                      March 31, 2002 and 2001                                                                1

                  Condensed Consolidated Balance Sheets - March 31, 2002
                      and December 31, 2001                                                                  2

                  Condensed Consolidated Statements of Cash Flows - Three
                      Months Ended March 31, 2002 and 2001                                                   3

                  Notes to Consolidated Financial Statements                                                 4

Item 2.           Management's Discussion and Analysis of
                      Financial Condition and Results of Operations                                         11

Item 3.           Quantitative and Qualitative Disclosure About Market Risk                                 16

                           Part II.  Other Information

Item 1.           Legal Proceedings                                                                         16

Item 6.           Exhibits and Reports on Form 8-K                                                          16

</TABLE>


<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
                                                                                                 March 31,
                                                                                       ----------------------------
                                                                                           2002           2001
                                                                                       ------------   -------------
<S>                                                                                    <C>            <C>
Revenues:
    Services                                                                           $     59,088   $      48,069
    Products                                                                                  8,554            -
                                                                                       ------------   -------------
        Total revenues                                                                       67,642          48,069
                                                                                       ------------   -------------

Costs and expenses:
    Cost of products sold                                                                     7,829            -
    Operating costs                                                                          25,139          21,655
    Depreciation and amortization                                                             7,113           5,751
    General and administrative                                                                4,336           2,328
                                                                                       ------------   -------------
        Total costs and expenses                                                             44,417          29,734
                                                                                       ------------   -------------

Operating income                                                                             23,225          18,335
Interest and other income                                                                        71             708
Interest expense                                                                             (5,277)         (4,721)
                                                                                       ------------   -------------
Income before minority interest, income taxes
    and extraordinary item                                                                   18,019          14,322
Minority interest                                                                              (176)           (141)
Income tax provision                                                                           (448)           (235)
                                                                                       ------------   -------------
Income before extraordinary item                                                             17,395          13,946
Extraordinary item - loss on debt extinguishment,
    net of minority interest and income taxes                                                  (153)         (5,757)
                                                                                       ------------   -------------
        Net income                                                                           17,242           8,189

General partner's interest in net income                                                     (1,309)           (408)
                                                                                       ------------   -------------
Limited partners' interest in net income                                               $     15,933   $       7,781
                                                                                       ============   =============

Allocation of net income per unit:
    Before extraordinary item                                                          $        .76   $         .67
    Extraordinary item                                                                         (.01)           (.29)
                                                                                       ------------   -------------
                                                                                       $        .75   $         .38
                                                                                       ============   =============
Weighted average number of Partnership
    units outstanding                                                                        21,299          20,285
                                                                                       ============   =============
</TABLE>


                 See notes to consolidated financial statements.
                                        1


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


CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                              March 31,             December 31,
                                                                                2002                    2001
                                                                          ---------------        ------------------
                                                                             (Unaudited)
            ASSETS
<S>                                                                        <C>                     <C>
Current assets:
    Cash and cash equivalents                                              $       19,427          $       7,903
    Accounts receivable                                                            31,622                 24,005
    Prepaid expenses and other                                                      8,152                  2,721
                                                                           --------------          -------------
        Total current assets                                                       59,201                 34,629
                                                                           --------------          -------------

Property and equipment                                                            942,306                639,084
Less accumulated depreciation                                                     164,666                157,810
                                                                           --------------          -------------
    Net property and equipment                                                    777,640                481,274
                                                                           --------------          -------------

Investments in affiliates                                                          22,162                 22,252

Excess of cost over fair value of net assets of
    acquired businesses and other assets                                           12,306                 10,216
                                                                           --------------          -------------
                                                                           $      871,309          $     548,371
                                                                           ==============          =============


                LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
    Accounts payable                                                       $       13,729          $       6,541
    Accrued expenses                                                               34,411                 19,101
    Accrued distributions payable                                                  18,496                 16,263
    Payable to general partner                                                      3,187                  4,701
                                                                           --------------          -------------
        Total current liabilities                                                  69,823                 46,606
                                                                           --------------          -------------

Long-term debt                                                                    515,223                262,624

Other liabilities and deferred taxes                                               17,578                 18,614

Minority interest                                                                   1,006                  1,010

Commitments and contingencies

Partners' capital                                                                 267,679                219,517
                                                                           --------------          -------------
                                                                           $      871,309          $     548,371
                                                                           ==============          =============
</TABLE>

                 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>

                                                                                            Three Months Ended
                                                                                                 March 31,
                                                                                       ----------------------------
                                                                                           2002           2001
                                                                                       ------------   -------------
<S>                                                                                    <C>            <C>
Operating activities:
    Net income                                                                         $     17,242   $      8,189
    Adjustments to reconcile net income to net
        cash provided by operating activities:
           Depreciation and amortization                                                      7,113           5,751
           Minority interest                                                                    176             141
           Equity in earnings of affiliates, net of distributions                                10             114
           Deferred income taxes                                                                374             235
           Extraordinary item                                                                   153           5,757
           Changes in working capital components                                             (7,020)          7,304
                                                                                       ------------   -------------
               Net cash provided by operating activities                                     18,048          27,491
                                                                                       ------------   -------------

