NuStar Energy Annual Report 2017

Plain-text annual report

Table of ContentsUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017OR[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission File Number 1-16417NUSTAR ENERGY L.P.(Exact name of registrant as specified in its charter)Delaware 74-2956831(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 19003 IH-10 West 78257San Antonio, Texas (Zip Code)(Address of principal executive offices) Registrant’s telephone number, including area code (210) 918-2000Securities registered pursuant to Section 12(b) of the Act: Common units representing limited partner interests listed on the New York Stock Exchange.8.50% Series A, 7.625% Series B and 9.00% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units representing limited partnerinterests listed on the New York Stock Exchange.Securities registered pursuant to 12(g) of the Act: None.Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [ ]Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes [ ] No [X]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 1934during 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 filingrequirements for the past 90 days. Yes [X] No [ ]Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes [X] No [ ]Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K orany amendment to this Form 10-K. [X]Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [ ] Emerging growth company [ ]If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]The aggregate market value of the common units held by non-affiliates was approximately $3,692 million based on the last sales price quoted as of June 30,2017, the last business day of the registrant’s most recently completed second quarter.The number of common units outstanding as of January 31, 2018 was 93,182,018.Table of ContentsNUSTAR ENERGY L.P.FORM 10-KTABLE OF CONTENTS PART IItems 1., 1A. & 2.Business, Risk Factors and Properties3 Overview3 Recent Developments4 Organizational Structure5 Segments6 Employees15 Rate Regulation15 Environmental, Health, Safety and Security Regulation15 Risk Factors18 Properties36 Item 1B.Unresolved Staff Comments36 Item 3.Legal Proceedings36 Item 4.Mine Safety Disclosures36 PART IIItem 5.Market for Registrant’s Common Units, Related Unitholder Matters and Issuer Purchases of Equity Securities37 Item 6.Selected Financial Data40 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations41 Item 7A.Quantitative and Qualitative Disclosures about Market Risk64 Item 8.Financial Statements and Supplementary Data67 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure127 Item 9A.Controls and Procedures127 Item 9B.Other Information127 PART IIIItem 10.Directors, Executive Officers and Corporate Governance128 Item 11.Executive Compensation132 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters168 Item 13.Certain Relationships and Related Transactions and Director Independence171 Item 14.Principal Accountant Fees and Services175 PART IVItem 15.Exhibits and Financial Statement Schedules176 Item 16.Form 10-K Summary183 Signatures1842Table of ContentsPART IUnless otherwise indicated, the terms “NuStar Energy L.P.,” “the Partnership,” “we,” “our” and “us” are used in this report to refer to NuStar Energy L.P., toone or more of our consolidated subsidiaries or to all of them taken as a whole.CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATIONIn this Form 10-K, we make certain forward-looking statements, including statements regarding our plans, strategies, objectives, expectations, estimates,predictions, projections, assumptions, intentions and resources. While these forward-looking statements, and any assumptions upon which they are based,are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimesmaterially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. These forward-looking statementscan generally be identified by the words “anticipates,” “believes,” “expects,” “plans,” “intends,” “estimates,” “forecasts,” “budgets,” “projects,” “will,”“could,” “should,” “may” and similar expressions. These statements reflect our current views with regard to future events and are subject to various risks,uncertainties and assumptions, that may cause actual results to differ materially, including the possibility that the proposed merger described under“Recent Developments” below will not be completed prior to the August 8, 2018 outside termination date, the possibility that NuStar GP Holdings, LLC willnot obtain the required approvals by its unitholders, the possibility that the anticipated benefits from the proposed merger cannot be fully realized, thepossibility that costs or difficulties related to the proposed merger will be greater than expected and other risk factors. Please read Item 1A. “Risk Factors”for a discussion of certain of those risks, uncertainties and assumptions.If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from thosedescribed in any forward-looking statement. Other unknown or unpredictable factors could also have material adverse effects on our future results. Readersare cautioned not to place undue reliance on this forward-looking information, which is as of the date of this Form 10-K. We do not intend to update thesestatements unless we are required by the securities laws to do so, and we undertake no obligation to publicly release the result of any revisions to any suchforward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipatedevents.ITEM 1., 1A. and 2.BUSINESS, RISK FACTORS AND PROPERTIESOVERVIEWNuStar Energy L.P. (NuStar Energy), a Delaware limited partnership, was formed in 1999 and completed its initial public offering of common units onApril 16, 2001. Our common units trade on the New York Stock Exchange (NYSE) under the symbol “NS,” our fixed-to-floating rate cumulative redeemableperpetual preferred units trade on the NYSE under the symbol “NSprA” for our 8.50% Series A Preferred Units, “NSprB” for our 7.625% Series B PreferredUnits and “NSprC” for our 9.00% Series C Preferred Units. Our principal executive offices are located at 19003 IH-10 West, San Antonio, Texas 78257 andour telephone number is (210) 918-2000.We are engaged in the transportation of petroleum products and anhydrous ammonia, and the terminalling, storage and marketing of petroleum products. Theterm “throughput” as used in this document generally refers to barrels of crude oil or refined product or tons of ammonia, as applicable, that pass through ourpipelines, terminals or storage tanks.We divide our operations into the following three reportable business segments: pipeline, storage and fuels marketing. As of December 31, 2017, our assetsincluded approximately 9,400 miles of pipeline and 81 terminal and storage facilities that provide approximately 96 million barrels of storage capacity. Thefollowing table summarizes operating income for each of our business segments: Year EndedDecember 31, 2017 (Thousands of Dollars)Pipeline$231,795Storage$219,439Fuels marketing$5,9833Table of ContentsWe conduct our operations through our wholly owned subsidiaries, primarily NuStar Logistics, L.P. (NuStar Logistics) and NuStar Pipeline OperatingPartnership L.P. (NuPOP). Our revenues include:•tariffs for transporting crude oil, refined products and anhydrous ammonia through our pipelines;•fees for the use of our terminal and storage facilities and related ancillary services; and•sales of petroleum products.We strive to increase unitholder value by:•enhancing our existing assets through strategic internal growth projects that expand our business with current and new customers;•pursuing strategic expansion projects by constructing new assets;•improving our operations, including safety and environmental stewardship, cost control and asset reliability; and•identifying acquisition targets that meet our financial and strategic criteria.Our internet website address is http://www.nustarenergy.com. Information contained on our website is not part of this report. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with (or furnished to) the Securities and Exchange Commission (SEC) are availableon our website, free of charge, as soon as reasonably practicable after we file or furnish such material (select the “Investors” link, then the “SEC Filings” link).We also post our corporate governance guidelines, code of business conduct and ethics, code of ethics for senior financial officers and the charters of ourboard’s committees on our website free of charge (select the “Investors” link, then the “Corporate Governance” link).Our governance documents are available in print to any unitholder that makes a written request to Corporate Secretary, NuStar Energy L.P., 19003 IH-10West, San Antonio, Texas 78257 or corporatesecretary@nustarenergy.com.RECENT DEVELOPMENTSMerger. On February 7, 2018, NuStar Energy, Riverwalk Logistics, L.P., NuStar GP, LLC, Marshall Merger Sub LLC, a wholly owned subsidiary of NuStarEnergy (Merger Sub), Riverwalk Holdings, LLC and NuStar GP Holdings, LLC (NuStar GP Holdings) entered into an Agreement and Plan of Merger (theMerger Agreement) pursuant to which Merger Sub will merge with and into NuStar GP Holdings with NuStar GP Holdings being the surviving entity (theMerger), such that NuStar Energy will be the sole member of NuStar GP Holdings following the Merger. Pursuant to the Merger Agreement and at theeffective time of the Merger, our partnership agreement will be amended and restated to, among other things, (i) cancel the incentive distribution rights heldby our general partner, (ii) convert the 2% general partner interest in NuStar Energy held by our general partner into a non-economic management interestand (iii) provide the holders of our common units with voting rights in the election of the members of the board of directors of NuStar GP, LLC at an annualmeeting, beginning in 2019. The Merger is subject to the satisfaction or waiver of certain conditions, including approval of the Merger Agreement by NuStarGP Holdings unitholders. Additionally, on February 8, 2018, we announced that our management anticipates recommending to the board of directors ofNuStar GP, LLC, and the board of directors expects to adopt, a reset of our quarterly distribution per common unit to $0.60 ($2.40 on an annualized basis),starting with the first-quarter distribution payable in May 2018. Please refer to Note 28 of the Notes to Consolidated Financial Statements in Item 8.“Financial Statements and Supplementary Data” for further discussion of the Merger.Hurricane Activity. In the third quarter of 2017, parts of the Caribbean and Gulf of Mexico experienced three major hurricanes. Several of our facilities wereaffected by the hurricanes, but our St. Eustatius terminal experienced the most damage and was temporarily shut down. We recorded a $5.0 million loss in2017 for property damage at our St. Eustatius terminal, which represents the amount of our property deductible under our insurance policy. We receivedinsurance proceeds of $12.5 million in 2017 and $87.5 million in January 2018 for property damage at our St. Eustatius terminal. We expect that the costs torepair the property damage at the terminal will not exceed the value of insurance proceeds received. Please refer to Note 1 of the Notes to ConsolidatedFinancial Statements in Item 8. “Financial Statements and Supplementary Data” for further discussion.Navigator Acquisition and Financing Transactions. On May 4, 2017, we completed the acquisition of Navigator Energy Services, LLC for approximately$1.5 billion (the Navigator Acquisition). In order to fund the purchase price, we issued 14,375,000 common units for net proceeds of $657.5 million, issued$550.0 million of 5.625% senior notes for net proceeds of $543.3 million and issued 15,400,000 of our 7.625% Series B Fixed-to-Floating Rate CumulativeRedeemable Perpetual Preferred Units (Series B Preferred Units) for net proceeds of $371.8 million. Please refer to Notes 4, 12 and 19 of the Notes toConsolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for further discussion.4Table of ContentsORGANIZATIONAL STRUCTUREOur operations are managed by NuStar GP, LLC, the general partner of our general partner. NuStar GP, LLC, a Delaware limited liability company, is aconsolidated subsidiary of NuStar GP Holdings (NYSE: NSH).The following chart depicts a summary of our organizational structure at December 31, 2017:5Table of ContentsSEGMENTSDetailed financial information about our segments is included in Note 25 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statementsand Supplementary Data.” The following map depicts our assets at December 31, 2017:6Table of ContentsPIPELINEOur pipeline operations consist of the transportation of refined petroleum products, crude oil and anhydrous ammonia. As of December 31, 2017, we ownedand operated:•refined product pipelines with an aggregate length of 3,130 miles and crude oil pipelines with an aggregate length of 1,930 miles in Texas,Oklahoma, Kansas, Colorado and New Mexico (collectively, the Central West System);•a 1,920-mile refined product pipeline originating in southern Kansas and terminating at Jamestown, North Dakota, with a western extension toNorth Platte, Nebraska and an eastern extension into Iowa (the East Pipeline);•a 450-mile refined product pipeline originating at Andeavor’s Mandan, North Dakota refinery and terminating in Minneapolis, Minnesota (theNorth Pipeline); and•a 2,000-mile anhydrous ammonia pipeline originating in the Louisiana delta area that travels north through the Midwestern United Statesforking east and west to terminate in Nebraska and Indiana (the Ammonia Pipeline).The following table lists information about our pipeline assets as of December 31, 2017: Throughput For the year ended December 31,Region / Pipeline SystemLength Tank Capacity 2017 2016 (Miles) (Barrels) (Barrels/Day)Central West System: McKee System2,276 — 171,815 178,373Three Rivers System373 — 78,165 79,502Other481 — 53,829 57,039Central West Refined Products Pipelines3,130 — 303,809 314,914South Texas Crude System330 2,157,000 114,920 124,363Other200 — 52,969 59,087Eagle Ford System530 2,157,000 167,889 183,450McKee System598 1,039,000 137,675 147,956Ardmore System119 824,000 84,801 60,775Permian Crude System683 1,000,000 192,958 —Central West Crude Oil Pipelines1,930 5,020,000 583,323 392,181Total Central West System5,060 5,020,000 887,132 707,095 Central East System: East Pipeline1,920 5,261,000 139,317 143,446North Pipeline450 1,492,000 41,438 48,343Ammonia Pipeline2,000 — 32,172 29,243Total Central East System4,370 6,753,000 212,927 221,032 Total9,430 11,773,000 1,100,059 928,127Description of PipelinesCentral West System. The Central West System covers a total of 5,060 miles, including refined product and crude oil pipelines. The refined product pipelineshave an aggregate length of 3,130 miles (Central West Refined Products Pipelines) and transport gasoline, distillates (including diesel and jet fuel), naturalgas liquids and other products produced at the refineries to which they are connected, including Valero Energy Corporation’s (Valero Energy) McKee andThree Rivers refineries.The crude oil pipelines have an aggregate length of 1,930 miles (Central West Crude Oil Pipelines). Our crude oil pipelines transport crude oil and otherfeedstocks to the refineries to which they are connected, including Valero Energy’s McKee, Three Rivers and Ardmore refineries, or from the Eagle FordShale region to our North Beach marine terminal and to our customers’ refineries in Corpus Christi, Texas. Our Permian Crude System, most of which weacquired with the Navigator Acquisition,7Table of Contentsconsists of crude oil transportation, pipeline connection and storage assets located in the Midland Basin of West Texas, including a pipeline connectionsystem with more than 200 producer tank batteries covering over 500,000 dedicated acres.Central East System. The Central East System covers a total of 4,370 miles and consists of the East Pipeline, North Pipeline and Ammonia Pipeline.The East Pipeline covers 1,920 miles and moves refined products and natural gas liquids north in pipelines ranging in diameter from 6 inches to 16 inches toour terminals and third party terminals along the system and to receiving pipeline connections in Kansas. Shippers on the East Pipeline obtain refinedpetroleum products from refineries in Kansas, Oklahoma and Texas. The East Pipeline system includes 17 terminals, discussed below, with storage capacity ofapproximately 3.8 million barrels and two tank farms with storage capacity of approximately 1.4 million barrels at McPherson and El Dorado, Kansas.The North Pipeline originates at Andeavor’s Mandan, North Dakota refinery and runs from west to east for approximately 450 miles to its termination in theMinneapolis, Minnesota area. The North Pipeline system includes four terminals, discussed below, with storage capacity of approximately 1.5 million barrels.The East and North Pipelines include 21 truck-loading terminals through which refined petroleum products are delivered to storage tanks and then loadedinto petroleum product transport trucks. Revenues earned at these terminals predominately relate to the volumes transported on the pipeline through feesincluded in the pipeline tariff. As a result, these terminals are included in this segment instead of the storage segment.The 2,000-mile Ammonia Pipeline originates in the Louisiana delta area, where it connects to three third-party marine terminals and three anhydrousammonia plants on the Mississippi River. The line runs north through Louisiana and Arkansas into Missouri, where at Hermann, Missouri it splits and onebranch goes east into Illinois and Indiana, while the other branch continues north into Iowa and then turns west into Nebraska. The Ammonia Pipeline isconnected to multiple third-party-owned terminals, which include industrial facility delivery locations. Product is supplied to the pipeline from anhydrousammonia plants in Louisiana and imported product delivered through the marine terminals. Anhydrous ammonia is primarily used as agricultural fertilizer. Itis also used as a feedstock to produce other nitrogen derivative fertilizers and explosives.Pipeline OperationsWe charge tariffs on a per barrel basis for transporting refined products, crude oil and other feedstocks in our refined product and crude oil pipelines and on aper ton basis for transporting anhydrous ammonia in the Ammonia Pipeline.In general, shippers on our crude oil and refined product pipelines deliver petroleum products to our pipelines for transport to/from: (i) refineries that connectto our pipelines, (ii) third-party pipelines or terminals and (iii) our terminals for further delivery to marine vessels or pipelines. We charge our shippers tariffrates based on transportation from the origination point on the pipeline to the point of delivery.Our pipelines are subject to federal regulation by one or more of the following governmental agencies: the Federal Energy Regulatory Commission (theFERC), the Surface Transportation Board (the STB), the Department of Transportation (DOT), the Environmental Protection Agency (EPA) and theDepartment of Homeland Security. Additionally, our pipelines are subject to the respective state jurisdictions. See “Rate Regulation” and “Environmental,Health, Safety and Security Regulation” below.The majority of our pipelines are common carrier. Common carrier activities are those for which transportation through our pipelines is available to anyshipper who requests such services and satisfies the conditions and specifications for transportation. Published tariffs are (i) filed with the FERC for interstatepetroleum product shipments, (ii) filed with the relevant state authority for intrastate petroleum product shipments or (iii) regulated