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 March 31, 1999                                            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 April 30, 1999:  16,060,000.


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


FORM 10-Q
QUARTER ENDED MARCH 31, 1999


                                                                       Page No.

                           Part I. Financial Information

Item 1.  Financial Statements (Unaudited)

         Consolidated Statements of Income -- Three Months Ended
             March 31, 1999 and 1998                                      1

         Condensed Consolidated Balance Sheets -- March 31, 1999
             and December 31, 1998                                        2

         Condensed Consolidated Statements of Cash Flows -- Three
             Months Ended March 31, 1999 and 1998                         3

         Notes to Consolidated Financial Statements                       4

Item 2.  Management's Discussion and Analysis of
             Financial Condition and Results of Operations                7

                           Part II.  Other Information

Item 6.  Exhibits and Reports on Form 8-K                                12



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

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

                                                            Three Months Ended
                                                                 March 31,
                                                           --------------------
                                                             1999        1998
                                                           --------    --------

Revenues                                                   $ 36,845    $ 28,070
                                                           --------    --------

Costs and expenses:
      Operating costs                                        16,183      11,688
      Depreciation and amortization                           3,615       2,947
      General and administrative                              1,903       1,535
                                                           --------    --------

           Total costs and expenses                          21,701      16,170
                                                           --------    --------

Operating income                                             15,144      11,900
Interest and other income, net                                  244          48
Interest expense                                             (3,509)     (2,707)
                                                           --------    --------

Income before minority interest and income taxes             11,879       9,241
Minority interest in net income                                (115)        (91)
Income tax provision                                           (408)       (190)
                                                           --------    --------

Net income                                                   11,356       8,960
General partner's interest in net income                       (370)        (90)
                                                           --------    --------

Limited partners' interest in net income                   $ 10,986    $  8,870
                                                           ========    ========

Allocation of net income per Unit                          $    .68    $    .55
                                                           ========    ========

Weighted average number of Partnership
     Units outstanding                                       16,060      16,060
                                                           ========    ========


                See notes to consolidated financial statements.
                                        1




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


CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

                                                            March 31 December 31
                                                              1999       1998
                                                            --------   --------
                                                           (Unaudited)
         ASSETS
Current assets:
     Cash and cash equivalents                              $  9,893   $    849
     Accounts receivable                                      14,725     13,917
     Prepaid expenses and other                                4,768      4,035
                                                            --------   --------

         Total current assets                                 29,386     18,801
                                                            --------   --------

Property and equipment                                       440,881    398,253
Less accumulated depreciation                                112,034    108,622
                                                            --------   --------

     Net property and equipment                              328,847    289,631
                                                            --------   --------

                                                            $358,233   $308,432
                                                            ========   ========

     LIABILITIES AND PARTNERS' CAPITAL 
Current liabilities:
     Short-term and current portion of long-term debt       $ 33,300   $ 10,000
     Accounts payable and accrued expenses                    16,617     14,354
     Accrued distributions payable                            11,728     10,725
     Payable to general partner                                1,112      6,785
                                                            --------   --------

         Total current liabilities                            62,757     41,864
                                                            --------   --------

Long-term debt, less current portion                         178,920    153,000

Other liabilities and deferred taxes                          10,689      7,131

Minority interest                                              1,046      1,049

Commitments and contingencies

Partners' capital                                            104,821    105,388
                                                            --------   --------

                                                            $358,233   $308,432
                                                            ========   ========
 

               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)

                                                             Three Months Ended
                                                                 March 31,
                                                           --------------------
                                                             1999        1998
                                                           --------    --------

Operating activities:
   Net income                                              $ 11,356    $  8,960
   Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation and amortization                            3,615       2,947
     Minority interest in net income                            115          91
     Deferred income taxes                                      404         187
     Changes in working capital components                      722         580
                                                           --------    --------

         Net cash provided by operating activities           16,212      12,765
                                                           --------    --------

Investing activities:
   Capital expenditures                                      (2,255)     (2,350)
   Acquisitions of terminals                                (37,206)     (5,030)
   Other, net                                                  (199)     (1,438)
                                                           --------    --------

         Net cash used in investing activities              (39,660)     (8,818)
                                                           --------    --------

Financing activities:
   Changes in payable to general partner                     (5,000)       (103)
   Issuance of short-term and long-term debt                 49,220       5,000
   Payments of long-term debt                                  --          (554)
   Distributions to partners, including minority interest   (11,728)    (10,725)
                                                           --------    --------

         Net cash provided by (used in)
               financing activities                          32,492      (6,382)
                                                           --------    --------

Increase (decrease) in cash and cash equivalents              9,044      (2,435)
Cash and cash equivalents at beginning of period                849       6,376
                                                           --------    --------

Cash and cash equivalents at end of period                 $  9,893    $  3,941
                                                           ========    ========

Supplemental cash flow information-cash paid for interest  $  1,693    $  1,349
                                                           ========    ========







                See notes to consolidated financial statements.
                                        3



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


Notes to Consolidated Financial Statements
(Unaudited)

                                                         4
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,  1999 and  1998,  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,  1998.  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
     and its  consolidated  subsidiaries at March 31, 1999 and the  consolidated
     results of their  operations and cash flows for the periods ended March 31,
     1999 and 1998.  Operating results for the three months ended March 31, 1999
     are not necessarily  indicative of the results that may be expected for the
     year ending December 31, 1999.