Investing activities:
    Acquisitions, net of cash acquired                                                     (177,692)       (106,810)
    Capital expenditures                                                                     (5,164)         (3,037)
    Other, net                                                                                 (127)            125
                                                                                       ------------   -------------
               Net cash used in investing activities                                       (182,983)       (109,722)
                                                                                       ------------   -------------
Financing activities:
    Issuance of debt                                                                        388,375         257,500
    Payments of debt                                                                       (245,303)       (150,715)
    Distributions, including minority interest                                              (16,263)        (14,814)
    Net proceeds from issuance of limited partnership units                                  49,650            -
                                                                                       ------------   -------------
               Net cash provided by financing activities                                    176,459          91,971
                                                                                       ------------   -------------

Increase in cash and cash equivalents                                                        11,524           9,740
Cash and cash equivalents at beginning of period                                              7,903           4,758
                                                                                       ------------   -------------
Cash and cash equivalents at end of period                                             $     19,427   $      14,498
                                                                                       ============   =============
Supplemental cash flow information:
    Cash paid for interest                                                             $      2,254   $       3,623
                                                                                       ============   =============
    Non-cash investing and financing activities -
        Issuance of units for acquisition of terminals                                 $      -       $      56,488
                                                                                       ============   =============
</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
     month  periods  ended  March 31,  2002 and  2001,  have  been  prepared  in
     accordance  with  accounting  principles  generally  accepted in the United
     States of America  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, 2001. In the opinion of
     the  Partnership's  management,  the  accompanying  condensed  consolidated
     financial  statements contain all of the adjustments,  consisting of normal
     recurring accruals,  necessary to present fairly the consolidated financial
     position of the Partnership and its consolidated  subsidiaries at March 31,
     2002 and the  consolidated  results of their  operations and cash flows for
     the periods ended March 31, 2002 and 2001.  Operating results for the three
     months ended March 31, 2002 are not  necessarily  indicative of the results
     that may be expected for the year ending December 31, 2002.


2.   ACQUISITIONS AND FINANCINGS

     In January  2001,  the  Partnership  used  proceeds  from its $275  million
     revolving  credit  agreement  to repay in full its $128 million of mortgage
     notes. Under the provisions of the mortgage notes, the Partnership incurred
     a $6.5  million  prepayment  penalty  which,  net of minority  interest and
     income  taxes,  was  recognized  as an  extraordinary  expense in the first
     quarter of 2001.

     On January 3, 2001, the  Partnership,  through a  wholly-owned  subsidiary,
     acquired  Shore  Terminals  LLC  ("Shore")  for  $107  million  in cash and
     1,975,090  Partnership  units  (valued  at  $56.5  million  on the  date of
     agreement  and its  announcement).  Financing  for the cash  portion of the
     purchase  price was  supplied  under  the  Partnership's  revolving  credit
     agreement.  The  acquisition was accounted for using the purchase method of
     accounting.

     In January of 2002, the Partnership  issued 1,250,000  limited  partnership
     units in a public  offering  at $41.65 per unit,  generating  approximately
     $49.7 million in net proceeds.  The proceeds were used to reduce the amount
     of  indebtedness  outstanding  under  the  Partnership's  revolving  credit
     agreement.

     In February 2002, Kaneb Pipe Line Operating Partnership,  L.P. ("KPOP"), an
     operating  subsidiary  of the  Partnership,  issued  $250  million of 7.75%
     senior  unsecured  notes due February 15, 2012.  The net proceeds  from the
     public  offering,  $248.2  million,  were used to repay  the  Partnership's
     revolving  credit agreement and to partially fund the acquisition of all of
     the  liquids   terminaling   subsidiaries  of  Statia  Terminals  Group  NV
     ("Statia").

     On February 28, 2002, the  Partnership  acquired  Statia for  approximately
     $178  million  in  cash  (net  of  acquired  cash).   The  acquired  Statia
     subsidiaries had approximately $107 million in outstanding debt,  including
     $101 million of 11.75% notes due in November  2003. The cash portion of the
     purchase price was funded by the  Partnership's  revolving credit agreement
     and proceeds from KPOP's  February 2002 public debt  offering.  On April 5,
     2002, the Partnership  redeemed all of Statia's 11.75% notes at 102.938% of
     the principal amount,  plus accrued interest.  The redemption was funded by
     the  Partnership's  revolving  credit  facility.  Assuming the  acquisition
     occurred on January 1, 2001,  unaudited pro forma revenues,  net income and
     net income per unit would have been $92.3 million, $16.3 million and $0.69,
     respectively,  for the three months ended March 31, 2002 and $98.3 million,
     $7.7 million and $0.34, respectively,  for the three months ended March 31,
     2001.