by the STB for ourAmmonia Pipeline.We operate our pipelines remotely through a computerized Supervisory Control and Data Acquisition, or SCADA, system.Demand for and Sources of Refined Products and Crude OilThroughputs on our Central West Refined Product Pipelines and the East and North Pipelines depend on the level of demand for refined products in themarkets served by the pipelines and the ability and willingness of the refiners and marketers having access to the pipelines to supply that demand throughour pipelines.The majority of the refined products delivered through the Central West Refined Product Pipelines and the North Pipeline are gasoline and diesel fuel thatoriginate at refineries connected to our pipelines. Demand for these products fluctuates as prices for these products fluctuate. Prices fluctuate for a variety ofreasons, including the overall balance in supply and demand, which is affected by general economic conditions, among other factors. Prices for gasoline anddiesel fuel tend to increase in the warm weather months when people tend to drive automobiles more often and for longer distances.8Table of ContentsMuch of the refined products and natural gas liquids delivered through the East Pipeline and a portion of volumes on the North Pipeline are ultimately usedas fuel for railroads, ethanol denaturant or in agricultural operations, including fuel for farm equipment, irrigation systems, trucks used for transporting cropsand crop-drying facilities. Demand for refined products for agricultural use, and the relative mix of products required, is affected by weather conditions in themarkets served by the East and North Pipelines. The agricultural sector is also affected by government agricultural policies and crop prices. Although periodsof drought suppress agricultural demand for some refined products, particularly those used for fueling farm equipment, the demand for fuel for irrigationsystems often increases during such times. The mix of refined products delivered for agricultural use varies seasonally, with gasoline demand peaking in earlysummer, diesel fuel demand peaking in late summer and propane demand higher in the fall.Our refined product pipelines are also dependent upon adequate levels of production of refined products by refineries connected to the pipelines, directly orthrough connecting pipelines. The refineries are, in turn, dependent upon adequate supplies of suitable grades of crude oil. Certain of our Central WestRefined Products Pipelines are subject to long-term throughput agreements with Valero Energy. Valero Energy refineries connected directly to our pipelinesobtain crude oil from a variety of foreign and domestic sources. If operations at one of these refineries were discontinued or significantly reduced, it couldhave a material adverse effect on our operations, although we would endeavor to minimize the impact by seeking alternative customers for those pipelines.The North Pipeline is heavily dependent on Andeavor’s Mandan, North Dakota refinery, which primarily runs North Dakota crude oil (although it has theability to process other crude oils), and an interruption in operations at the Andeavor refinery could have a material adverse effect on our operations. Themajority of the refined products transported through the East Pipeline are produced at three refineries located at McPherson and El Dorado, Kansas and PoncaCity, Oklahoma, which are operated by CHS Inc., HollyFrontier Corporation and Phillips 66, respectively. The East Pipeline also has access to Gulf Coastsupplies of products through third party connecting pipelines that receive products originating on the Gulf Coast.Other than the Valero Energy refineries and the Andeavor refinery described above, if operations at any one refinery were discontinued, we believe (assumingunchanged demand for refined products in markets served by the refined product pipelines) that the effects thereof would be short-term in nature and ourbusiness would not be materially adversely affected over the long-term because such discontinued production could be replaced by other refineries or othersources.Our crude oil pipelines are dependent on our customers’ continued access to sufficient crude oil and sufficient demand for refined products for our customersto operate their refineries. The supply of crude oil production (domestic and foreign) could increase or decrease with the change in crude oil prices. Changesin crude oil prices could also affect the exploration and production of shale plays, which could affect demand for crude oil pipelines serving those regions,such as our Eagle Ford System and Permian Crude System. However, certain of our crude oil pipelines, including the McKee System, are the primary source ofcrude oil for our customers’ refineries. Therefore, these “demand-pull” pipelines are less affected by changes in crude oil prices.Demand for and Sources of Anhydrous AmmoniaThe Ammonia Pipeline is one of two major anhydrous ammonia pipelines in the United States and the only one capable of receiving products from outsidethe United States directly into the system and transporting anhydrous ammonia into the nation’s corn belt.Throughputs on our Ammonia Pipeline depend on overall nitrogen fertilizer use, the price of natural gas, which is the primary component of anhydrousammonia, and the level of demand for direct application of anhydrous ammonia as a fertilizer for crop production (Direct Application). Demand for DirectApplication is dependent on the weather, as Direct Application is not effective if the ground is too wet or too dry.Corn producers have fertilizer alternatives to anhydrous ammonia, such as liquid or dry nitrogen fertilizers. Liquid and dry nitrogen fertilizers are both lesssensitive to weather conditions during application but are generally more costly than anhydrous ammonia. In addition, anhydrous ammonia has the highestnitrogen content of any nitrogen-derivative fertilizer.CustomersThe largest customer of our pipeline segment was Valero Energy, which accounted for approximately 33% of the total segment revenues for the year endedDecember 31, 2017. In addition to Valero Energy, our customers include integrated oil companies, refining companies, farm cooperatives, railroads andothers. No other customer accounted for more than 10% of the total revenues of the pipeline segment for the year ended December 31, 2017.9Table of ContentsCompetition and Business ConsiderationsBecause pipelines are generally the lowest-cost method for intermediate and long-haul movement of crude oil and refined petroleum products, our moresignificant competitors are common carrier and proprietary pipelines owned and operated by major integrated and large independent oil companies and othercompanies in the areas where we deliver products. Competition between common carrier pipelines is based primarily on transportation charges, quality ofcustomer service and proximity to end users. Trucks may competitively deliver products in some of the areas served by our pipelines; however, trucking costsrender that mode of transportation uncompetitive for longer hauls or larger volumes.Most of our refined product pipelines and certain of our crude oil pipelines within the Central West System are physically integrated with and principallyserve refineries owned by Valero Energy. As a result, we do not believe that we will face significant competition for transportation services provided to theValero Energy refineries we serve.Certain of our crude oil pipelines serve areas or refineries impacted by domestic shale oil production in the Eagle Ford, Permian Basin and Granite Washregions. Our pipelines also face competition from other crude oil pipelines and truck transportation in these regions. However, some of that exposure ismitigated through our long-term contracts and minimum volume commitments with creditworthy customers.The East and North Pipelines compete with an independent common carrier pipeline system owned by Magellan Midstream Partners, L.P. (Magellan) thatoperates approximately 100 miles east of and parallel to the East Pipeline and in close proximity to the North Pipeline. Certain of the East Pipeline’s and theNorth Pipeline’s delivery terminals are in direct competition with Magellan’s terminals. Competition with Magellan is based primarily on transportationcharges, quality of customer service and proximity to end users.Competitors of the Ammonia Pipeline include the other major anhydrous ammonia pipeline, owned by Magellan, which originates in Oklahoma and Texasand terminates in Minnesota. The competing pipeline has the same Direct Application demand and weather issues as the Ammonia Pipeline but is restrictedto domestically produced anhydrous ammonia. Midwest production facilities, nitrogen fertilizer substitutes and barge and railroad transportation representother forms of direct competition to the Ammonia Pipeline under certain market conditions.STORAGEOur storage segment consists of facilities that provide storage, handling and other services for petroleum products, crude oil, specialty chemicals and otherliquids. As of December 31, 2017, we owned and operated:•40 terminal and storage facilities in the United States and one terminal in Nuevo Laredo, Mexico, with total storage capacity of 53.3 millionbarrels;•A terminal on the island of St. Eustatius with tank capacity of 14.3 million barrels and a transshipment facility;•A terminal located in Point Tupper, Canada with tank capacity of 7.8 million barrels and a transshipment facility; and•Six terminals located in the United Kingdom and one terminal located in Amsterdam, the Netherlands, with total storage capacity ofapproximately 9.5 million barrels.The following table sets forth information about our terminal and storage facilities as of December 31, 2017:FacilityTank Capacity (Barrels)Colorado Springs, CO328,000Denver, CO110,000Albuquerque, NM251,000Rosario, NM166,000Catoosa, OK358,000Abernathy, TX160,000Amarillo, TX269,000Corpus Christi, TX491,000Corpus Christi, TX (North Beach)3,339,000Edinburg, TX340,000 10Table of ContentsFacilityTank Capacity (Barrels)El Paso, TX (b)419,000Harlingen, TX286,000Laredo, TX215,000San Antonio, TX (c)375,000Southlake, TX569,000Nuevo Laredo, Mexico35,000Central West Terminals7,711,000 Jacksonville, FL2,593,000St. James, LA9,917,000Houston, TX86,000Texas City, TX (c)2,964,000Gulf Coast Terminals15,560,000 Blue Island, IL690,000Andrews AFB, MD (a)75,000Baltimore, MD813,000Piney Point, MD5,402,000Linden, NJ (c)4,637,000Paulsboro, NJ74,000Virginia Beach, VA (a)41,000North East Terminals11,732,000 Los Angeles, CA608,000Pittsburg, CA398,000Selby, CA3,074,000Stockton, CA816,000Portland, OR1,345,000Tacoma, WA391,000Vancouver, WA (c)774,000West Coast Terminals7,406,000 Benicia, CA3,683,000Corpus Christi, TX4,030,000Texas City, TX3,141,000Refinery Storage Tanks10,854,000 Eastham, England2,096,000Grays, England1,958,000Runcorn, England149,000Belfast, Northern Ireland408,000Glasgow, Scotland353,000Grangemouth, Scotland719,000United Kingdom (UK) Terminals5,683,000 11Table of ContentsFacilityTank Capacity (Barrels)St. Eustatius, the Netherlands14,256,000Amsterdam, the Netherlands3,834,000Point Tupper, Canada7,778,000International Terminals31,551,000 Total84,814,000 (a)Terminal facility also includes pipelines to U.S. government military base locations.(b)We own a 67% undivided interest in the El Paso refined product terminal. The tank capacity represents the proportionate share of capacity attributable to our ownershipinterest.(c)Location includes two terminal facilities.Description of Major Terminal FacilitiesSt. Eustatius. We own and operate a 14.3 million barrel petroleum storage and terminalling facility located on the island of St. Eustatius in the Caribbean,which is located at a point of minimal deviation from major shipping routes. This facility is capable of handling a wide range of petroleum products,including crude oil and refined products, and it can accommodate heavily laden ultra large crude carriers, or ULCCs, for loading and discharging crude oiland other petroleum products. A two-berth jetty, a two-berth monopile with platform and buoy systems, a floating hose station and an offshore single pointmooring (SPM) buoy with loading and unloading capabilities serve the terminal’s customers’ vessels. The fuel oil and petroleum product facilities have in-tank and in-line blending capabilities, while the crude tanks have tank-to-tank blending capability and in-tank mixers. In addition to the storage andblending services at St. Eustatius, this facility has the flexibility to utilize certain storage capacity for both feedstock and refined products to support ouratmospheric distillation unit, which is capable of handling up to 25,000 barrels per day of feedstock, ranging from condensates to heavy crude oil. We ownand operate all of the berthing facilities at the St. Eustatius terminal. Separate fees apply for use of the berthing facilities, as well as associated services,including pilotage, tug assistance, line handling, launch service, emergency response services and other ship services.We are currently working on strategic projects at the St. Eustatius terminal to make it more flexible and marketable. These projects include: (i) replacing theexisting SPM with a refurbished SPM and the installation of two additional subsea pipelines from the SPM, which will give us the option to load and unloadtwo different products at the SPM and segregate various grades of crude and fuel oil to and from the SPM, (ii) pipeline improvements and (iii) tank upgrades,repairs and rebuilds. Upon completion of these projects, we will also have the capability to load or unload three crude vessels at a time. In September 2017,St. Eustatius sustained substantial damage during Hurricane Irma and the terminal was temporarily shut down. Although the terminal was fully operational byNovember, we expect repairs to continue into 2018 and beyond, thereby delaying the completion of certain of these strategic projects.Refinery Storage Tanks. We own and operate crude oil storage tanks with an aggregate storage capacity of 10.9 million barrels that are physically integratedwith and serve refineries owned by Valero Energy at Corpus Christi and Texas City, TX and Benicia, CA. Effective January 1, 2017, we lease our refinerystorage tanks to Valero Energy in exchange for a fixed fee, whereas we previously earned fees based upon throughput.St. James, Louisiana. Our St. James terminal, which is located on the Mississippi River near St. James, Louisiana, has a total storage capacity of 9.9 millionbarrels. The facility is located on almost 900 acres of land, some of which is undeveloped. The majority of the storage tanks and infrastructure are suited forlight crude oil, with certain of the tanks capable of fuel oil or heated crude oil storage. Additionally, the facility has one barge dock and two ship docks. OurSt. James terminal is connected to gathering pipelines in the Gulf of Mexico, lines that connect to Eagle Ford, Permian and other domestic shale plays, andpipelines to refineries in the Gulf Coast and Midwest. The St. James terminal also has two unit train rail facilities and a manifest rail facility, which are servedby the Union Pacific Railroad and have a combined capacity of approximately 200,000 barrels per day.Point Tupper. We own and operate a 7.8 million barrel terminalling and storage facility located at Point Tupper on the Strait of Canso, near Port Hawkesbury,Nova Scotia. This facility is the deepest independent, ice-free marine terminal on the North American Atlantic coast, with access to the East Coast, Canadaand the Midwestern United States via the St. Lawrence Seaway and the Great Lakes system. With one of the premier jetty facilities in North America, thePoint Tupper facility can accommodate heavily laden ULCCs for loading and discharging crude oil, petroleum products and petrochemicals. Crude oil andpetroleum product movements at the terminal are fully automated. Separate fees apply for use of the jetty facility, as well12Table of Contentsas associated services, including pilotage, tug assistance, line handling, launch service, emergency response services and other ship services.Linden, New Jersey. Our Linden terminal facility includes two terminals that provide deep-water terminalling capabilities in the New York Harbor andprimarily stores petroleum products, including gasoline, jet fuel and fuel oils. The two terminals have a total storage capacity of 4.6 million barrels and canreceive and deliver products via ship, barge and pipeline. The terminal facility includes two docks.Amsterdam. Our Amsterdam terminal has a total storage capacity of 3.8 million barrels. This facility is located at the Port of Amsterdam and primarily storespetroleum products, including gasoline, diesel and fuel oil. This facility has two docks for vessels and five docks for inland barges.Corpus Christi North Beach. We own and operate a 3.3 million barrel crude oil storage and terminalling facility located at the Port of Corpus Christi inTexas. The facility supports our South Texas Crude System and is connected to a third-party pipeline system. It also provides our customers with theflexibility to segregate and deliver crude oil and processed condensate. This facility has three docks, including one private dock, and can load crude oil ontoships simultaneously on all three docks at a maximum rate of 65,000 barrels per hour. This facility will have exclusive-use access to the Port of CorpusChristi’s new crude oil dock expected to be completed in 2018, which will give the terminal four docks. Once the new dock is complete, the Corpus ChristiNorth Beach terminal will have the capacity to move on average between 650,000 and 700,000 barrels per day and will be able to accommodate Aframax-class vessels.Storage OperationsRevenues for the storage segment include fees for tank storage agreements, where a customer agrees to pay for a certain amount of storage in a tank over aperiod of time (storage terminal revenues), and throughput agreements, where a customer pays a fee per barrel for volumes moving through our terminals(throughput terminal revenues). Our terminals also provide blending, additive injections, handling and filtering services for which we charge additional fees.We previously charged a fee for each barrel of crude oil and certain other feedstocks that we delivered to Valero Energy’s Benicia, Corpus Christi West andTexas City refineries from our crude oil refinery storage tanks. Effective January 1, 2017, we lease these refinery storage tanks in exchange for a fixed fee.Certain of our facilities charge fees to provide marine services such as pilotage, tug assistance, line handling, launch service, emergency response servicesand other ship services.Demand for Refined Petroleum Products and Crude OilThe operations of our refined product terminals depend in large part on the level of demand for products stored in our terminals in the markets served bythose assets. The majority of products stored in our terminals are refined petroleum products. Demand for our terminalling services will generally increase ordecrease with demand for refined petroleum products, and demand for refined petroleum products tends to increase or decrease with the relative strength ofthe economy. In addition, the forward pricing curve can have an impact on demand. For example, in a contango market (when the price of a commodity isexpected to exceed current prices), demand for storage services will generally increase.Crude oil delivered to our St. James terminal through our unit train facilities, and crude oil delivered to our Corpus Christi North Beach terminal willgenerally increase or decrease with crude oil production rates in the Bakken and Eagle