2.   ACQUISITION

     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
     the assumption of certain liabilities. The acquisition,  which was financed
     with term  loans from a bank,  has been  accounted  for using the  purchase
     method of  accounting.  The pro forma  effect  of the  acquisition  was not
     material to the results of operations.


3.   COMPREHENSIVE INCOME

     Comprehensive  income for the three months ended March 31, 1999 and 1998 is
     as follows:

                                                           Three Months Ended
                                                                 March 31,
                                                           --------------------
                                                             1999        1998
                                                           --------    --------
                                                              (in thousands)

     Net income                                            $ 11,356    $  8,960
     Other comprehensive income - foreign
       currency translation adjustment                         (309)       --
                                                           --------    --------

     Comprehensive income                                  $ 11,047    $  8,960
                                                           ========    ========



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  ("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 $0.65  per unit for the
     fourth  quarter of 1998 was paid on February 12, 1999. A cash  distribution
     of $0.70 per unit for the first  quarter of 1999 was declared to holders of
     record on April 30, 1999 and is payable on May 14, 1999.


5.   DEBT

     In January 1999, the Partnership,  through two  wholly-owned  subsidiaries,
     entered into a credit  agreement with a bank that provides for the issuance
     of $39.2  million  of term  loans in  connection  with the  United  Kingdom
     terminal acquisition and $5.0 million for general Partnership purposes. The
     term  loans,  which bear  interest in varying  amounts,  are secured by the
     capital  stock  of  the  subsidiaries  that  acquired  the  United  Kingdom
     terminals,  and pari  passu  with the  existing  mortgage  notes and credit
     facility,  by a  mortgage  on the East  Pipeline.  The term  loans  contain
     certain financial and operational covenants and are due in June 1999 ($18.3
     million) and in January 2002 ($25.9 million).


6.   CONTINGENCIES

     The operations of the Partnership  are subject to Federal,  state and local
     laws and regulations  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 are defendants in a lawsuit filed
     in a Texas state court in 1997 by Grace Energy Corporation  ("Grace"),  the
     entity from whom the  Partnership  acquired its Support  Terminal  Services
     operation ("ST") in 1993, involving certain issues allegedly arising out of
     the  Partnership's  acquisition  of ST. Grace  alleges that the  defendants
     assumed  responsibility  for certain  environmental  damages to a former ST
     facility  located in  Massachusetts  that  occurred  at a time prior to the
     Partnership's  acquisition  of ST. The  defendants  have also  received and
     responded to inquiries from two governmental authorities in connection with
     the same allegation by Grace. The defendants'  consistent  position is that
     it did not  acquire  the  facility  in  question  as  part  of the  1993 ST
     transaction and,  consequently,  did not assume any  responsibility for the
     environmental damage. The case is set for trial in June, 1999.

     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,  including the Grace litigation described
     above, 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.
 
                                                            Three Months Ended
                                                                 March 31,
                                                           --------------------
                                                             1999        1998
                                                           --------    --------
                                                              (in thousands)

     Business segment revenues:
        Pipeline operations                                $ 15,164    $ 14,101
        Terminaling operations                               21,681      13,969
                                                           --------    --------
                                                           $ 36,845    $ 28,070
                                                           ========    ========

     Business segment profit:
        Pipeline operations                                $  7,356    $  6,774
        Terminaling operations                                7,788       5,126
                                                           --------    --------
           Operating income                                  15,144      11,900
        Interest and other income, net                          244          48
        Interest expense                                     (3,509)     (2,707)
                                                           --------    --------
           Income before minority interest 
               and income taxes                            $ 11,879    $  9,241
                                                           ========    ========

                                                           March 31  December 31
                                                             1999        1998
                                                           --------    --------
     Total assets:
        Pipeline operations                                $104,984    $103,966
        Terminaling operations                              253,249     204,466
                                                           --------    --------
                                                           $358,233    $308,432
                                                           ========    ========
<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

                                                            Three Months Ended
                                                                 March 31,
                                                           --------------------
                                                             1999        1998
                                                           --------    --------
                                                              (in thousands)

     Revenues                                              $ 15,164    $ 14,101
     Operating costs                                          5,792       5,402
     Depreciation and amortization                            1,264       1,186
     General and administrative                                 752         739
                                                           --------    --------
        Operating income                                   $  7,356    $  6,774
                                                           ========    ========


     Pipeline revenues are based on volumes shipped and the distances over which
     such  volumes are  transported.  For the three months ended March 31, 1999,
     revenues  increased 8%, compared to the same 1998 period, due to an overall
     increase in volumes shipped,  primarily on the East Pipeline.  Barrel miles
     totaled 4.0 billion for the three months ended March 31, 1999,  compared to
     3.7 billion for the respective 1998 period.