3.   COMPREHENSIVE INCOME

     Comprehensive  income for the three months ended March 31, 2002 and 2001 is
     as follows:

<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                                            March 31,
                                                                                ---------------------------------
                                                                                    2002                2001
                                                                                -------------      --------------
                                                                                      (in thousands)

<S>                                                                             <C>                <C>
     Net income                                                                 $      17,242      $        8,189
     Other comprehensive income (loss)
        - foreign currency translation adjustment                                        (408)               (695)
                                                                                -------------      --------------
     Comprehensive income                                                       $      16,834      $        7,494
                                                                                =============      ==============
</TABLE>


4.   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  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 $0.75  per unit for the
     fourth  quarter of 2001 was paid on February 14, 2002. A cash  distribution
     of $0.79 per unit for the first  quarter of 2002 was declared to holders of
     record on April 30, 2002 and will be paid on May 15, 2002.


5.   CONTINGENCIES

     The operations of the Partnership  are subject to Federal,  state and local
     laws and  regulations  in the United States and various  foreign  locations
     relating  to  protection  of  the  environment.  Although  the  Partnership
     believes  its  operations  are  in  general   compliance   with  applicable
     environmental  regulations,  risks of additional  costs and liabilities are
     inherent in pipeline and terminal operations, and there can be no assurance
     that  significant  costs  and  liabilities  will  not  be  incurred  by the
     Partnership.  Moreover,  it is possible  that other  developments,  such as
     increasingly  stringent  environmental  laws,  regulations  and enforcement
     policies  thereunder,  and  claims  for  damages  to  property  or  persons
     resulting  from  the  operations  of  the  Partnership,   could  result  in
     substantial costs and liabilities to 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 costs 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
     (the "Otis pipeline" or the "pipeline"),  ceased operations in 1973 and was
     abandoned not later than 1976, when the connecting  terminal was sold to an
     unrelated  entity.  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 from the Texas court
     that these subsidiaries are responsible for all liabilities,  including all
     present and future  remediation  expenses,  associated with these leaks and
     that Grace has no  obligation  to indemnify  these  subsidiaries  for these
     expenses. In the lawsuit, Grace also sought indemnification for expenses of
     approximately  $3.5  million  that it incurred  since 1996 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  has been  that they did not  acquire  the
     abandoned  pipeline  as  part  of the  1993 ST  Services  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,  the jury  returned a verdict  including  findings
     that (1) Grace had breached a provision of the 1993  acquisition  agreement
     by  failing  to  disclose  matters  related  to the  pipeline,  and (2) the
     pipeline was  abandoned  before 1978 -- 15 years  before the  Partnership's
     subsidiaries  acquired ST Services.  On August 30, 2000,  the Judge entered
     final judgment in the case that Grace take nothing from the subsidiaries on
     its  claims   seeking   recovery  of   remediation   costs.   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  indemnification  from Grace if any
     such expenses were incurred in the future.  Moreover, the Judge let stand a
     prior summary  judgment  ruling that the pipeline was an asset  acquired by
     the Partnership's  subsidiaries as part of the 1993 ST Services transaction
     and that any  liabilities  associated  with the pipeline  would have become
     liabilities of the  subsidiaries.  Based on that ruling,  the Massachusetts
     Department of  Environmental  Protection  and Samson  Hydrocarbons  Company
     (successor  to  Grace  Petroleum  Company)  wrote  letters  to ST  Services
     alleging its responsibility for the remediation,  and ST Services responded
     denying  any  liability  in  connection  with this  matter.  The Judge also
     awarded  attorney  fees to  Grace  of more  than  $1.5  million.  Both  the
     Partnership's  subsidiaries and Grace have appealed the trial court's final
     judgment  to the Texas  Court of  Appeals  in Dallas.  In  particular,  the
     subsidiaries  have filed an appeal of the  judgement  finding that the Otis
     pipeline and any liabilities  associated with the pipeline were transferred
     to them as well as the award of attorney fees to Grace.

     On April 2, 2001,  Grace filed a petition in  bankruptcy,  which created an
     automatic stay against  actions  against Grace.  This automatic stay covers
     the appeal of the Dallas  litigation,  and the Texas  Court of Appeals  has
     issued an order  staying  all  proceedings  of the  appeal  because  of the
     bankruptcy.  Once that stay is lifted, the Partnership's  subsidiaries that
     are  party to the  lawsuit  intend to resume  vigorous  prosecution  of the
     appeal.

     The Otis Air Force Base is a part of the Massachusetts Military Reservation
     ("MMR Site"),  which has been declared a Superfund Site pursuant to CERCLA.
     The MMR Site contains nine groundwater  contamination  plumes, two of which
     are allegedly  associated  with the Otis 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
     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  Partnership's
     subsidiaries,  the Government advised the parties in April 1999 that it has
     identified  two spill areas that it believes to be related to the  pipeline
     that is the subject of the Grace suit.  The Government at that time advised
     the parties that it believed it had  incurred  costs of  approximately  $34
     million,  and  expected 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.