Ford shale plays, respectively. In addition, the market pricerelationship between various grades of crude oil impacts the demand for our unit train facilities at our St. James terminal.CustomersWe provide storage and terminalling services for crude oil and refined petroleum products to many of the world’s largest producers of crude oil, integrated oilcompanies, chemical companies, oil traders and refiners. In addition, our blending capabilities in our storage assets have attracted customers who have leasedcapacity primarily for blending purposes. The largest customer of our storage segment is Valero Energy, which accounted for approximately 21% of the totalrevenues of the segment for the year ended December 31, 2017. No other customer accounted for more than 10% of the total revenues of the storage segmentfor the year ended December 31, 2017.Competition and Business ConsiderationsMany major energy and chemical companies own extensive terminal storage facilities. Although such terminals often have the same capabilities as terminalsowned by independent operators, they generally do not provide terminalling services to third parties. In many instances, major energy and chemicalcompanies that own storage and terminalling facilities are also significant customers of independent terminal operators. Such companies typically havestrong demand for terminals owned by independent operators when independent terminals have more cost-effective locations near key transportation links,such as13Table of Contentsdeep-water ports. Major energy and chemical companies also need independent terminal storage when their owned storage facilities are inadequate, eitherbecause of size constraints, the nature of the stored material or specialized handling requirements.Independent terminal owners generally compete on the basis of the location and versatility of terminals, service and price. A favorably located terminal willhave access to various cost-effective transportation modes both to and from the terminal. Transportation modes typically include waterways, railroads,roadways and pipelines.Terminal versatility is a function of the operator’s ability to offer complex handling requirements for diverse products. The services typically provided by theterminal include, among other things, the safe storage of the product at specified temperature, moisture and other conditions, as well as receipt at and deliveryfrom the terminal, all of which must comply with applicable environmental regulations. A terminal operator’s ability to obtain attractive pricing is oftendependent on the quality, versatility and reputation of the facilities owned by the operator. Although many products require modest terminal modification,operators with versatile storage capabilities typically require less modification prior to usage, ultimately making the storage cost to the customer moreattractive.Our St. Eustatius and Point Tupper terminals have historically functioned as “break bulk” facilities, which handled imports of light crude from foreignsources into the U.S. to satisfy U.S. East Coast and Gulf Coast refinery demand for light crude. Light crude suppliers brought the crude from the Middle Eastand other foreign regions on very large ships, which are efficient for long routes. These large ships, due to draft constraints, are unable to navigate far enoughinland to deliver directly to U.S. shores, which necessitates unloading these ships to storage and subsequent loading onto smaller ships that can bring thecrude to the refiners, a process referred to as “break bulk.” Both terminals are well-located to provide this service.As the supply of light crude from various U.S. shale formations has increased, U.S. demand for foreign light crude oil, particularly on the U.S. Gulf Coast, hasdropped. This reduced demand for imported light crude has, in turn, changed oil trade flow patterns around the world, thereby depressing the demand forbreak bulk services. At the same time, South American production of heavy crude has ramped up significantly. As demand for export of heavy crude out ofSouth America has risen, so has the demand for “build bulk” services. In order to reduce costs and increase efficiencies for long routes to customers abroad,exporting producers need to consolidate their heavy oil cargos from the small ships used to move the heavy crude off shore to a large vessel that is moreefficient for long routes, a process referred to as “build bulk.” Our St. Eustatius terminal’s location is well-suited to build bulk for South American producersheaded to customers overseas, primarily in Asia. However, recently, the combination of oversupply of storage capacity, decreased demand from backwardatedmarkets and reduced North American crude imports has depressed storage rates in the region.We may face increased competition from new and/or expanding terminals near our locations, if those facilities offer either break bulk or build bulk services,as demanded by the applicable oil trade flows, now and in the future.Our crude oil refinery storage tanks are physically integrated with and serve refineries owned by Valero Energy. Additionally, we have entered into variousagreements with Valero Energy governing the usage of these tanks. As a result, we believe that we will not face significant competition for our servicesprovided to those refineries.FUELS MARKETINGPrior to the third quarter of 2017, our fuels marketing operations involved the purchase of crude oil, fuel oil, bunker fuel, fuel oil blending components andother refined products for resale. We ceased marketing crude oil in the second quarter of 2017 and exited our heavy fuels trading operations in the thirdquarter of 2017. These actions are in line with our goal of reducing our exposure to commodity margins, and instead focusing on our core, fee-based pipelineand storage segments. The only operations remaining in our fuels marketing segment are our bunkering operations at our St. Eustatius and Texas Cityterminals, as well as certain of our blending operations.The results of operations for the fuels marketing segment depend largely on the margin between our cost and the sales prices of the products we market.Therefore, the results of operations for this segment are more sensitive to changes in commodity prices compared to the operations of the pipeline and storagesegments. Since our fuels marketing operations expose us to commodity price risk, we enter into derivative instruments to mitigate the effect of commodityprice fluctuations on our operations. The derivative instruments we use consist primarily of commodity futures and swap contracts.Customers for our bunker fuel sales are mainly ship owners, including cruise line companies. In the sale of bunker fuel, we compete with ports offering bunkerfuels that are along the route of travel of the vessel.14Table of ContentsEMPLOYEESAs of December 31, 2017, we had 1,694 employees.RATE REGULATIONSeveral of our pipelines are interstate common carrier pipelines, which are subject to regulation by the FERC under the Interstate Commerce Act (ICA) andthe Energy Policy Act of 1992 (the EP Act). The ICA and its implementing regulations give the FERC authority to regulate the rates charged for service oninterstate common carrier pipelines and generally require the rates and practices of interstate liquids pipelines to be just, reasonable, not undulydiscriminatory and not unduly preferential. The ICA also requires tariffs that set forth the rates a common carrier pipeline charges for providing transportationservices on its interstate common carrier liquids pipelines, as well as the rules and regulations governing these services, to be maintained on file with theFERC and posted publicly. The EP Act deemed certain rates in effect prior to its passage to be just and reasonable and limited the circumstances under whicha complaint can be made against such “grandfathered” rates. The EP Act and its implementing regulations also allow interstate common carrier liquidspipelines to annually index their rates up to a prescribed ceiling level and require that such pipelines index their rates down to the prescribed ceiling level ifthe index is negative. In addition, the FERC retains cost-of-service ratemaking, market-based rates and settlement rates as alternatives to the indexingapproach.The Ammonia Pipeline is subject to regulation by the STB pursuant to the Interstate Commerce Act applicable to such pipelines (which differs from the ICAapplicable to interstate liquids pipelines). Under that regulation, the Ammonia Pipeline’s rates, classifications, rules and practices related to the interstatetransportation of anhydrous ammonia must be reasonable and, in providing interstate transportation, the Ammonia Pipeline may not subject a person, place,port or type of traffic to unreasonable discrimination.In addition to federal regulatory body oversight, various states, including Colorado, Kansas, Louisiana, North Dakota and Texas, maintain commissionsfocused on the rates and practices of common carrier pipelines offering services within their borders. Although the applicable state statutes and regulationsvary, they generally require that intrastate pipelines publish tariffs setting forth all rates, rules and regulations applying to intrastate service, and generallyrequire that pipeline rates and practices be just, reasonable and nondiscriminatory.Shippers may challenge tariff rates, rules and regulations on our pipelines. In most instances, state commissions have not initiated investigations of the ratesor practices of pipelines in the absence of shipper complaints. There are no pending challenges or complaints regarding our tariffs.ENVIRONMENTAL, HEALTH, SAFETY AND SECURITY REGULATIONOur operations are subject to extensive international, federal, state and local environmental laws and regulations, in the U.S. and in the other countries inwhich we operate, including those relating to the discharge of materials into the environment, waste management, remediation, the characteristics andcomposition of fuels, climate change and greenhouse gases. Our operations are also subject to extensive health, safety and security laws and regulations,including those relating to worker and pipeline safety, pipeline and storage tank integrity and operations security. The principal environmental, health,safety and security risks associated with our operations relate to unauthorized emissions into the air, releases into soil, surface water or groundwater, personalinjury and property damage. We have adopted policies, practices, systems and procedures to comply with the laws and regulations, mitigate these risks, limitthe liability that could result from such events, prevent material environmental or other damage, ensure the safety of our employees and the public and secureour pipelines, terminals and operations. Compliance with environmental, health, safety and security laws, regulations and related permits increases ourcapital expenditures and operating expenses, and violation of these laws, regulations or permits could result in significant civil and criminal liabilities,injunctions or other penalties.In 2017, our capital expenditures attributable to compliance with environmental regulations were $13.9 million, and we currently project spending to beapproximately $17.8 million in this regard in 2018. However, future governmental actions could result in these laws and regulations becoming morerestrictive, necessitating additional capital expenditures and operating expenses. At this time, we are unable to estimate the effect on our financial conditionor results of operations, or the amount and timing of such possible future expenditures or expenses. In addition, while we believe that we are in substantialcompliance with the environmental, health, safety and security laws and regulations applicable to our operations, risks of additional complianceexpenditures, expenses and liabilities are inherent within the industry. As a result, there can be no assurances that significant expenditures, expenses andliabilities will not be incurred in the future. However, while compliance may affect our capital expenditures and operating expenses, we believe that the costof such compliance will not have a material impact on our15Table of Contentscompetitive position, financial condition or results of operations. Further, we do not believe that our cost of compliance is proportionately greater than thecost to other companies operating in our industry.Discussed below are the primary U.S. environmental, health, safety and security laws applicable to our operations. Compliance with or violations of any ofthese laws and related regulations could result in significant expenditures, expenses and liabilities.OCCUPATIONAL SAFETY AND HEALTHWe are subject to the Occupational Safety and Health Act, as amended, and analogous or more stringent international, state and local laws and regulations forthe protection of worker safety and health. In addition, we have operations subject to the Occupational Safety and Health Administration’s Process SafetyManagement regulations. These regulations apply to processes which involve certain chemicals at or above specified thresholds.FUEL STANDARDS AND RENEWABLE ENERGYFederal, state and local laws and regulations regulate the fuels we transport and store for our customers. Changes in these laws or regulations could affect ourearnings, including by reducing our throughput volumes, or require capital expenditures and expenses to segregate and separately store fuels. In addition,several federal and state programs require, subsidize or encourage the purchase and use of renewable energy, electric battery-powered motor vehicle enginesand alternative fuels, such as biodiesel. These programs may over time offset projected increases or reduce the demand for refined petroleum products,particularly gasoline, in certain markets. However, the increased production and use of biofuels may also create opportunities for pipeline transportation andfuel blending. Other legislative changes in the future may similarly alter the expected demand and supply projections for refined petroleum products in waysthat cannot be predicted.HAZARDOUS SUBSTANCES & HAZARDOUS WASTEThe Federal Comprehensive Environmental Response, Compensation and Liability Act, referred to as CERCLA or “Superfund,” and analogous or morestringent international, state and local laws and regulations, impose restrictions and liability related to the release, threatened release, disposal andremediation of hazardous substances. This liability can be joint and several strict liability, without regard to fault or the legality of the original release ordisposal. Current operators of a facility, past owners or operators of a facility and parties who arranged for the disposal of a hazardous substance can be heldliable under these laws and regulations.We currently own, lease, and operate on, and have in the past owned, leased and operated on, properties and at facilities that handled, transported and storedhazardous substances. Our current operating and disposal practices comply with applicable laws, regulations and industry standards, and we believe our pastpractices complied at the time. Despite our compliance, hazardous substances may have been released on or under our facilities and properties, or on or underlocations where these substances were taken for disposal. We are currently remediating subsurface contamination at several facilities, and based on currentlyavailable information we believe the costs related to these remedial activities should not materially affect our financial condition or results of operations.However, the aggregate total cost of remediation projects can be difficult to estimate and there are no assurances that the cost of future remedial activities willnot become material. Further, applicable laws or regulation, including regarding clean up levels, may be revised to be more restrictive in the future. As aresult, we are unable to estimate the effect of future regulation on our financial condition or results of operations or the amount and timing of futureexpenditures.The Federal Resource Conservation and Recovery Act, as amended, and analogous or more stringent international, state and local laws and regulationsimpose restrictions and strict controls regarding the handling and disposal of wastes, including hazardous wastes. We generate hazardous wastes and it ispossible that additional wastes, which could include wastes currently generated during operations, will be designated as hazardous wastes in the future.Hazardous wastes are subject to more rigorous requirements than are non-hazardous wastes.AIRThe Federal Clean Air Act, as amended, and various applicable international, state and local laws and regulations impose restrictions and strict controlsregarding emission into the air. These laws and regulations generally require permits issued by applicable federal or state authorities for emissions, andimpose monitoring and reporting requirements. Such laws and regulations can also require pre-approval for the construction or modification of certainoperations or facilities expected to produce or increase air emissions.16Table of ContentsWATERThe Federal Water Pollution Control Act, as amended, also known as the Clean Water Act, and analogous or more stringent international, state and local lawsand regulations impose restrictions and strict controls regarding the discharge of pollutants into state waters or waters of the United States. The discharge ofpollutants into waters is generally prohibited, except in accordance with a permit issued by applicable federal or state authorities. The Oil Pollution Actfurther regulates the discharge of oil, and the response to and liability for oil spills, and the Rivers and Harbors Act regulates pipelines crossing navigablewaters.PIPELINE AND OTHER ASSET INTEGRITY, SAFETY AND SECURITYOur pipeline, storage tank and other operations are subject to extensive international, federal, state and local laws and regulations governing integrity andsafety, including those in Title 49 of the U.S. Code and its implementing regulations. These laws and regulations include the Pipeline and HazardousMaterials Safety Administration’s requirements for safe pipeline design, construction, operation, maintenance, inspection, testing and corrosion control,control rooms and qualification programs for operating personnel. In addition, we have marine terminal operations subject to Coast Guard safety, integrityand security regulations and standards. We also have operations subject to the Department of Homeland Security Chemical Facility Anti-Terrorism Standardsand Transportation Security Administration’s Pipeline Security Guidelines. We believe that we are in material compliance with all applicable laws andregulations regarding the security of our facilities.While we are not currently required to implement specific governmental regulatory protocols for the protection of our computer-based systems andtechnology from cyber threats and attacks, proposals to do so are being considered by a number of U.S. governmental departments and agencies, includingthe Department of Homeland Security. We currently have our own cybersecurity programs and protocols in place; however, we cannot guarantee theireffectiveness, and successful penetration of our critical systems could have a material effect on our operations and those of our customers and vendors.17Table of ContentsRISK FACTORSRISKS RELATED TO THE POTENTIAL MERGERWhile the Merger Agreement is in effect, we may be limited in our ability to pursue other attractive business opportunities.While the Merger Agreement is in effect, we have agreed to refrain from taking certain actions with respect to our business and financial