     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 7% over the comparable
     prior  year  period.   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
     remained  constant for the three months ended March 31, 1999, when compared
     to the same 1998 period.


     Terminaling Operations
                                                            Three Months Ended
                                                                 March 31,
                                                           --------------------
                                                             1999        1998
                                                           --------    --------
                                                              (in thousands)


     Revenues                                              $ 21,681    $ 13,969
     Operating costs                                         10,391       6,286
     Depreciation and amortization                            2,351       1,761
     General and administrative                               1,151         796
                                                           --------    --------
         Operating income                                  $  7,788    $  5,126
                                                           ========    ========

     On October 30, 1998, the  Partnership,  through a wholly-owned  subsidiary,
     entered into  acquisition  and joint  venture  agreements  with  Northville
     Industries  Corp.  to acquire  and manage  the former  Northville  terminal
     located  in Linden,  New  Jersey.  Under the  agreements,  the  Partnership
     acquired a 50%  interest  in the newly  formed ST Linden  Terminal  LLC for
     $20.5 million plus  transaction  costs.  During the year ended December 31,
     1998, the Partnership acquired other terminals for aggregate  consideration
     of $15.9  million.  On  February  1, 1999,  the  Partnership  acquired  six
     terminals   in  the  United   Kingdom  from  GATX   Terminal   Limited  for
     approximately $37.2 million plus the assumption of certain liabilities. The
     acquisitions (the "Acquisitions") were funded with bank financing.

     Terminaling  revenues  increased 55% for the three month period ended March
     31,  1999,  compared  to  the  same  1998  period,  due  primarily  to  the
     Acquisitions  and an increase in tank  utilization due to favorable  market
     conditions,  partially  offset by a decrease in the overall  average  price
     realized  for storage.  For the three months ended March 31, 1999,  average
     annualized  revenues  per barrel of tankage  utilized  decreased  to $3.95,
     compared to $4.51 per barrel for the same prior year period,  primarily the
     result  of the  storage  of a  larger  proportionate  volume  of  petroleum
     products,  which are  historically at lower per barrel rates than specialty
     chemicals. Average annual tankage utilized for the three months ended March
     31, 1999  increased to 21.9 million  barrels from 12.4 million  barrels for
     the comparable prior year period, primarily as a result of the Acquisitions
     and increased  utilization at the  Partnership's  largest petroleum storage
     facility.

     For the three month period ended March 31, 1999,  operating costs increased
     by $4.1 million,  when  compared to the same 1998 period,  as the result of
     the increase in tank utilization resulting primarily from the Acquisitions.
     General and  administrative  expense for the three  months  ended March 31,
     1999,  increased  by  $0.4  million,  when  compared  to  1998,  due to the
     Acquisitions.

     Total tankage  capacity (27.7 million  barrels at March 31, 1999) 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  quarter  of 1999,  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 $16.2  million and $12.8 million for the
     periods ended March 31, 1999 and 1998,  respectively.  Capital expenditures
     (excluding acquisitions) were $2.3 million for the three months ended March
     31,  1999,  compared  to $2.4  million  during  the same 1998  period.  The
     Partnership  anticipates that capital expenditures will total approximately
     $12 million to $16  million  (excluding  acquisitions)  for the year ending
     December 31, 1999.

     At March 31, 1999, the  Partnership  had a net working  capital  deficit of
     approximately $33.4 million resulting from, among other factors,  cash paid
     and short-term debt incurred for acquisitions  which closed near the end of
     1998 and in early 1999. The general  partner  believes that the Partnership
     will  be  able to  meet  its  ongoing  obligations  with  cash  flows  from
     operations,  along with the Partnership's ability to refinance and/or issue
     additional debt, and that the Partnership's ability to pay distributions to
     the  holders  of Units  has not been  impaired;  however,  there  can be no
     assurance in this regard.