     By letter  dated July 26, 2001,  the United  States  Department  of Justice
     ("DOJ")   advised  ST  Services  that  the   Government   intends  to  seek
     reimbursement  from ST Services under the  Massachusetts  Oil and Hazardous
     Material Release  Prevention and Response Act and the Declaratory  Judgment
     Act for the  Government's  response costs at the two spill areas  discussed
     above.  The DOJ relied in part on the  judgment  by the Texas  state  court
     that,  in the view of the DOJ,  held that ST Services was the current owner
     of the  pipeline  and the  successor-in-interest  of the  prior  owner  and
     operator.  The  Government  advised ST  Services  that it  believes  it has
     incurred  costs  exceeding  $40 million,  and expects to incur future costs
     exceeding an  additional  $22  million,  for  remediation  of the two spill
     areas.  The Partnership  believes that its  subsidiaries  have  substantial
     defenses. ST Services responded to the DOJ on September 6, 2001, contesting
     the  Government's  positions and declining to reimburse any response costs.
     The DOJ has not filed a lawsuit  against ST Services  seeking cost recovery
     for its environmental investigation and response costs.

     On April 7, 2000, a fuel oil pipeline in Maryland owned by Potomac Electric
     Power  Company  ("PEPCO")  ruptured.  Work  performed  with  regards to the
     pipeline  was  conducted by a  partnership  of which ST Services is general
     partner. PEPCO has reported that it expects to incur total cleanup costs of
     $70 million to $75 million.  Since May 2000, ST Services has  provisionally
     contributed a minority share of the cleanup expense,  which has been funded
     by ST  Services'  insurance  carriers.  ST  Services  and  PEPCO  have not,
     however,  reached a final  agreement  regarding ST Services'  proportionate
     responsibility  for this  cleanup  effort and have  reserved  all rights to
     assert claims for contribution  against each other. The Partnership  cannot
     predict the amount,  if any,  that  ultimately  may be  determined to be ST
     Services'  share of the  remediation  expense,  but it  believes  that such
     amount  will be  covered by  insurance  and will not  materially  adversely
     affect the Partnership's financial condition.

     As a result of the rupture, purported class actions have been filed against
     PEPCO and ST  Services  in federal  and state court in Maryland by property
     and/or  business  owners  alleging  damages in  unspecified  amounts  under
     various theories,  including under the Oil Pollution Act ("OPA"). The court
     consolidated all of these cases in a case styled as In re Swanson Creek Oil
     Spill Litigation. The trial judge recently granted approval of a $2,250,000
     class settlement,  with ST Services and PEPCO each contributing half of the
     settlement  fund.  Notice  of the  proposed  settlement  was  sent to class
     members in January  2002,  and in response to this notice,  a number of the
     class  members  chose to opt out of the class  settlement.  ST Services and
     PEPCO  each have the right to void the  entire  class  settlement  based on
     these opt-outs and elect to pursue separate  litigation.  No final decision
     in this regard has been made at this time.  If ST  Services  chooses not to
     exercise its right to void the class settlement and the In re Swanson Creek
     Oil Spill Litigation  settlement  becomes final, ST Services may still face
     litigation from opt-out  plaintiffs.  ST Services'  insurance carriers have
     assumed the defense of these actions.  While the Partnership cannot predict
     the  amount,  if any,  of any  liability  it may  have in these  suits,  it
     believes  that such  amounts  will be covered by  insurance  and that these
     actions will not have a material adverse effect on its financial condition.

     PEPCO and ST Services have agreed with the federal government and the State
     of Maryland to pay costs of assessing natural resource damages arising from
     the Swanson Creek oil spill under OPA, but they cannot predict at this time
     the amount of any damages that may be claimed by the federal government and
     the State of Maryland.  The  Partnership  believes that both the assessment
     costs and such  damages are covered by  insurance  and will not  materially
     adversely affect the Partnership's financial condition.

     The U.S.  Department  of  Transportation  ("DOT")  has  issued a Notice  of
     Proposed  Violation  to PEPCO  and ST  Services  alleging  violations  over
     several years of pipeline safety  regulations and proposing a civil penalty
     of $674,000 on the two companies.  ST Services and PEPCO have contested the
     DOT  allegations  and the proposed  penalty.  A hearing was held before the
     Office  of  Pipeline  Safety  at the  DOT in  late  2001,  and ST  Services
     anticipates  that the DOT will rule during the second or third  quarters of
     2002. In addition,  by letter dated January 4, 2002, the Attorney General's
     Office  for the State of  Maryland  advised  ST  Services  that it plans to
     exercise its right to seek  penalties  from ST Services in connection  with
     the April 7, 2000 spill. The ultimate amount of any penalty attributable to
     ST Services cannot be determined at this time, but the Partnership believes
     that this matter will not have a material  adverse  effect on its financial
     condition.

     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.


6.   BUSINESS SEGMENT DATA

     The Partnership conducts business through three principal  operations;  the
     "Pipeline  Operations,"  which consists  primarily of the transportation of
     refined  petroleum  products in the Midwestern  states as a common carrier,
     the  "Terminaling   Operations,"   which  provides  storage  for  petroleum
     products,  specialty  chemicals and other  liquids,  and the "Product Sales
     Operations", which delivers bunker fuels to ships in the Caribbean and Nova
     Scotia,  Canada and sells bulk  petroleum  products  to various  commercial
     interests.