affairs pending theconsummation of the Merger or termination of the Merger Agreement. These restrictions could be in effect for an extended period of time if theconsummation of the Merger is delayed. These limitations do not preclude us from conducting our business in the ordinary or usual course or from acquiringassets or businesses so long as such activity does not have a “material adverse effect,” as such term is defined in the Merger Agreement, or exceed certainthresholds specifically provided in the Merger Agreement.In addition to the economic costs associated with pursuing the Merger, the management of our general partner will continue to devote substantial time andother human resources to the proposed Merger, which could limit our ability to pursue other attractive business opportunities, including potential jointventures, stand-alone projects and other transactions. If we are unable to pursue such other attractive business opportunities, our growth prospects and thelong-term strategic position of our business following the Merger could be adversely affected.Our existing unitholders will be diluted by the Merger.The Merger will dilute the ownership position of our existing unitholders. Pursuant to the Merger Agreement, NuStar GP Holdings unitholders will receiveapproximately 23.6 million of our common units as a result of the Merger. Assuming the number of units outstanding as of January 31, 2018, immediatelyfollowing the Merger, our common units would be owned approximately 78% by our current common unitholders and approximately 22% by former NuStarGP Holdings unitholders.The Merger is subject to conditions and may not be consummated even if the required NuStar GP Holdings unitholder approvals are obtained.The Merger is subject to the satisfaction or waiver of certain conditions, some of which are out of the control of NuStar GP Holdings and NuStar Energy,including approval of the Merger Agreement by NuStar GP Holdings unitholders. The Merger Agreement also contains other conditions that, if not satisfiedor waived, would result in the Merger not occurring, regardless of whether or not the NuStar GP Holdings unitholders have voted in favor of the Merger-related proposals presented to them. Satisfaction of some of these other conditions to the Merger is not entirely in the control of either NuStar GP Holdings orNuStar Energy. In addition, NuStar GP Holdings and NuStar Energy can agree not to consummate the Merger even if all unitholder approvals have beenreceived. The closing conditions to the Merger may not be satisfied, and NuStar GP Holdings and NuStar Energy may choose not to, or may be unable to,waive an unsatisfied condition, which may cause the Merger not to occur.The Merger Agreement contains provisions granting both NuStar Energy and NuStar GP Holdings the right to terminate the Merger Agreement for certainreasons, including, among others (1) by mutual consent of NuStar Energy and NuStar GP Holdings; (2) by either party if the Merger has not beenconsummated on or before August 8, 2018; (3) if certain changes in rules or regulations prohibit the consummation of the Merger; (4) if NuStar GP Holdingsfails to obtain NuStar GP Holdings unitholder approval; or (5) if a breach of, or an inaccuracy in, the representations or warranties is not cured within thirtydays. Furthermore, NuStar Energy may terminate the Merger Agreement in the event that, prior to NuStar GP Holdings unitholder approval, NuStar GPHoldings has intentionally and materially breached the non-solicitation covenants in the Merger Agreement or the NuStar GP Holdings board issues a changeof recommendation pursuant to the terms of the Merger Agreement, and NuStar GP Holdings may terminate the Merger Agreement in order to accept aSuperior Proposal (as defined in the Merger Agreement) so long as NuStar GP Holdings (1) has not intentionally and materially breached certain provisions ofthe Merger Agreement and (2) has paid NuStar Energy a termination fee.Failure to complete the Merger or delays in completing the Merger could negatively impact our common unit price.If the Merger is not completed for any reason, we may be subject to a number of material risks, including the following:•we will not realize the benefits expected from the Merger, including a potentially enhanced financial and competitive position;•the price of our common units may decline to the extent that the current market price of these securities reflects a market assumption that theMerger will be completed; and•some costs relating to the Merger, such as certain investment banking fees and legal and accounting fees, must be paid even if the Merger is notcompleted.18Table of ContentsThe costs of the Merger could adversely affect our operations and cash flows available for distribution to our unitholders.The total costs of the Merger, which could be substantial, primarily consist of investment banking, legal counsel and accounting fees, financial printing andother related costs. These costs could adversely affect our operations and cash flows available for distributions to our unitholders.RISKS RELATED TO OUR BUSINESSWe may not be able to generate sufficient cash from operations to enable us to pay quarterly distributions to our unitholders.The amount of cash that we can distribute to our unitholders each quarter principally depends upon the amount of cash we generate from our operations,which fluctuates from quarter to quarter based on, among other things:•throughput volumes transported in our pipelines;•storage contract renewals or throughput volumes in our terminals and storage facilities;•tariff rates and fees we charge and the revenue we realize for our services;•demand for and supply of crude oil, refined products and anhydrous ammonia;•the effect of worldwide energy conservation measures;•our operating costs;•the costs to comply with environmental, health, safety and security laws and regulations;•weather conditions;•domestic and foreign governmental laws, regulations, sanctions, embargoes and taxes;•prevailing economic conditions; and•the results of our marketing, trading and hedging activities, which fluctuate depending upon the relationship between refined product pricesand prices of crude oil and other feedstocks.In addition, the amount of cash that we will have available for distribution depends on other factors, including:•our debt service requirements and restrictions on distributions contained in our current or future debt agreements;•the sources of cash used to fund our acquisitions;•our capital expenditures;•fluctuations in our working capital needs;•issuances of debt and equity securities and ability to access the capital markets; and•adjustments in cash reserves made by our board of directors, in its discretion.On February 8, 2018, we announced that our management anticipates recommending to our board of directors, and our board of directors expects to adopt, areset of our quarterly distribution per common unit to $0.60 ($2.40 on an annualized basis), starting with the first-quarter distribution payable in May 2018.In addition, it is possible that one or more of the factors listed above may serve to reduce our available cash to such an extent that we could be renderedunable to pay distributions at the current level or at all in a given quarter. Furthermore, cash distributions to our unitholders depend primarily upon our cashflows, including cash flows from reserves and working capital borrowings, and not solely on profitability, which is affected by non-cash items, and we maymake cash distributions during periods in which we record net losses and may not make cash distributions during periods in which we record net income.Our future financial and operating flexibility may be adversely affected by our significant leverage, any future downgrades of our credit ratings,restrictions in our debt agreements and conditions in the financial markets.As of December 31, 2017, our consolidated debt was $3.6 billion, and we have the ability to incur more debt. We also may be required to post cash collateralunder certain of our hedging arrangements, which we expect to fund with borrowings under our revolving credit agreement. In addition to any potentialdirect financial impact of our debt, it is possible that any material increase to our debt or other negative financial factors may be viewed negatively by creditrating agencies, which could result in ratings downgrades and increased costs for us to access the capital markets. In November 2017, S&P Global Ratingsdowngraded our credit rating from BB+ Stable to BB Negative outlook, which raised the interest rate on our 7.65% Senior Notes Due 2018 (the 2018 SeniorNotes). In February 2018, Moody’s Investors Service, Inc. downgraded our credit rating from Ba1 to Ba2, which increased the interest rate on both the 2018Senior Notes and amounts borrowed under our credit facilities. Any additional downgrades in our credit ratings in the future could result in further increasesto the interest rate on the 2018 Senior Notes, significantly increase our capital costs, reduce our liquidity and adversely affect our ability to raise capital inthe future.Our revolving credit agreement contains restrictive covenants, such as limitations on indebtedness, liens, mergers, asset transfers and certain investingactivities. In addition, the revolving credit agreement generally requires us to maintain, as of the end of each rolling period (consisting of any period of fourconsecutive fiscal quarters) a consolidated debt coverage ratio (consolidated debt to consolidated EBITDA, each as defined in the revolving creditagreement) not to exceed 5.00-to-1.00,19Table of Contentsexcept in specific circumstances, including acquisitions for aggregate net consideration of at least $50 million, when we are permitted to maintain aconsolidated debt coverage ratio of up to 5.50-to-1.00 for two rolling periods, as provided in the revolving credit agreement. Our maximum permitted ratiowas raised to 5.50-to-1.00 through March 31, 2018 due to our acquisition of Navigator Energy Services, LLC. We also amended our revolving creditagreement in November 2017 to exclude NuStar Logistics’ 7.625% Fixed-to-Floating Rate Subordinated Notes due 2043 (the Junior Sub Notes) from ourcalculation of consolidated debt through December 31, 2018. Failure to comply with any of the revolving credit agreement restrictive covenants or ourrequired coverage ratio will result in a default and could result in acceleration of our obligations under the revolving credit agreement and possibly otherindebtedness. Future financing agreements we may enter into may contain similar or more restrictive covenants than those we have negotiated for our currentfinancing agreements.Our accounts receivable securitization program contains various customary affirmative and negative covenants and default, indemnification and terminationprovisions, and the related receivables financing agreement (pursuant to which we are initial servicer and performance guarantor) provides for acceleration ofamounts owed upon the occurrence of certain specified events.Our debt service obligations, restrictive covenants and maturities resulting from our leverage may adversely affect our ability to finance future operations,pursue acquisitions, fund our capital needs and pay cash distributions to our unitholders. In addition, this leverage may make our results of operations moresusceptible to adverse economic or operating conditions, limit our flexibility in planning for, or reacting to, changes in our business and industry and placeus at a competitive disadvantage compared to competitors with proportionately less indebtedness. For example, during an event of default under certain ofour debt agreements, we would be prohibited from making cash distributions to our unitholders. Also, if any of our lenders file for bankruptcy or experiencesevere financial hardship, they may not honor their pro rata share of our borrowing requests under the revolving credit agreement, which may significantlyreduce our available borrowing capacity and, as a result, materially adversely affect our financial condition and ability to pay distributions to ourunitholders.Our ability to service our debt will depend on, among other things, our future financial and operating performance, which will be affected by prevailingeconomic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient toservice our indebtedness, we may be required to reduce our distributions, reduce or delay our business activities, investments or capital expenditures, sellassets or issue equity, which could materially and adversely affect our financial condition, results of operations, cash flows and ability to make distributionsto unitholders, as well as the trading price of our units.Depending on conditions in the credit and capital markets at a given time, we may not be able to obtain funding on acceptable terms or at all, which mayhinder or prevent us from meeting our future capital needs.From time to time, the domestic and global financial markets and economic conditions are volatile and disrupted by a variety of factors, including lowconsumer confidence, high unemployment, geoeconomic and geopolitical issues, weak economic conditions and uncertainty in the market. In addition, thereare fewer investors and lenders for master limited partnership debt and equity capital market issuances than there are for corporate issuances. As a result, thecost of raising capital in the debt and equity capital markets could increase substantially, possibly at a time when the availability of funds from these marketshas diminished. The cost of obtaining funds from the credit markets may increase as interest rates increase and tighter lending standards are enacted, andlenders may refuse to refinance existing debt on similar terms or at all and reduce, or in some cases cease to provide, funding to borrowers.In addition, lending counterparties under our existing revolving credit facility and other debt instruments may be unwilling or unable to meet their fundingobligations. Due to these factors, we cannot be certain that new financing or funding will be available on acceptable terms. If funding is not available whenneeded, or is available only on unfavorable terms, we may be unable to execute our growth strategy, complete future acquisitions or construction projects ortake advantage of other business opportunities, any of which could have a material adverse effect on our revenues and results of operations.A significant portion of our debt matures over the next five years and will need to be paid or refinanced, and changes to the debt and equity markets couldlimit our refinancing options.A significant portion of our debt is set to mature within the next five years, including our revolving credit facility. We may not be able to refinance ourmaturing debt on commercially reasonable terms, or at all, depending on numerous factors, including our financial condition and prospects at the time andthe then-current state of the banking and capital markets in the United States.Increases in interest rates could adversely affect our business and the trading price of our units.We have significant exposure to increases in interest rates through variable rate provisions in certain of our debt instruments. At December 31, 2017, we hadapproximately $3.6 billion of consolidated debt, of which $2.3 billion was at fixed interest rates20Table of Contentsand $1.3 billion was at variable interest rates. Also, in January 2018 the interest rate on our Junior Sub Notes shifted from a fixed rate to a floating annual rateequal to the sum of the three-month LIBOR rate for the related quarterly interest period, plus 6.734%. Additionally, at December 31, 2017, we had $600.0million aggregate notional amount of interest rate swap arrangements, which may expose us to risk of financial loss. Prior ratings downgrades on our existingindebtedness caused interest rates under our revolving credit agreement and our 2018 Senior Notes to increase, and any future downgrades may furtherincrease the interest rate on our 2018 Senior Notes. Our results of operations, cash flows and financial position could be materially adversely affected bysignificant changes in interest rates. In addition, we historically have funded our strategic capital expenditures and acquisitions from external sources,primarily borrowings under our revolving credit agreement or funds raised through debt or equity offerings. An increase in interest rates may also have anegative impact on our ability to access the capital markets at economically attractive rates.Furthermore, the market price of master limited partnership units, like other yield-oriented securities, may be affected by, among other factors, implieddistribution yield. The distribution yield is often used by investors to compare and rank yield-oriented securities for investment decision-making purposes.Therefore, increases or decreases in interest rates may affect whether or not certain investors decide to invest in master limited partnership units, includingours, and a rising interest rate environment could have an adverse impact on our unit price and impair our ability to issue additional equity or incur debt tofund growth or for other purposes, including distributions.Continued low crude oil prices could have an adverse impact on our results of operations, cash flows and ability to make distributions to our unitholders.Since late 2014, the price of crude oil has been depressed, which has caused most crude oil producers to reduce their capital spending and drilling activityand narrow their focus to assets in the most cost-advantaged regions. On the other hand, refiners have benefited from lower crude prices, to the extent thatlower feedstock price has been coupled with higher demand for certain refined products in some regional markets. While only a portion of our total businessis directly affected by the price of crude, continued low crude oil prices and related overall economic downturn could have a negative impact on our cashflows and results of operations.An extended period of reduced demand for or supply of crude oil and refined products could affect our results of operations and ability to makedistributions to our unitholders.Although we enter into throughput and deficiency agreements to protect against near-term fluctuations whenever possible, our business is ultimatelydependent upon the long-term demand for and supply of the crude oil and refined products we transport in our pipelines and store in our terminals. Anysustained decrease in demand for refined products in the markets our pipelines and terminals serve that extends beyond the expiration of our existingthroughput and deficiency agreements could result in a significant reduction in throughputs in our pipelines and storage in our terminals, which wouldreduce our cash flows and impair our ability to make distributions to our unitholders. Factors that tend to decrease market demand include:•a recession or other adverse economic condition that results in lower spending by consumers on gasoline, diesel and travel;•higher fuel taxes or other governmental or regulatory actions that increase, directly or indirectly, the cost of gasoline;•an increase in automotive engine fuel economy, whether as a result of a shift by consumers to more fuel-efficient vehicles or technologicaladvances by manufacturers;•new regulations or court decisions requiring the phase out or reduced use of gasoline-fueled vehicles;•the increased use of alternative fuel sources;•an increase in the market price of crude oil that leads to higher refined product prices, which may reduce demand for refined products and drivedemand for alternative products. Market prices for crude oil and refined products, including