     In January 1999, the Partnership,  through two  wholly-owned  subsidiaries,
     entered into a credit  agreement with a bank that provides for the issuance
     of $39.2  million  of term  loans in  connection  with the  United  Kingdom
     terminal acquisition and $5.0 million for general Partnership purposes. The
     term  loans,  which bear  interest in varying  amounts,  are secured by the
     capital  stock  of  the  subsidiaries  that  acquired  the  United  Kingdom
     terminals,  and pari  passu  with the  existing  mortgage  notes and credit
     facility,  by a  mortgage  on the East  Pipeline.  The term  loans  contain
     certain financial and operational covenants and are due in June 1999 ($18.3
     million) and in January 2002 ($25.9 million).

     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  quarter of 1999 and $2.60 per unit was declared in the calendar year
     1998.

     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.


     Year 2000 Issue

     The Partnership  recognizes the challenges associated with Year 2000 Issues
     ("Y2K") and has undertaken a review and testing of its computer  systems to
     identify  Y2K-related  issues  associated  with any  items of  software  or
     hardware used in its business operations. Most of the software systems used
     by the Partnership are licensed from third parties and are Y2K compliant or
     will be upgraded to Y2K  compliant  releases  before the end of 1999.  This
     issue is being addressed by the Partnership in multiple  phases,  including
     assessment,  remediation, testing and implementation, and progress is being
     monitored by the general partner's senior management. All material systems,
     including non-information  technology systems that may house non-compliant,
     embedded technology are being evaluated.

     In addition to  addressing  the  Partnership's  own  systems,  as described
     above, the Partnership must assess the state of readiness of the systems of
     other entities with which it does business. With respect to its third-party
     relationships,  the  Partnership  has contacted  its primary  suppliers and
     service  providers to assess their state of Y2K readiness.  The Partnership
     has received  information from its critical suppliers and service providers
     and anticipates  receiving  additional  information in the near future that
     will  assist  the  Partnership  in  assessing  the Y2K  readiness  of these
     parties.  Failure by these third  parties to  adequately  resolve their Y2K
     problems  could  have  a  material  adverse  effect  on  the  Partnership's
     operations.

     The  Partnership  believes its success in being Y2K  compliant  will not be
     conclusively  known  until  the year  2000 is  actually  reached.  Although
     failure by one or more of the  Partnership's  own systems  could  result in
     lost  revenues  and/or  additional  expenses  required  to carry out manual
     processing of transactions,  the Partnership cannot predict the effect that
     external   forces  could  have  on  its   business.   Failures  by  banking
     institutions,   the  telecommunications  industry  and  others  could  have
     far-reaching effects on the entire economy and the Partnership.

     At March 31, 1999, the initial  assessment phase has been completed for the
     Partnership's   information   technology  systems.  The  major  information
     technology  systems on which the  pipeline and the  terminaling  operations
     depend have been  updated,  tested and certified to be Y2K  compliant.  The
     Partnership continues to assess Y2K compliance and evaluate the appropriate
     courses  of action of its  non-information  technology  systems,  including
     embedded  chips  located  in  pipeline  and   terminaling   hardware.   The
     Partnership   expects  to  complete  its   assessment  of   non-information
     technology  systems by the end of the second  quarter of 1999 and  complete
     all phases of its Y2K program prior to December 31, 1999.

     The  Partnership  believes  that  it is  not  possible  to  determine  with
     certainty  that  all Y2K  problems  affecting  the  Partnership  have  been
     identified or  corrected.  The number of devices that could be affected and
     the interactions among these devices are simply too numerous.  In addition,
     the Partnership  cannot accurately predict how many failures related to the
     Y2K problem will occur or the severity,  duration or financial consequences
     of such failures.  The  Partnership  has hired an outside Y2K consultant to
     assist the  Partnership in meeting its goals and in developing  contingency
     plans to define and address the worst-case  scenario  likely to be faced by
     the  Partnership.  The  plan is  expected  to be in place by the end of the
     second quarter of 1999.

     Through March 31, 1999, the  Partnership  has incurred  approximately  $0.2
     million  of  costs  related  to  assessing,  remediating  and  testing  its
     information technology and non-information technology systems. A portion of
     these  costs  would  have  been  incurred  as part  of  normal  system  and
     application  upgrades.  In certain cases, the timing of these  expenditures
     has been  accelerated due to Y2K  considerations.  The Partnership does not
     anticipate  that  future  costs  to  become  fully  Y2K  compliant  will be
     material.


     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
     $0.69 and $0.55 for the three month  periods ended March 31, 1999 and 1998,
     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

                    Registrant's  Current Report on Form 8-K, dated February 12,
                    1999 (SEC File No. 001-10311).

                    Registrant's  Current  Report on Form 8-K/A,  dated March 9,
                    1999 (SEC File No. 001-10311).


                                    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:      May 14, 1999                              //s//
                                           Jimmy L. Harrison
                                           Vice President and Controller