     The Partnership  measures segment profit as operating income.  Total assets
     are those controlled by each reportable  segment.  Business segment data is
     as follows:

<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                                            March 31,
                                                                                ---------------------------------
                                                                                    2002                2001
                                                                                -------------      --------------
                                                                                      (in thousands)
<S>                                                                             <C>                <C>
     Business segment revenues:
        Pipeline operations                                                     $      17,626      $       16,169
        Terminaling operations                                                         41,462              31,900
        Product sales operations                                                        8,554                -
                                                                                -------------      --------------
                                                                                $      67,642      $       48,069
                                                                                =============      ==============
     Business segment profit:
        Pipeline operations                                                     $       8,451      $        7,268
        Terminaling operations                                                         14,636              11,067
        Product sales operations                                                          138                -
                                                                                -------------      --------------
            Operating income                                                           23,225              18,335
        Interest and other income                                                          71                 708
        Interest expense                                                               (5,277)             (4,721)
                                                                                -------------      --------------
            Income before minority interest,
               income taxes and extraordinary item                              $      18,019      $       14,322
                                                                                =============      ==============

</TABLE>

<TABLE>
<CAPTION>

                                                                                  March 31,         December 31,
                                                                                    2002                2001
                                                                              ----------------   ------------------
                                                                                          (in thousands)
<S>                                                                             <C>                <C>
     Total assets:
        Pipeline operations                                                     $     107,400      $     105,156
        Terminaling operations                                                        752,096            443,215
        Product sales                                                                  11,813                -
                                                                                -------------      -------------
                                                                                $     871,309      $     548,371
                                                                                =============      =============
</TABLE>


7.   ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

     Effective  January 1, 2002, the Partnership  adopted Statement of Financial
     Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS
     No.  142"),  which  eliminates  the  amortization  for  goodwill  and other
     intangible  assets with indefinite  lives.  Under SFAS No. 142,  intangible
     assets with lives  restricted by  contractual,  legal,  or other means will
     continue to be amortized over their useful lives. As of March 31, 2002, the
     Partnership  had no intangible  assets subject to  amortization  under SFAS
     142.  Goodwill and other intangible  assets not subject to amortization are
     tested for impairment  annually or more  frequently if events or changes in
     circumstances  indicate  that the asset  might be  impaired.  SFAS No.  142
     requires a two-step process for testing  impairment.  First, the fair value
     of each  reporting  unit is compared  to its  carrying  value to  determine
     whether an indication of impairment  exists. If an impairment is indicated,
     then the fair value of the  reporting  unit's  goodwill  is  determined  by
     allocating the unit's fair value to its assets and  liabilities  (including
     any  unrecognized  intangible  assets)  as if the  reporting  unit had been
     acquired in a business  combination.  The amount of impairment for goodwill
     is measured as the excess of its  carrying  value over its fair value.  The
     Partnership  is evaluating  the impact of adopting SFAS No. 142,  including
     whether  any  transitional   impairment  losses  will  be  required  to  be
     recognized  as a  cumulative  effect of a change in  accounting  principle.
     Goodwill  amortization  included  in  the  results  of  operations  of  the
     Partnership for the three months ended March 31, 2001 was not material.

     Additionally,  effective January 1, 2002, the Partnership  adopted SFAS No.
     144 "Accounting for the Impairment or Disposal of Long-Lived Assets", which
     addresses financial accounting and reporting for the impairment or disposal
     of long-lived  assets.  The adoption of SFAS No. 144, which superceded SFAS
     No.  121,  did not have a  material  impact on the  consolidated  financial
     statements of the Partnership.



<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:

<TABLE>
<CAPTION>
     Pipeline Operations
                                                                                       Three Months Ended
                                                                                            March 31,
                                                                                ---------------------------------
                                                                                    2002                2001
                                                                                -------------      --------------
                                                                                      (in thousands)
<S>                                                                             <C>                <C>
     Revenues                                                                   $      17,626      $       16,169
     Operating costs                                                                    6,476               6,803
     Depreciation and amortization                                                      1,373               1,299
     General and administrative                                                         1,326                 799
                                                                                -------------      --------------
        Operating income                                                        $       8,451      $        7,268
                                                                                =============      ==============
</TABLE>

     Pipeline revenues are based on volumes shipped and the distances over which
     such  volumes are  transported.  For the three months ended March 31, 2002,
     revenues  increased  by $1.5  million,  or 9%,  compared  to the same  2001
     period,  due primarily to increases in barrel miles  shipped.  Barrel miles
     totaled 4.2 billion for the three months ended March 31, 2002,  compared to
     4.1 billion for the three months ended March 31, 2001.

     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,  decreased by $0.3 million for the
     three months ended March 31, 2002,  when compared to the three months ended
     March 31, 2001, due primarily to decreases in power and fuel costs. 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 $0.5 million
     for the three  months  ended  March 31,  2002,  when  compared to the three
     months ended March 31, 2001 due to increases in  professional  services and
     personnel costs.