fuel oil, are subject to wide fluctuation in responseto changes in global and regional supply that are beyond our control, and increases in the price of crude oil may result in a lower demand forrefined products that we transport, store and market, including fuel oil; and•a decrease in corn acres planted for ethanol, which may reduce demand for anhydrous ammonia.Similarly, any sustained decrease in the supply of crude oil and refined products in markets we serve could result in a significant reduction in throughputs inour pipelines and storage in our terminals, which would reduce our cash flows and undermine our ability to make distributions to our unitholders. Factors thattend to decrease supply and, by extension, utilization of our pipelines and terminals include:•prolonged periods of low prices for crude oil and refined products, which could lead to a decrease in exploration and development activity andreduced production in markets served by our pipelines and storage terminals;•a lack of drilling services or equipment available to producers to accommodate production needs;•changes in laws, regulations, sanctions or taxation that directly or indirectly delay supply or production or increase the cost of production ofrefined products; and21Table of Contents•macroeconomic forces affecting, or actions taken by, foreign oil and gas producing nations that impact supply of and prices for crude oil andrefined products.Our inability to develop and execute growth projects and acquire new assets could limit our ability to maintain and grow quarterly distributions to ourunitholders.Our ability to maintain and grow our distributions to unitholders depends on the growth of our existing businesses and strategic acquisitions. Decisionsregarding new growth projects rely on numerous estimates, including, among other factors, predictions of future demand for our services, future supply shifts,crude oil production estimates, commodity price environments, economic conditions, both domestic and foreign, and potential changes in the financialcondition of our customers. Our predictions of such factors could cause us to forego certain investments and to lose opportunities to competitors who makeinvestments based on different predictions. If we are unable to acquire new assets, due either to high prices or a lack of attractive synergistic targets, our futuregrowth will be limited. In addition, our future growth will be limited if we are unable to develop additional expansion projects, implement businessdevelopment opportunities and finance such activities on economically acceptable terms, which could adversely impact our results of operations and cashflows and, accordingly, result in reduced distributions over time.Failure to complete capital projects as planned could adversely affect our financial condition, results of operations and cash flows.Delays or cost increases related to capital spending programs involving construction of new facilities (or improvements and repairs to our existing facilities)could adversely affect our ability to achieve forecasted operating results. Although we evaluate and monitor each capital spending project and try toanticipate difficulties that may arise, such delays or cost increases may arise as a result of factors that are beyond our control, including:•non-performance or delay by, or disputes with, counterparties, vendors, suppliers, contractors or sub-contractors involved with a project;•denial or delay in issuing requisite regulatory approvals and/or permits;•protests and other activist interference with planned or in-process projects;•unplanned increases in the cost of construction materials or labor;•disruptions in transportation of modular components and/or construction materials;•severe adverse weather conditions, natural disasters or other events (such as hurricanes, equipment malfunctions, explosions, fires or spills)affecting our facilities, or those of vendors and suppliers;•shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages; or•market-related increases in a project’s debt or equity financing costs.We will incur financing costs during the planning and construction phases of our projects; however, the operating cash flows we expect these projects togenerate will not materialize until sometime after the projects are completed, if at all. Additionally, our forecasted operating results from capital spendingprojects are based upon our projections of future market fundamentals that are not within our control, including changes in general economic conditions, thesupply and demand of crude oil and refined products, availability to our customers of attractively priced alternative solutions for storage, transportation orsupplies of crude oil and refined products and overall customer demand.If we are unable to retain or replace current customers and existing contracts to maintain utilization of our pipeline and storage assets at current or morefavorable rates, our revenue and cash flows could be reduced to levels that could adversely affect our ability to make quarterly distributions to ourunitholders.Our revenue and cash flows are generated primarily from our customers’ payments of fees under throughput contracts and storage agreements. Failure torenew or enter into new contracts or our storage customers’ material reduction of utilization under existing contracts could result from many factors,including:•continued low crude oil prices;•a material decrease in the supply or price of crude oil;•a material decrease in demand for refined products in the markets served by our pipelines and terminals;•political, social or economic instability in another country impacting a customer based there;•competition for customers from companies with comparable assets and capabilities;•scheduled turnarounds or unscheduled maintenance at refineries we serve;•operational problems or catastrophic events affecting our assets or a refinery we serve;•environmental proceedings or other litigation that compel the cessation of all or a portion of the operations at our assets or a refinery we serve;•increasingly stringent environmental, health, safety and security regulations;•a decision by our current customers to redirect refined products transported in our pipelines to markets not served by our pipelines or totransport crude oil or refined products by means other than our pipelines; or22Table of Contents•a decision by our current customers to sell one or more of the refineries we serve to a purchaser that elects not to use our pipelines and terminals.Competing midstream service providers, including certain major energy and chemical companies, possess, or have greater financial resources to acquire,assets better suited to meet customer demand, which could undermine our ability to obtain and retain customers or reduce utilization of our assets, whichcould reduce our revenues and cash flows, thereby reducing our ability to make our quarterly distributions to unitholders.Our competitors include major energy and chemical companies, some of which have greater financial resources, more pipelines or storage terminals, greatercapacity pipelines or storage terminals and greater access to supply than we do. Certain of our competitors also may have advantages in competing foracquisitions or other new business opportunities because of their financial resources and synergies in operations. As a consequence of increased competitionin the industry, some of our customers may be reluctant to renew or enter into long-term contracts or contracts that provide for minimum throughput amountsin the future. Our inability to renew or replace our current contracts as they expire, to enter into contracts for newly acquired, constructed or expanded assetsand to respond appropriately to changing market conditions could have a negative effect on our revenue, cash flows and ability to make quarterlydistributions to our unitholders.Our operations are subject to operational hazards and interruptions, and we cannot insure against and/or predict all potential losses and liabilities thatmight result therefrom.Our operations and those of our customers and suppliers are subject to operational hazards and unforeseen interruptions such as natural disasters, adverseweather conditions (such as hurricanes, tornadoes, storms and floods), accidents, fires, explosions, hazardous materials releases, mechanical failures and otherevents beyond our control. In addition, many scientists hypothesize that global climatic changes are occurring that are likely to cause an increase inhurricanes and other severe weather conditions. These events might result in a loss of life or equipment, injury or extensive property damage, as well as aninterruption in our operations or those of our customers or suppliers. In the event any of our facilities, or those of our customers or suppliers, suffer significantdamage or are forced to shut down for a significant period of time, it may have a material adverse effect on our earnings, our other results of operations andour financial condition as a whole. As a result of market conditions, premiums and deductibles for certain of our insurance policies have increased substantially and could escalate further;therefore, we may not be able to maintain or obtain insurance of the type and amount we desire at reasonable rates. Certain insurance coverage could becomesubject to broad exclusions, become unavailable altogether or become available only for reduced amounts of coverage and at higher rates. For example, ourinsurance carriers require broad exclusions for losses due to terrorist acts. If we were to incur a significant liability for which we are not fully insured, such aliability could have a material adverse effect on our financial position.We could be subject to damages or lose customers due to failure to maintain certain quality specifications or other claims related to the operation of ourassets and the services we provide to our customers.Certain of the products we store and transport are produced to precise customer specifications. If we fail to maintain the quality and purity of the products wereceive and/or a product fails to perform in a manner consistent with the quality specifications required by the customer, the customer could seek replacementof the product or damages for costs incurred as a result of the product failing to perform as guaranteed. We also could face other claims by our customers if ourassets do not operate as expected by our customers or our services otherwise do not meet our customers’ expectations. A successful claim or series of claimsagainst us could result in unforeseen expenditures and a loss of one or more customers.We are exposed to counterparty credit risk. Nonpayment and nonperformance by our customers, vendors or derivative counterparties could reduce ourrevenues, increase our expenses and otherwise have a negative impact on our ability to conduct our business, operating results, cash flows and ability tomake distributions to our unitholders.Weak economic conditions and widespread financial stress could reduce the liquidity of our customers, vendors or counterparties, making it more difficult forthem to meet their obligations to us. We are therefore subject to risks of loss resulting from nonpayment or nonperformance by our customers to whom weextend credit. Severe financial problems encountered by our customers could limit our ability to collect amounts owed to us, or to enforce the performance ofobligations owed to us under contractual arrangements. For example, a substantial portion of our St. Eustatius facility revenue derives from our storage ofpetroleum products exported from Venezuela on behalf of Petróleos de Venezuela, S.A. (PDVSA), a state-owned Venezuelan oil company. Significantpolitical, social and economic instability in Venezuela, including constraints on foreign currency transactions by the Venezuelan government, has causedPDVSA to utilize our assets significantly less than we forecasted and late-pay invoices from time to time. Our involvement with products exported fromVenezuela also exposes us to the risk of trade restrictions and economic embargoes imposed by the United States and other countries.In addition, nonperformance by vendors who have committed to provide us with critical products or services could raise our costs or interfere with our abilityto successfully conduct our business. Furthermore, nonpayment by the counterparties to any23Table of Contentsof our outstanding derivatives could expose us to additional interest rate or commodity price risk. While we attempt to mitigate our risk throughwarehouseman’s liens and other security protections, any substantial increase in the nonpayment and nonperformance by our customers, vendors orcounterparties could have a material adverse effect on our results of operations, cash flows and ability to make distributions to unitholders.Cybersecurity breaches and other disruptions could compromise our information and operations, and expose us to liability, which would cause ourbusiness and reputation to suffer.We rely on our information technology infrastructure to process, transmit and store electronic information, including information we use to safely operate ourassets. In recent years, there has been a rise in the number of cyberattacks on other companies’ network and information systems by both state-sponsored andcriminal organizations, and as a result, the risks associated with such an event continue to increase. A significant failure, compromise, breach or interruptionin our systems could result in a disruption of our operations, customer dissatisfaction, damage to our reputation, a loss of customers or revenues and potentialregulatory fines. If any such failure, interruption or similar event results in improper disclosure of information maintained in our information systems andnetworks or those of our vendors, including personnel, customer and vendor information, we could also be subject to liability under relevant contractualobligations and laws and regulations protecting personal data and privacy. Our financial results could also be adversely affected if operational systems arebreached or an employee causes our operational systems to fail, either as a result of inadvertent error or by deliberately tampering with or manipulating ouroperational systems.Although we believe that we have robust information security procedures and other safeguards in place, as cyberthreats continue to evolve, we may berequired to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate information securityvulnerabilities.Acquisitions and expansions, if any, may increase substantially the level of our indebtedness and contingent liabilities or otherwise change our capitalstructure, and we may be unable to integrate acquisitions and expansions effectively into our existing operations.From time to time, we evaluate and acquire assets and businesses that we believe complement or diversify our existing assets and operations. Acquisitionsmay require us to raise a substantial amount of equity or incur a substantial amount of indebtedness. If we consummate any future material acquisitions, ourcapitalization and results of operations may change significantly, and unitholders will not have the opportunity to evaluate the economic, financial and otherrelevant information that we will consider in connection with any future acquisitions.Part of our overall business strategy includes acquiring additional assets that complement our existing asset base and distribution capabilities or provideentry into new markets. We may not be able to identify suitable acquisitions, or we may not be able to purchase or finance any acquisitions on terms that wefind acceptable. Additionally, we compete against other companies for acquisitions, and we may not be successful in the acquisition of any assets orbusinesses appropriate for our growth strategy.Even if we do consummate acquisitions that we believe will increase distributable cash flow, these acquisitions may nevertheless result in a decrease indistributable cash flow. Any acquisition involves potential risks, including, among other things:•we may not be able to obtain the cost savings and financial improvements we anticipate or acquired assets may not perform as we expect;•we may not be able to successfully integrate the assets, management teams or employees of the businesses we acquire with our assets andmanagement team, or such integration may be significantly delayed;•we may fail or be unable to discover some of the liabilities of businesses that we acquire, including liabilities resulting from a prior owner’snoncompliance with applicable federal, state or local laws;•we may have assumed prior known or unknown liabilities for which we may not be indemnified or have adequate insurance;•acquisitions may divert the attention of our senior management from focusing on our core business;•we may experience a decrease in our liquidity by using a significant portion of our available cash or borrowing capacity to finance acquisitions;and•we may face the risk that our existing financial controls, information systems, management resources and human resources will need to grow tosupport future growth.We operate a global business that exposes us to additional risk.We operate a global business. A significant portion of our revenues come from our business outside of the United States, and our operations are subject tovarious risks unique to each country that could have a material adverse effect on our business, results of operations and financial condition. With respect toany particular country, these risks may include political and24Table of Contentseconomic instability, including: civil unrest, war and other armed conflict; inflation; and currency fluctuations, devaluation and conversion restrictions. Weare also exposed to the risk of governmental actions that may: limit or disrupt markets for our operations, restrict payments or limit the movement of funds;impose sanctions on our ability to conduct business with certain customers or persons; or result in the deprivation of contract rights. Our operations outsidethe United States may also be affected by changes in trade protection laws, policies and measures, and other regulatory requirements affecting trade andinvestment, including the Foreign Corrupt Practices Act, the United Kingdom Bribery Act and other foreign laws prohibiting corrupt payments, as well asimport and export regulations. Additionally, negotiations are ongoing regarding the United Kingdom’s exit from the European Union, and any future effectsfrom this are currently unknown.We also have assets in, or do business with customers based in, certain emerging markets, and the developing nature of these markets presents a number ofrisks. In addition, due to the unsettled political conditions in many oil-producing countries, our operations may be subject to the adverse consequences ofwar, civil unrest, strikes, currency controls and governmental actions.Deterioration of social, political, labor or economic conditions, including the increasing threat of terrorist organizations and drug cartels, in a country orregion in which we do business, or affecting a customer with whom we do business, as well as difficulties in staffing and managing foreign operations, mayadversely affect our operations or financial results. For example, PDVSA, a state-owned oil company in Venezuela, is a significant customer of our terminalfacility in St. Eustatius, and recent political, social and economic instability in Venezuela seems to have had a negative impact on both PDVSA’s utilizationof our facility and its ability to timely pay amounts invoiced.We are subject to laws and sanctions implemented by the United States and foreign jurisdictions where we