<TABLE>
<CAPTION>

     Terminaling Operations

                                                                                       Three Months Ended
                                                                                            March 31,
                                                                                ---------------------------------
                                                                                    2002                2001
                                                                                -------------      --------------
                                                                                      (in thousands)
<S>                                                                             <C>                <C>
     Revenues                                                                   $      41,462      $       31,900
     Operating costs                                                                   18,318              14,852
     Depreciation and amortization                                                      5,673               4,452
     General and administrative                                                         2,835               1,529
                                                                                -------------      --------------
        Operating income                                                        $      14,636      $       11,067
                                                                                =============      ==============

</TABLE>

     Terminaling  revenues  for the three  month  period  ended  March 31,  2002
     increased by $9.6  million,  or 30%, when compared to the same 2001 period,
     due to the Statia  acquisition (see "Liquidity and Capital  Resources") and
     overall increases in utilization at existing locations.  Approximately $6.8
     million of the  revenue  increase  was a result of the Statia  acquisition.
     Average annual  tankage  utilized for the three months ended March 31, 2002
     increased to 39.0  million  barrels,  up from 30.0 million  barrels for the
     three  months  ended March 31,  2001.  For the three months ended March 31,
     2002, average annualized  revenues per barrel of tankage utilized increased
     to $4.32 per  barrel,  compared  to $4.25 per barrel  for the three  months
     ended March 31, 2001.

     For the three month period ended March 31, 2002,  operating costs increased
     by $3.5 million,  when compared to the same 2001 period,  the result of the
     Statia   acquisition   and  increases  in  volumes   stored.   General  and
     administrative  costs for the three  month  period  ended  March 31,  2002,
     increased by $1.3 million,  when  compared to the same 2001 period,  also a
     result of the Statia acquisition.

     Total tankage  capacity (58.7 million  barrels at March 31, 2002) 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.

     Product Sales

<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                                            March 31,
                                                                                ---------------------------------
                                                                                    2002                2001
                                                                                -------------      --------------
                                                                                      (in thousands)
<S>                                                                             <C>                <C>
     Revenues                                                                   $       8,554      $         -
     Cost of products sold                                                              7,829                -
                                                                                -------------      --------------
     Gross margin                                                               $         725      $         -
                                                                                =============      ==============
     Operating income                                                           $         138      $         -
                                                                                =============      ==============
</TABLE>

     The product sales business,  which was acquired with Statia on February 28,
     2002 (see  "Liquidity  and Capital  Resources"),  delivers  bunker fuels to
     ships in the  Caribbean  and Nova Scotia,  Canada and sells bulk  petroleum
     products to various  commercial  interests.  For the period ended March 31,
     2002,  product sales revenues,  gross margin and operating income were $8.6
     million, $0.7 million and $0.1 million, respectively.

     Interest and Other Income

     In March of 2001, a wholly-owned subsidiary of the Partnership entered into
     two contracts for the purpose of locking in interest  rates on $100 million
     of anticipated  ten-year public debt offerings.  As the interest rate locks
     were not designated as hedging instruments  pursuant to the requirements of
     Statement of Financial  Accounting Standards ("SFAS") No. 133, increases or
     decreases in the fair value of the contracts are included as a component of
     interest and other  income.  For the three months ended March 31, 2001,  an
     unrealized  gain of $0.6 million and an asset of the same amount,  based on
     the fair value of the  instruments at March 31, 2001, was recorded on these
     contracts.  On May 22, 2001,  the  contracts  were settled  resulting in an
     aggregate gain of $3.8 million.

     Interest Expense

     For the three months ended March 31, 2002,  interest  expense  increased by
     $0.6  million,  compared to the same 2001 period,  due to increases in debt
     resulting  from  the  Statia   acquisition   (see  "Liquidity  and  Capital
     Resources"), partially offset by overall declines in interest rates.


     Liquidity and Capital Resources

     During the first three months of 2002, the  Partnership's  working  capital
     requirements for operations,  capital expenditures (excluding acquisitions)
     and cash distributions were funded through the use of internally  generated
     funds.

     Cash  provided by  operations  was $18.0  million and $27.5 million for the
     three months ended March 31, 2002 and 2001,  respectively.  The decrease in
     cash  provided by  operations  for the three  months  ended March 31, 2002,
     compared  to the same 2001  period,  was due to normal  changes  in working
     capital  components   resulting  from  the  timing  of  cash  receipts  and
     disbursements.  Capital  expenditures  (excluding  acquisitions)  were $5.2
     million for the three months ended March 31, 2002, compared to $3.0 million
     during the same 2001  period.  The  Partnership  anticipates  that  routine
     maintenance  capital  expenditures will total  approximately $15 million to
     $20 million (excluding acquisitions) for the year ending December 31, 2002.

     The Partnership has a credit  agreement with a group of banks that provides
     for a $275 million  unsecured  revolving  credit facility  through December
     2003.  The credit  facility  bears  interest  at  variable  rates and has a
     variable commitment fee on unutilized amounts. The credit facility contains
     certain  financial and  operational  covenants,  including  limitations  on
     investments,  sales of assets and transactions with affiliates, and, absent
     an event  of  default,  the  covenants  do not  restrict  distributions  to
     unitholders.  At March 31, 2002,  $140.0 million was drawn on the facility,
     at an interest rate of 2.60%, which is due in December of 2003.

     In January 2001, the  Partnership  used proceeds from its revolving  credit
     agreement  to repay in full its $128 million of mortgage  notes.  Under the
     provisions of the mortgage notes,  the Partnership  incurred a $6.5 million
     prepayment  penalty which,  net of minority  interest and income taxes, was
     recognized as an extraordinary expense in the first quarter of 2001.

     On January 3, 2001, the  Partnership,  through a  wholly-owned  subsidiary,
     acquired  Shore  Terminals  LLC  ("Shore")  for  $107  million  in cash and
     1,975,090  Partnership  units  (valued  at  $56.5  million  on the  date of
     agreement  and its  announcement).  Financing  for the cash  portion of the
     purchase  price  was  supplied  by  the   Partnership's   revolving  credit
     agreement.

     In January of 2002, the Partnership  issued 1,250,000  limited  partnership
     units in a public  offering  at $41.65 per unit,  generating  approximately
     $49.7 million in net proceeds.  The proceeds were used to reduce the amount
     of  indebtedness  outstanding  under  the  Partnership's  revolving  credit
     agreement.

     In February 2002, Kaneb Pipe Line Operating Partnership,  L.P. ("KPOP"), an
     operating  subsidiary  of the  Partnership,  issued  $250  million of 7.75%
     senior  unsecured  notes due February 15, 2012.  The net proceeds  from the
     public  offering,  $248.2  million,  were used to repay  the  Partnership's
     revolving  credit agreement and to partially fund the acquisition of all of
     the  liquids   terminaling   subsidiaries  of  Statia  Terminals  Group  NV
     ("Statia").

     On February 28, 2002, the  Partnership  acquired  Statia for  approximately
     $178  million  in  cash  (net  of  acquired  cash).   The  acquired  Statia
     subsidiaries had approximately $107 million in outstanding debt,  including
     $101 million of 11.75% notes due in November  2003. The cash portion of the
     purchase price was funded by the  Partnership's  revolving credit agreement
     and proceeds from KPOP's  February 2002 public debt  offering.  On April 5,
     2002, the Partnership  redeemed all of Statia's 11.75% notes at 102.938% of
     the principal amount,  plus accrued interest.  The redemption was funded by
     the Partnership's revolving credit facility.

     The  Partnership  makes  quarterly  distributions  of 100% of its available
     cash,  as  defined  in the  Partnership  agreement,  to  holders of limited
     partnership  units  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 $0.75  per unit for the
     fourth  quarter of 2001 was paid on February 14, 2002. A cash  distribution
     of $0.79 per unit for the first  quarter of 2002 was declared to holders of
     record on April 30, 2002 and will be paid on May 15, 2002.

     The Partnership  expects to fund future cash  distributions and maintenance
     capital  expenditures  with existing cash and  anticipated  cash flows from
     operations.  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.

     Information  regarding the Partnership's  Critical  Accounting  Policies is
     included in Item 7 of the Partnership's  Annual Report on Form 10-K for the
     year ended December 31, 2001.


     Recent Accounting Pronouncement

     The  FASB  has  issued  SFAS  No.  143  "Accounting  for  Asset  Retirement
     Obligations",  which  establishes  requirements for the removal-type  costs
     associated with asset retirements.  The Partnership is currently  assessing
     the impact of SFAS No. 143,  which must be adopted in the first  quarter of
     2003.



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


--------------------------------------------------------------------------------


Item 3.  Quantitative and Qualitative Disclosure About Market Risk

     The principal market risks (i.e., the risk of loss arising from the adverse
     changes in market rates and prices) to which the Partnership is exposed are
     interest rates on the  Partnership's  debt and investment  portfolios.  The
     Partnership's   investment   portfolio   consists   of  cash   equivalents;
     accordingly, the carrying amounts approximate fair value. The Partnership's
     investments  are not  material to its  financial  position or  performance.
     Assuming  variable  rate debt of $140.0  million at March 31,  2002,  a one
     percent  increase in interest rates would increase net interest  expense by
     approximately $1.4 million.


                           Part II - Other Information

Item 1.  Legal Proceedings

     The information contained in Note 5 of the Notes to Consolidated  Financial
     Statements included in this report is hereby incorporated by reference.


Item 6.  Exhibits and Reports on Form 8-K

     (a)  Exhibits.

          3.1  Amended  and  Restated  Agreement  of Limited  Partnership  dated
               September  27, 1989,  as revised July 23, 1998,  filed as Exhibit
               3.1 to  Registrant's  Form 10-K for the year ended  December  31,
               2000, which exhibit is hereby incorporated by reference.