do business that may restrict the type of businesswe are permitted to conduct with certain entities, including PDVSA, restrict our activities in certain countries, or even restrict the services we may providewith respect to crude oil or other products produced in certain countries. In 2017, the United States and the European Union imposed sanctions relating toVenezuela and PDVSA. While these sanctions do not prohibit us from continuing to perform under our existing contracts with PDVSA, the sanctions mayincrease the likelihood that PDVSA will be unable to perform its obligations to us. In addition, in the event additional sanctions are imposed in the futurerelating to Venezuela or PDVSA, such future sanctions may result in further deterioration of PDVSA’s ability to perform its obligations to us and couldprevent us from continuing to serve PDVSA in St. Eustatius.We do not own all of the land on which our pipelines and facilities have been constructed, and we are therefore subject to the possibility of increased costsor the inability to retain necessary land use.We obtain the rights to construct and operate our pipelines, storage terminals and other facilities on land owned by third parties and governmental agencies.Many of our rights-of-way or other property rights are perpetual in duration, but others are for a specific period of time. In addition, some of our facilities arelocated on leased premises. Our loss of property rights, through our inability to renew right-of-way contracts or leases or otherwise, could adversely affect ouroperations and cash flows available for distribution to unitholders.In addition, the construction of additions to our existing assets may require us to obtain new rights-of-way or property rights prior to construction. We may beunable to obtain such rights-of-way or other property rights to connect new supplies to our existing pipelines, storage terminals or other facilities or tocapitalize on other attractive expansion opportunities. Additionally, it may become more expensive for us to obtain new rights-of-way or other propertyrights or to renew existing rights-of-way or property rights. If the cost of obtaining new or renewing existing rights-of-way or other property rights increases, itmay adversely affect our operations and cash flows available for distribution to unitholders.We may be unable to obtain or renew permits necessary for our operations, which could inhibit our ability to do business.Our facilities operate under a number of federal, state and local permits, licenses and approvals with terms and conditions containing a significant number ofprescriptive limits and performance standards in order to operate. These limits and standards require a significant amount of monitoring, recordkeeping andreporting in order to demonstrate compliance with the underlying permit, license or approval. Noncompliance or incomplete documentation of ourcompliance status may result in the imposition of fines, penalties and injunctive relief. In addition, public protest and responsive government interventionhave recently made it more difficult for some energy companies to acquire the permits required to complete planned infrastructure projects. A decision by agovernment agency to deny or delay issuing a new or renewed permit, license or approval, or to revoke or substantially modify an existing permit, license orapproval, could have a material adverse effect on our ability to continue operations and on our financial condition, results of operations, cash flows andability to make distributions to our unitholders.We may have liabilities from our assets that preexist our acquisition of those assets, but that may not be covered by indemnification rights we may haveagainst the sellers of the assets.In some cases, we have indemnified the previous owners and operators of acquired assets. Some of our assets have been used for many years to transport andstore crude oil and refined products, and releases may have occurred in the past that could25Table of Contentsrequire costly future remediation. If a significant release or event occurred in the past, the liability for which was not retained by the seller, or for whichindemnification by the seller is not available, it could adversely affect our financial position and results of operations. Conversely, if future releases or otherliabilities arise from assets we have sold, we could incur costs related to those liabilities if the buyer possesses valid indemnification rights against us withrespect to those assets.Climate change and fuels legislation and other regulatory initiatives may decrease demand for the products we store, transport and sell and increase ouroperating costs.In response to scientific studies asserting that emissions of certain “greenhouse gases” such as carbon dioxide and methane may be contributing to warmingof the Earth’s atmosphere, the U.S. Congress, European Union and other political bodies have considered legislation or regulation to reduce emissions ofgreenhouse gases. Passage of climate change or fuels legislation or other regulatory initiatives in fuel efficiency, fuel additives, renewable fuels and otherareas in which we conduct business could result in changes to the demand for the products we store, transport and sell, and could increase the costs of ouroperations, including costs to operate and maintain our facilities, install new emission controls on our facilities, acquire allowances to authorize ourgreenhouse gas or other emissions, pay any taxes related to our greenhouse gas or other emissions or administer and manage emissions programs. In addition,certain of our blending operations can result in requirements to purchase renewable energy credits. Even though we attempt to mitigate such lost revenues orincreased costs through the contracts we sign with our customers, we may be unable to recover those revenues or mitigate the increased costs, and any suchrecovery may depend on events beyond our control, including the outcome of future rate proceedings before the FERC, the STB or other regulators and theprovisions of any final legislation or regulations. Reductions in our revenues or increases in our expenses as a result of climate change legislation or otherregulatory initiatives could have adverse effects on our business, financial position, results of operations and prospects.Our operations are subject to federal, state and local laws and regulations, in the U.S. and in the other countries in which we operate, relating toenvironmental, health, safety and security that could require us to make substantial expenditures.Our operations are subject to increasingly stringent federal, state and local environmental, health, safety and security laws and regulations. Transporting,storing and distributing hazardous materials, including petroleum products, entails the risk that these products may be released into the environment,potentially causing substantial expenditures for a response action, significant government penalties, liability to government agencies including for damagesto natural resources, personal injury or property damages to private parties and significant business interruption. Further, certain of our pipeline facilities maybe subject to the pipeline integrity and safety regulations of various federal and state regulatory agencies. In recent years, increased regulatory focus onpipeline integrity and safety has resulted in various proposed or adopted regulations. The implementation of these regulations, and the adoption of futureregulations, could require us to make additional capital expenditures, including to install new or modified safety measures, or to conduct new or moreextensive maintenance programs.Current and future legislative action and regulatory initiatives could also result in changes to operating permits, material changes in operations, increasedcapital expenditures and operating costs, increased costs of the goods we transport and decreased demand for products we handle that cannot be assessed withcertainty at this time. We may be required to make expenditures to modify operations or install pollution control equipment or release prevention andcontainment systems that could materially and adversely affect our business, financial condition, results of operations and liquidity if these expenditures, aswith all costs, are not ultimately reflected in the tariffs and other fees we receive for our services.We own or lease a number of properties that were used to transport, store or distribute products for many years before we acquired them; therefore, suchproperties were operated by third parties whose handling, disposal or release of products and wastes was not under our control. Environmental laws andregulations could impose obligations to conduct assessment or remediation efforts at our facilities, third-party sites where we take wastes for disposal, orwhere wastes have migrated. Environmental laws and regulations also may impose joint and several liability on us for the conduct of third parties or foractions that complied with applicable requirements when taken, regardless of negligence or fault. If we were to incur a significant liability pursuant toenvironmental, health, safety or security laws or regulations, such a liability could have a material adverse effect on our financial position.Our interstate common carrier pipelines are subject to regulation by the FERC.The FERC regulates the tariff rates and terms and conditions of service for interstate oil movements on our common carrier pipelines. FERC regulationsrequire that these rates must be just and reasonable and that the pipeline not engage in undue discrimination or undue preference with respect to any shipper.Under the ICA, the FERC or shippers may challenge our pipeline tariff filings, including rates and terms and conditions of service. Further, other than for ratesset under market-based rate authority, if a new rate is challenged by protest and investigated by the FERC, the FERC may suspend collection of such new ratefor up to seven months. If such new rate is found to be unjust and unreasonable, the FERC may order refunds of amounts collected in excess of amountsgenerated by the just and reasonable rate determined by the FERC. A successful rate challenge could result in a common carrier paying refunds together withinterest for the period that the rate was in effect. In26Table of Contentsaddition, shippers may challenge by complaint tariff rates and terms and conditions of service even after the rates and terms and conditions of service are ineffect. If the FERC, in response to such a complaint or on its own initiative, initiates an investigation of rates that are already in effect, the FERC may order acarrier to change its rates prospectively. If existing rates are challenged and are determined by the FERC to be in excess of a just and reasonable level, anycomplaining shipper may obtain reparations for damages sustained during the two years prior to the date the shipper filed a complaint.We are able to use various FERC-authorized rate change methodologies for our interstate pipelines, including indexed rates, cost-of-service rates, market-based rates and settlement rates. Typically, we adjust our rates annually in accordance with the FERC indexing methodology, which currently allows apipeline to change its rates within prescribed ceiling levels that are tied to an inflation index. For the five-year period beginning July 1, 2011, the index wasmeasured by the year-over-year change in the Bureau of Labor’s producer price index for finished goods, plus 2.65%. For the five-year period beginning July1, 2016, the current index is measured by the year-over-year change in the Bureau of Labor’s producer price index for finished goods, plus 1.23%. Further,some of our newer projects that involved an open season include negotiated indexation rate caps.In October 2016, the FERC initiated an Advance Notice of Proposed Rulemaking (ANOPR) to determine whether to require oil pipeline companies to filecost and revenue data for each of the company’s pipeline systems, with the definition of such systems also part of the ANOPR. Among other things, theANOPR also proposed that index rate adjustments be capped or prohibited under certain circumstances and that ceiling rates be capped under certaincircumstances. These methodologies, if adopted, could result in changes in our revenue that do not fully reflect changes in costs we incur to operate andmaintain our pipelines. For example, our costs could increase more quickly or by a greater amount than the negotiated or, if adopted, FERC-mandatedindexation rate cap.The reporting of system-based cost and revenue data, if adopted as a result of the ANOPR, could lead to an increase in rate litigation at the FERC. Currently,shippers may protest rate increases made within the ceiling levels, but such protests must show that the portion of the rate increase resulting from applicationof the index is substantially in excess of the pipeline’s change in costs from the previous year. However, if the index results in a negative adjustment, we arerequired to reduce any rates that exceed the new maximum allowable rate. In addition, changes in the index might not be large enough to fully reflect actualincreases in our costs. If the FERC’s rate-making methodologies change, any such change or new methodologies could result in rates that generate lowerrevenues and cash flow and could adversely affect our ability to make distributions to our unitholders and to meet our debt service requirements.Additionally, because competition constrains our rates in various markets, we may from time to time be forced to reduce some of our rates to remaincompetitive.Changes to FERC rate-making principles or pronouncements could have an adverse impact on our ability to recover the full cost of operating our pipelinefacilities and our ability to make distributions to our unitholders.In May 2005, the FERC issued a statement of general policy stating it will permit pipelines to include in their costs of service a tax allowance to reflect actualor potential tax liability on their public utility income attributable to all partnership or limited liability company interests, if the ultimate owner of theinterest has an actual or potential income tax liability on such income. Whether a pipeline’s owners have such actual or potential income tax liability will bereviewed by the FERC on a case-by-case basis. Although this policy is generally favorable for pipelines that are organized as pass-through entities, it stillentails rate risk due to the case-by-case review requirement. This tax allowance policy and the FERC’s application of that policy were appealed to the D.C.Circuit and, on May 29, 2007, the D.C. Circuit issued an opinion upholding the FERC’s tax allowance policy.In two proceedings involving SFPP, L.P., a refined products pipeline system, shippers again challenged the FERC’s income tax allowance policy, allegingthat it is unlawful for a pipeline organized as a tax-pass-through entity to be afforded an income tax allowance and that the income tax allowance isunnecessary because an allowance for income taxes for such pipelines is recovered indirectly through the rate of return on equity. The FERC rejected theseshipper arguments in multiple orders. Petitions for review of the FERC’s rulings on the income tax allowance were filed with the D.C. Circuit.On July 1, 2016, the D.C. Circuit issued an opinion granting the shippers’ petition for review of the FERC’s rulings on the income tax allowance, finding thatthe FERC had failed to demonstrate that there is no double recovery of taxes for partnerships that receive an income tax allowance in addition to the returnthey receive through the rate of return on equity. On this basis, the D.C. Circuit remanded the issue to the FERC, which established a pending industrywideNotice of Inquiry regarding this issue. Certain participants in the Notice of Inquiry made filings claiming that pipeline rates should be reduced based onanticipated income tax reductions related to the Tax Cuts and Jobs Act. Because the extent to which an interstate oil pipeline organized as a partnership isentitled to an income tax allowance is subject to a case-by-case review at the FERC and is a matter that remains under litigation and FERC review, the levelof income tax allowance to which we would ultimately be entitled is not certain. The manner in which the FERC’s income tax allowance policy is applied topipelines owned by publicly traded partnerships could limit our ability to include a full income tax allowance in our cost of service.27Table of ContentsThe rates that we may charge on our interstate ammonia pipeline are subject to regulation by the STB.The Ammonia Pipeline is subject to regulation by the STB, which is part of the DOT. The Ammonia Pipeline’s rates, rules and practices related to theinterstate transportation of anhydrous ammonia must be reasonable and, in providing interstate transportation, our ammonia pipeline may not subject ashipper to unreasonable discrimination.Increases in natural gas and power prices could adversely affect our operating expenses and our ability to make distributions to our unitholders.Power costs constitute a significant portion of our operating expenses. For the year ended December 31, 2017, our power costs equaled approximately $46.0million, or 10.2% of our operating expenses for the year. We use mainly electric power at our pipeline pump stations and terminals, and such electric power isfurnished by various utility companies that primarily use natural gas to generate electricity. Accordingly, our power costs typically fluctuate with natural gasprices, and increases in natural gas prices may cause our power costs to increase further. If natural gas prices increase, our cash flows may be adverselyaffected, which could adversely affect our ability to make distributions to our unitholders.Terrorist attacks and the threat of future attacks worldwide, as well as continued hostilities in the Middle East or other sustained military campaigns, mayadversely impact our results of operations.The United States Department of Homeland Security has identified pipelines and other energy infrastructure assets as ones that might be specific targets ofterrorist organizations. These potential targets might include our pipeline systems, storage facilities or operating systems and may affect our ability to operateor control our pipeline and storage assets. Increased security measures we have taken as a precaution against possible terrorist attacks have resulted inincreased costs to our business. Uncertainty surrounding continued hostilities in the Middle East or other sustained military campaigns may affect ouroperations in unpredictable ways, including disruptions of crude oil supplies and markets for refined products, instability in the financial markets that couldrestrict our ability to raise capital and the possibility that infrastructure facilities could be direct targets of, or indirect casualties of, an attack.Hedging transactions may limit our potential gains or result in significant financial losses.While intended to reduce the effects of volatile commodity prices, hedging transactions, depending on the hedging instrument used, may limit our potentialgains if petroleum product prices were to rise substantially over the price established by the hedge. In addition, such transactions may expose us to the risk offinancial loss in certain circumstances, including instances in which there is a change in the expected differential between the underlying price in thehedging agreement and the actual prices received.The accounting standards regarding hedge accounting are complex and, even when we engage in hedging transactions that