          10.1 ST Agreement  and Plan of Merger  dated  December 21, 1992 by and
               between  Grace Energy  Corporation,  Support  Terminal  Services,
               Inc.,  Standard  Transpipe  Corp.,  and Kaneb Pipe Line Operating
               Partnership, NSTS, Inc. and NSTI, Inc. as amended by Amendment of
               STS Merger  Agreement dated March 2, 1993,  filed as Exhibit 10.1
               of the exhibits to Registrant's Current Report on Form 8-K ("Form
               8-K"), dated March 16, 1993, which exhibit is hereby incorporated
               by reference.

          10.2 Agreement for Sale and Purchase of Assets  between Wyco Pipe Line
               Company and KPOP,  dated February 19, 1995, filed as Exhibit 10.1
               of the exhibits to the  Registrant's  March 1995 Form 8-K,  which
               exhibit is hereby incorporated by reference.

          10.3 Asset  Purchase  Agreements  between and among Steuart  Petroleum
               Company,  SPC  Terminals,  Inc.,  Piney Point  Industries,  Inc.,
               Steuart   Investment   Company,   Support   Terminals   Operating
               Partnership,  L.P. and KPOP,  as amended,  dated August 27, 1995,
               filed as Exhibits 10.1,  10.2,  10.3, and 10.4 of the exhibits to
               Registrant's  Current  Report on Form 8-K dated  January 3, 1996,
               which exhibits are hereby incorporated by reference.

          10.4 Formation  and  Purchase  Agreement,  between  and among  Support
               Terminal Operating Partnership, L.P., Northville Industries Corp.
               and AFFCO,  Corp.,  dated October 30, 1998, filed as exhibit 10.9
               to the  Registrant's  Form 10-K for the year ended  December  31,
               1998, which exhibit is hereby incorporated by reference.

          10.5 Agreement,   between  and  among,  GATX  Terminals  Limited,   ST
               Services,  Ltd., ST Eastham,  Ltd.,  GATX Terminals  Corporation,
               Support Terminals Operating Partnership, L.P. and Kaneb Pipe Line
               Partners, L.P., dated January 26, 1999, filed as Exhibit 10.10 to
               the Registrant's  Form 10-K for the year ended December 31, 1998,
               which exhibit is hereby incorporated by reference.

          10.6 Credit  Agreement,  between and among,  Kaneb Pipe Line Operating
               Partnership,  L.P., ST Services, Ltd. and SunTrust Bank, Atlanta,
               dated   January  27,  1999,   filed  as  Exhibit   10.11  to  the
               Registrant's  Form 10-K for the year  ended  December  31,  1998,
               which exhibit is hereby incorporated by reference.

          10.7 Revolving Credit  Agreement,  dated as of December 28, 2000 among
               Kaneb  Pipe Line  Operating  Partnership,  L.P.,  Kaneb Pipe Line
               Partners,  L.P., The Lenders From Time To Time Party Hereto,  and
               SunTrust Bank, as Administrative  Agent, filed as Exhibit 10.7 to
               the Registrant's  Form 10-K for the year ended December 31, 2001,
               which exhibit is incorporated herein by reference.

          10.8 Securities  Purchase  Agreement  Among Shore Terminals LLC, Kaneb
               Pipe Line Partners,  L.P. and the Sellers Named Therein, dated as
               of September 22, 2000,  Amendment  No. 1 To  Securities  Purchase
               Agreement,  dated as of November 28, 2000 and Registration Rights
               Agreement,  dated as of January 3, 2001,  filed as Exhibits 10.1,
               10.2 and 10.3 of the exhibits to  Registrant's  Current Report on
               Form 8-K  dated  January  3,  2001,  which  exhibits  are  hereby
               incorporated by reference.

          10.9 Stock Purchase  Agreement,  dated as of November 12, 2001, by and
               between Kaneb Pipe Line Operating  Partnership,  L.P., and Statia
               Terminals  Group  NV, a public  company  with  limited  liability
               organized  under the laws of the Netherlands  Antilles,  filed as
               Exhibit 10.1 to the exhibits to  Registrant's  Current  Report on
               Form 8-K,  dated  January 11, 2002,  and  incorporated  herein by
               reference.

         10.10 Voting and Option  Agreement  dated as of November 12,  2001,  by
               and between  Kaneb Pipe Line  Operating  Partnership,  L.P.,  and
               Statia  Terminals  Holdings N.V., a Netherlands  Antilles company
               and a  shareholder  of Statia  Terminals  Group NV, a Netherlands
               Antilles  company  filed  as  Exhibit  10.1  to the  exhibits  to
               Registrant's  Current Report on Form 8-K, dated January 11, 2002,
               and incorporated herein by reference.


     (b)  Reports on Form 8-K

          Current Report on Form 8-K, filed January 14, 2002.

          Current Report on Form 8-K, filed January 18, 2002.

          Current Report on Form 8-K, filed February 19, 2002.

          Current Report on Form 8-K, filed March 14, 2002

          Current Report on Form 8-K, filed April 19, 2002.

                                    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 LLC
                                  --------------------------------
                                  (Managing General Partner)


Date:   May 8, 2002                     //s//
                                  ----------------------------------------------
                                  Howard C. Wadsworth
                                  Vice President, Treasurer and Secretary