are effective economically, thesetransactions may not be considered effective for accounting purposes. Accordingly, our financial statements will reflect increased volatility due to thesehedges, even when there is no underlying economic impact at that point. It is not possible for us to engage in a hedging transaction that completely mitigatesour exposure to commodity prices, and our financial statements may reflect a gain or loss arising from an exposure to commodity prices for which we areunable to enter into an effective hedge.Our purchase and sale of crude oil and petroleum products may expose us to trading losses and hedging losses, and non-compliance with our riskmanagement policies could result in significant financial losses.Although our marketing and trading of crude oil and petroleum products represents a small percentage of our overall business, these activities expose us tosome commodity price volatility risk for the purchase and sale of crude oil and petroleum products, including distillates and fuel oil. We attempt to mitigatethis volatility risk through hedging, but we are still exposed to basis risk and may be required to post cash collateral under our hedging arrangements. Wealso may be exposed to inventory and financial liquidity risk due to the inability to trade certain products or rising costs of carrying some inventories.Further, our marketing and trading activities, including any hedging activities, may cause volatility in our earnings. In addition, we will be exposed to creditrisk in the event of non-performance by counterparties.Our risk management policies may not eliminate all price risk since open trading positions will expose us to price volatility, and there is a risk that our riskmanagement policies will not be complied with. Although we have designed procedures to anticipate and detect non-compliance, we cannot assure you thatthese steps will detect and prevent all violations of our trading policies and procedures, particularly if deception and other intentional misconduct areinvolved.If we fail to maintain an effective system of internal controls, we may not be able to report our financial results accurately or prevent fraud, which couldhave a material and adverse impact on our financial condition, results of operations, cash flows and ability to make distributions to our unitholders.Under Section 404 of the Sarbanes-Oxley Act of 2002, we are required to disclose material changes made in our internal controls over financial reporting on aquarterly basis and we are required to assess the effectiveness of our controls annually.28Table of ContentsEffective internal controls are necessary for us to provide reliable and timely financial reports. Given the difficulties inherent in the design and operation ofinternal controls over financial reporting, we may be unable to maintain effective controls over our financial processes and reporting in the future or tocomply with our obligations under Section 404.For the foregoing reasons, we can provide no assurance as to our, or our independent registered public accounting firm’s, future conclusions about theeffectiveness of our internal controls, and we may incur significant costs in our efforts to comply with Section 404. Any failure to maintain effective internalcontrols over financial reporting will subject us to regulatory scrutiny and a loss of confidence in our reported financial information, which could have amaterial adverse effect on our financial condition, results of operations and cash flows and our ability to make distributions to our unitholders.RISKS INHERENT IN AN INVESTMENT IN USWe do not have the same flexibility as other types of organizations to accumulate cash and equity and protect against illiquidity in the future.Unlike a corporation, our partnership agreement requires us to make quarterly distributions to our unitholders of all available cash, after taking into accountreserves for commitments and contingencies, including capital and operating costs and debt service requirements. As a result, we do not accumulate equity inthe form of retained earnings in a manner typical of many other forms of organizations, including most traditional public corporations. We are therefore morelikely than those organizations to require issuances of additional capital to finance our growth plans, meet unforeseen cash requirements and service our debt.Additionally, the value of our common units and other limited partner interests may decrease in correlation with any reduction in our cash distributions perunit. Accordingly, if we experience a liquidity shortage in the future, we may not be able to issue more equity to recapitalize.Our cash distribution policy may limit our growth.Consistent with the terms of our partnership agreement, we distribute our available cash to our common unitholders and our general partner each quarter. Indetermining the amount of cash available for distribution, our management sets aside cash reserves which we use to fund our growth capital expenditures.Additionally, we historically have relied upon external financing sources, including commercial borrowings and other debt and equity issuances, to fund ouracquisition capital expenditures. Accordingly, to the extent we do not have sufficient cash reserves or are unable to finance growth externally, our cashdistribution policy will significantly impair our ability to grow. In addition, to the extent we issue additional units in connection with any acquisitions orgrowth capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase ourcurrent per unit distribution level.NuStar GP Holdings may currently have and, if the Merger is not consummated, may continue to have conflicts of interest and limited fiduciaryresponsibilities, which may permit it to favor its own interests to the detriment of our unitholders.NuStar GP Holdings currently indirectly owns our general partner, our incentive distribution rights and, as of December 31, 2017, an aggregate 11.0% of ouroutstanding common units. Conflicts of interest may arise between NuStar GP Holdings and its affiliates, including our general partner, on the one hand, andus and our limited partners, on the other hand. As a result of these conflicts, the general partner may favor its own interests and the interests of its affiliatesover the interests of our unitholders. These conflicts include, among others, the following situations:•our general partner is allowed to take into account the interests of parties other than us, such as NuStar GP Holdings, in resolving conflicts ofinterest, which has the effect of limiting its fiduciary duty to our unitholders;•our general partner may limit its liability and reduce its fiduciary duties, while also restricting the remedies available to unitholders. As a resultof purchasing our units, unitholders have consented to some actions and conflicts of interest that might otherwise constitute a breach offiduciary or other duties under applicable state law;•our general partner determines the amount and timing of asset purchases and sales, capital expenditures, borrowings and issuances of additionallimited partner interests and reserves, each of which can affect the amount of cash that is paid to our unitholders;•our general partner determines in its sole discretion which costs incurred by NuStar GP Holdings and its affiliates are reimbursable by us;•our general partner may cause us to pay the general partner or its affiliates for any services rendered on terms that are fair and reasonable to us orenter into additional contractual arrangements with any of these entities on our behalf;•our general partner decides whether to retain separate counsel, accountants or others to perform services for us; and29Table of Contents•in some instances, our general partner may cause us to borrow funds in order to permit the payment of distributions.Our partnership agreement gives the general partner broad discretion in establishing financial reserves for the proper conduct of our business, includinginterest payments. These reserves also affect the amount of cash available for distribution.If the Merger is not consummated, the general partner interest, the control of our general partner and the incentive distribution rights of our generalpartner may be transferred to a third party without unitholder consent.If the merger is not consummated, our general partner may transfer its general partner interest and/or its incentive distribution rights to a third party withoutthe consent of our unitholders. Any new owner of our general partner would be in a position to replace the officers of the general partner with its own choicesand to control the decisions made by such officers. If our general partner transfers its incentive distribution rights to a third party but retains its generalpartner interest, our general partner may not have the same incentive to grow our partnership and increase quarterly distributions to unitholders over time as itwould if it had retained ownership of its incentive distribution rights.Unitholders have limited voting rights, and our partnership agreement further restricts the voting rights of unitholders owning 20% or more of any class ofour units.Unlike holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our business and, therefore, limited abilityto influence management’s decisions regarding our business. Unitholders’ voting rights are further restricted by a provision in our partnership agreementproviding that units held by certain persons that own 20% or more of any class of units then outstanding, other than our general partner or its affiliates,cannot vote on any matter without the prior approval of our general partner.We may issue an unlimited number of additional units, including units that are senior to the common units and pari passu with our 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units, 7.625% Series B Fixed-to-Floating Rate Cumulative Redeemable PerpetualPreferred Units and 9.00% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (collectively, the Preferred Units); issuingnew units dilutes existing unitholders and may increase the aggregate distribution we are required to pay each quarter under the terms of our partnershipagreement.Our partnership agreement allows us to issue additional units and certain other equity securities on the terms and conditions established by our generalpartner and without the approval of other unitholders. There is no limit on the total number of units and other equity securities we may issue. If we issueadditional units or other equity securities, the proportionate partnership interest of our existing common unitholders and the relative voting strength of eachof the previously outstanding common units will decrease. Any additional issuance may increase the risk that we will be unable to maintain or increase ourper common unit distribution level.In addition, we may issue an unlimited number of units that are senior to the common units in right of distribution, liquidation and voting, includingadditional Preferred Units and any securities in parity with the Preferred Units without any vote of the holders of the Preferred Units (except where thecumulative distributions on the Preferred Units or any parity securities are in arrears and in certain other circumstances) and without the approval of ourcommon unitholders. Our issuance of additional units or other equity interests of equal or senior rank will have the following effects:•our unitholders’ proportionate ownership interest in us will decrease;•the amount of cash available for distribution on each unit may decrease;•the ratio of taxable income to distributions may increase;•the relative voting strength of each previously outstanding unit may be diminished; and•the market price of our common units and Preferred Units may decline.Additionally, although holders of the Preferred Units are entitled to limited voting rights, with respect to certain matters the Preferred Units generally voteseparately as a class along with all other series of our parity securities that we may issue upon which like voting rights have been conferred and areexercisable. As a result, the voting rights of holders of Preferred Units may be significantly diluted, and the holders of such other series of parity securitiesthat we may issue may be able to control or significantly influence the outcome of any vote with respect to which the holders of the Preferred Units areentitled to vote. The issuance of additional units on parity with or senior to the Preferred Units (including additional Preferred Units of the same series) woulddilute the interests of the holders of the Preferred Units, and any issuance of equity securities of any class or series that ranks on parity with the Preferred Unitsas to the payment of distributions and amounts payable upon a liquidation event (including additional Preferred Units of the same series) or equity securitieswith terms expressly made senior to the Preferred Units as to the payment of distributions and amounts payable upon a liquidation event or additionalindebtedness could affect our ability to pay distributions on, redeem or pay the liquidation preference on the Preferred Units. Our partnership agreementcontains limited protections for the holders of the Preferred Units in the event of a highly leveraged or other30Table of Contentstransaction, including a merger or the sale, lease or conveyance of all or substantially all of our assets or business, which might adversely affect the holders ofthe Preferred Units.Future issuances and sales of parity securities, or the perception that such issuances and sales could occur, may cause prevailing market prices for thePreferred Units and our common units to decline and may adversely affect our ability to raise additional capital in the financial markets at times and pricesfavorable to us.Furthermore, the payment of distributions on any additional units may increase the risk that we will not be able to make distributions at our prior per unitdistribution levels. To the extent new units are senior to our common units, their issuance will increase the uncertainty of the payment of distributions on ourcommon units.If we do not pay distributions on our Preferred Units in any fiscal quarter, we will be unable to pay distributions on our common units until all unpaidPreferred Unit distributions have been paid, and our common unitholders are not entitled to receive distributions for such prior period.The Preferred Units rank senior to our common units with respect to distribution rights and rights upon liquidation. If we do not pay the required distributionson our Preferred Units, we will be unable to pay distributions on our common units. Additionally, because distributions to our Preferred Unitholders arecumulative, we will have to pay all unpaid accumulated preferred distributions before we can pay any distributions to our common unitholders. Also, becausedistributions to our common unitholders are not cumulative, if we do not pay distributions on our common units with respect to any quarter, our commonunitholders will not be entitled to receive distributions covering any prior periods. The preferences and privileges of the Preferred Units could adverselyaffect the market price for our common units, or could make it more difficult for us to sell our common units in the future.Unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business or that we have not complied withapplicable statutes, which may have an impact on the cash we have available to make distributions.Under Delaware law, unitholders could be held liable for our obligations to the same extent as a general partner if a court determined that actions of aunitholder constituted participation in the “control” of our business.Under Delaware law, the general partner generally has unlimited liability for the obligations of the partnership, such as its debts and environmental liabilities,except for those contractual obligations of the partnership that are expressly made without recourse to the general partner. In addition, Section 17-607 of theDelaware Revised Uniform Limited Partnership Act (the Delaware Act) provides that, under some circumstances, a limited partner may be liable to us for theamount of a distribution for a period of three years from the date of the distribution.Under certain circumstances, unitholders may have liability to repay distributions wrongfully distributed to them.Under Section 17-607 of the Delaware Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fairvalue of our assets. Liabilities to partners on account of their partnership interests and liabilities that are nonrecourse to the partnership are not counted forpurposes of determining whether a distribution is permitted.Delaware law provides that, for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and whoknew at the time of the distribution that it violated Delaware law will be liable to us for the repayment of the distribution amount. Likewise, upon thewinding up of our partnership, in the event that (a) we do not distribute assets in the following order: (1) to creditors in satisfaction of our debts; (2) topartners and former partners in satisfaction of liabilities for distributions owed under our partnership agreement; (3) to partners for the return of theircontributions; and finally (4) to the partners in the proportions in which the partners share in distributions and (b) a limited partner knows at the time that thedistribution violated the Delaware Act, then such limited partner will be liable to repay the distribution for a period of three years from the impermissibledistribution under Section 17-804 of the Delaware Act.A purchaser of common or Preferred Units becomes a limited partner and is liable for the obligations of the transferring limited partner to make contributionsto us that are known to such purchaser of common or Preferred Units at the time it became a limited partner and for unknown obligations, if the liabilitiescould be determined from our partnership agreement.Unitholders may be required to sell their units to our general partner at an undesirable time or price.If at any time less than 20% of the outstanding units of any class are held by persons other than the general partner and its affiliates, the general partner willhave the right to acquire all, but not less than all, of those units at a price no less than their then-current market price. As a consequence, a unitholder may berequired to sell his common units at an undesirable time or price. The general partner may assign this purchase right to any of its affiliates or to us.31Table of ContentsThe NYSE does not require a publicly traded limited partnership like us to comply with certain of its corporate governance requirements.We currently list our common units on the NYSE under the symbol “NS” and our Preferred Units on the NYSE under the symbols “NSprA,” “NSprB” and“NSprC,” respectively. Although our general partner has maintained a majority of independent directors on its board and all members of its board’s auditcommittee, compensation committee and nominating/governance & conflicts committee are independent directors, because we are a publicly traded limitedpartnership, the NYSE does not require us to have a majority of independent directors on our general partner’s board of directors or to have a compensationcommittee or a nominating committee consisting of independent directors. Additionally, any future issuance of additional common or Preferred Units orother securities, including to affiliates, will not be subject to the NYSE’s shareholder approval rules that apply to a corporation. Accordingly, the NYSE doesnot mandate the same protections for our unitholders as are required for certain corporations that are subject to all of the NYSE corporate governancerequirements. See “Director Independence” under Item 13 of this annual report on Form 10-K for additional information regarding the independence of ourgeneral partner’s directors and the committees of our general partner’s board.TAX RISKS TO OUR UNITHOLDERSIf we were treated as a corporation for federal or state income tax purposes or we were otherwise subject to a material amount of entity-level taxation, thenour cash available for distribution to unitholders would be substantially reduced.The anticipated after-tax benefit of an investment in our units depends largely on our being treated as a partnership for federal income tax purposes. We havenot requested, and do not plan to request, a ruling from the Internal Revenue Service (the IRS) on this matter.Despite the fact that we are a limited partnership under Delaware law, we will be treated as a corporation for federal income tax purposes unless we satisfy a“qualifying income” requirement. Based upon our current operations, we believe we satisfy the qualifying income requirement. Failing to meet thequalifying income requirement or a change in current law could cause us to be treated as a corporation for federal income tax purposes or otherwise subject usto taxation as an entity.If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate andwould likely pay state and local income tax at varying rates. Distributions to unitholders who are treated as holders of corporate stock would generally betaxed again as corporate dividends (to the extent of our current and accumulated earnings and profits), and no income, gains, losses, deductions or creditswould flow through to unitholders. Because a tax would be imposed upon us as a corporation, our distributable cash flow would be substantially reduced.Moreover, changes in current state law may subject us to entity-level taxation by individual states. Because of widespread state budget deficits and otherreasons, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise and other forms oftaxation. Imposition of any such taxes or an increase in the existing tax rates would substantially reduce the cash available for distribution to our unitholders.Therefore, if we were treated as a corporation for federal income tax purposes or otherwise subjected to a material amount of entity-level taxation, there wouldbe a material reduction in the anticipated cash flow and after-tax return to our unitholders, likely causing a substantial reduction in the value of our units.The tax treatment of publicly traded partnerships or an investment in our units could be subject to potential legislative, judicial or administrative changesor differing interpretations, possibly applied on a retroactive basis.The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our units may be modified by administrative,legislative or judicial changes or differing interpretations at any time. From time to time, members of Congress propose and consider such substantivechanges to the existing federal income tax laws that affect publicly traded partnerships. Further, final Treasury regulations under Section 7704(d)(1)(E) of theCode published in the Federal Register interpret the scope of qualifying income requirements for publicly traded partnerships by providing industry-specificguidance. We do not believe the final Treasury regulations affect our ability to be treated as a partnership for U.S. federal income tax purposes.In addition, the Tax Cuts and Jobs Act enacted December 22, 2017, makes significant changes to the U.S. federal income tax rules applicable to bothindividuals and entities, including changes to the tax rate on a unitholder’s allocable share of income from the publicly traded partnership. The Tax Cuts andJobs Act is complex and lacks administrative guidance. Thus, the impact of certain aspects of its provisions on us or an investment in our units is currentlyunclear. Unitholders should consult their tax advisor regarding the Tax Cuts and Jobs Act and its effect on us or an investment in our units.32Table of ContentsAny changes to the federal income tax laws and interpretations thereof (including administrative guidance relating to the Tax Cuts and Jobs Act) may beapplied retroactively and could make it more difficult or impossible for us to meet the exception for certain publicly traded partnerships to be treated aspartnerships for federal income tax purposes or otherwise adversely affect our business, financial condition or results of operations. We are unable to predictwhether any additional changes or other proposals will ultimately be enacted. Any such changes could negatively impact the value of an investment in ourunits.A successful IRS contest of the federal income tax positions we take may adversely impact the market for our units, and the costs of any contest will reducecash available for distribution to our unitholders.The IRS may adopt positions that differ from the positions we take, even positions taken with the advice of counsel. It may be necessary to resort toadministrative or court proceedings to sustain some or all of the positions we take. A court may not agree with all of the positions we take. Any contest withthe IRS may affect adversely the taxable income reported to our unitholders and the income taxes they are required to pay. As a result, any such contest withthe IRS may materially and adversely impact the market for our units and the prices at which they trade. In addition, the costs of any contest between us andthe IRS will be borne indirectly by our unitholders and our general partner because such costs will reduce our cash available for distribution.If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it (and some states) may assess and collectany taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us, in which case we may elect to either paythe taxes directly to the IRS or to have our unitholders and former unitholders take such audit adjustment into account and pay any resulting taxes. If webear such payment our cash available for distribution to our unitholders might be substantially reduced.Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns,it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us.To the extent possible under the new rules, our general partner may elect to either pay the taxes (including any applicable penalties and interest) directly tothe IRS or, if we are eligible, issue a revised Schedule K-1 to each unitholder with respect to an audited and adjusted return. Although our general partner mayelect to have our unitholders and former unitholders take such audit adjustment into account and pay any resulting taxes (including applicable penalties orinterest) in accordance with their interests in us during the tax year under audit, there can be no assurance that such election will be practical, permissible oreffective in all circumstances. As a result, our current unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if suchunitholders did not own common units in us during the tax year under audit. If, as a result of any such audit adjustment, we make payments of taxes, penaltiesand interest, our cash available for distribution to our unitholders might be substantially reduced.Even if unitholders do not receive any cash distributions from us, they will be required to pay taxes on their respective share of our taxable income.Unitholders will be required to pay federal income taxes and, in some cases, state and local income taxes on their respective share of our taxable income,whether or not the unitholders receive cash distributions from us. Unitholders may not receive cash distributions from us equal to their respective share of ourtaxable income or even equal to the actual tax liability that results from their respective share of our taxable income.Tax gain or loss on the disposition of our units could be different than expected.If a unitholder sells units, the selling unitholder will recognize a gain or loss equal to the difference between the amount realized and the unitholder’s taxbasis in those units. Prior distributions to the selling unitholder in excess of the total net taxable income the unitholder was allocated for a unit, whichdecreased the unitholder’s tax basis in that unit, will, in effect, become taxable income to the selling unitholder if the unit is sold at a price greater than theunitholder’s tax basis in that unit, even if the price the unitholder receives is less than the unit’s original cost. A substantial portion of the amount realized,whether or not representing gain, may be ordinary income to the selling unitholder.Unitholders may be subject to limitations on their ability to deduct interest expense incurred by us.In general, we are entitled to a deduction for interest paid or accrued on indebtedness properly allocable to our trade or business during our taxable year.However, under the Tax Cuts and Jobs Act, for taxable years beginning after December 31, 2017, a deduction for “business interest” is limited to the sum ofour business interest income plus 30% of our “adjusted taxable income.” This limitation is applied at the entity level for partnerships. For the purposes of thislimitation, our adjusted taxable income is computed without regard to any business interest expense or business interest income, and in the case of taxableyears beginning before January 1, 2022, any deduction allowable for depreciation, amortization, or depletion. Any interest disallowed at the partnership levelmay be carried forward and deducted in future years by a unitholder from his share of our “excess taxable income,” which is generally equal to the excess of30% of our adjusted taxable income over the amount of our deduction for business interest for such future taxable year, subject to certain restrictions.33Table of ContentsTax-exempt entities face unique tax issues from owning our units that may result in adverse tax consequences to them.Investment in our units by tax-exempt entities, such as employee benefit plans and individual retirement accounts (known as IRAs) raises issues unique tothem. For example, virtually all of our income allocated to organizations that are exempt from U.S. federal income tax, including IRAs and other retirementplans, will be unrelated business taxable income and will be taxable to them. Further, with respect to taxable years beginning after December 31, 2017, a tax-exempt entity with more than one unrelated trade or business (including by attribution from investment in a partnership such as ours that is engaged in one ormore unrelated trades or businesses) is required to compute the unrelated business taxable income of such tax-exempt entity separately with respect to eachsuch trade or business (including for purposes of determining any net operating loss deduction). As a result, for years beginning after December 31, 2017, itmay not be possible for tax-exempt entities to utilize losses from an investment in us to offset unrelated business taxable income from another unrelated tradeor business and vice versa. Tax-exempt entities should consult a tax advisor before investing in our units. Non-U.S. unitholders will be subject to U.S. taxes and withholding with respect to their income and gain from owning our units.Non-U.S. unitholders are subject to U.S. federal income tax on income effectively connected with a U.S. trade or business (“effectively connected income”). Aunitholder’s share of our income, gain, loss and deduction, and any gain from the sale or disposition of our units will generally be considered to be“effectively connected” with a U.S. trade or business and subject to U.S. federal income tax. Additionally, distributions to a non-U.S. unitholder will besubject to withholding at the highest applicable effective tax rate.The Tax Cuts and Jobs Act imposes a withholding obligation of 10% of the amount realized upon a non-U.S. unitholder’s sale or disposition of units. TheIRS has temporarily suspended the application of the withholding requirements on sales of publicly traded interests, including our units, pendingpromulgation of regulations or other guidance. It is not clear if or when such regulations or other guidances will be issued. Non-U.S. unitholders shouldconsult a tax advisor before investing in our units.We will treat each purchaser of our common units as having the same tax benefits without regard to the units purchased. The IRS may challenge thistreatment, which could adversely affect the value of our common units.Because we cannot match transferors and transferees of our common units, we will adopt depreciation and amortization positions that may not conform withall aspects of existing Treasury regulations. A successful IRS challenge to those positions could adversely affect the amount of tax benefits available tounitholders. It also could affect the timing of these tax benefits or the amount of gain from a unitholder’s sale of common units and could have a negativeimpact on the value of our common units or result in audit adjustments to the unitholder’s tax returns.Unitholders will likely be subject to state and local taxes and return filing requirements as a result of investing in our units.In addition to federal income taxes, unitholders will likely be subject to other taxes, such as state and local income taxes, unincorporated business taxes andestate, inheritance or intangible taxes that are imposed by the various jurisdictions in which we do business or own property. Unitholders will likely berequired to file state and local income tax returns and pay state and local income taxes in some or all of these various jurisdictions. Further, unitholders maybe subject to penalties for failure to comply with those requirements. We may own property or conduct business in other states or foreign countries in thefuture. It is each unitholder’s responsibility to file all federal, state and local tax returns.We prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month based upon the ownershipof our common units on the first day of each month, instead of on the basis of the date a particular common unit is transferred. The IRS may challenge thistreatment, which could change the allocation of items of income, gain, loss and deduction among our common unitholders.We prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month based upon the ownership ofour common units on the first day of each month, instead of on the basis of the date a particular common unit is transferred. The U.S. Treasury Department andthe IRS issued final regulations pursuant to which a publicly traded partnership may use a similar monthly simplifying convention to allocate tax itemsamong transferor and transferee unitholders, although such tax items must be prorated on a daily basis and the regulations do not specifically authorize allaspects of the proration method we have currently adopted. If the IRS were to challenge our proration method, we may be required to change the allocation ofitems of income, gain, loss and deduction among our common unitholders.34Table of ContentsWe have adopted certain valuation methodologies in determining a common unitholder’s allocations of income, gain, loss and deduction. The IRS maychallenge these methods or the resulting allocations and such a challenge could adversely affect the value of our common units.In determining the items of income, gain, loss and deduction allocable to our common unitholders, we must routinely determine the fair market value of ourrespective assets. Although we may from time to time consult with professional appraisers regarding valuation matters, we make fair market value estimatesusing a methodology based on the market value of our common units as a means to measure the fair market value of our respective assets. The IRS maychallenge these valuation methods and the resulting allocations of income, gain, loss and deduction.A successful IRS challenge to these methods or allocations could adversely affect the amount, character and timing of taxable income or loss being allocatedto our common unitholders. It also could affect the amount of gain from our unitholders’ sale of common units and could have a negative impact on the valueof the common units or result in audit adjustments to our common unitholders’ tax returns without the benefit of additional deductions.A unitholder whose units are the subject of a securities loan (e.g., a loan to a “short seller” to cover a short sale of units) may be considered as havingdisposed of those units. If so, the unitholder would no longer be treated for tax purposes as a partner with respect to those units during the period of theloan and may recognize gain or loss from the disposition.Because there are no specific rules governing the federal income tax consequences of loaning a partnership interest, a unitholder whose units are the subjectof a securities loan may be considered as having disposed of the loaned units. In that case, the unitholder may no longer be treated for tax purposes as apartner with respect to those units during the period of the loan to the short seller and the unitholder may recognize gain or loss from such disposition.Moreover, during the period of the loan, any of our income, gain, loss or deduction with respect to those units may not be reportable by the unitholder andany cash distributions received by the unitholder as to those units could be fully taxable as ordinary income. Unitholders desiring to assure their status aspartners and avoid the risk of gain recognition from a loan to a short seller are urged to consult a tax advisor to discuss whether it is advisable to modify anyapplicable brokerage account agreements to prohibit their brokers from borrowing their units.Treatment of distributions on our Preferred Units as guaranteed payments for the use of capital creates a different tax treatment for the holders ofPreferred Units than the holders of our common units and such distributions may not be eligible for the 20% deduction for qualified publicly tradedpartnership income.The tax treatment of distributions on our Preferred Units is uncertain. We will treat the holders of Preferred Units as partners for tax purposes and will treatdistributions on the Preferred Units as guaranteed payments for the use of capital that will generally be taxable to the holders of Preferred Units as ordinaryincome. Although a holder of Preferred Units could recognize taxable income from the accrual of such a guaranteed payment even in the absence of acontemporaneous distribution, we anticipate accruing and making the guaranteed payment distributions quarterly. Otherwise, the holders of Preferred Unitsare generally not anticipated to share in our items of income, gain, loss or deduction, nor will we allocate any share of our nonrecourse liabilities to theholders of Preferred Units. If the Preferred Units were treated as indebtedness for tax purposes, rather than as guaranteed payments for the use of capital,distributions likely would be treated as payments of interest by us to the holders of Preferred Units.The Tax Cuts and Jobs Act allows individuals and other non-corporate owners of interests in a publicly traded partnership to take a deduction equal to 20%of their allocable share of “qualified publicly traded partnership income.” Although we expect that much of the income we earn is generally eligible for the20% deduction for qualified publicly traded partnership income, it is uncertain whether a guaranteed payment for the use of capital may constitute anallocable or distributive share of such income. As a result, the guaranteed payment for use of capital received by the holders of our Preferred Units may not beeligible for the 20% deduction for qualified publicly traded partnership income.A holder of Preferred Units will be required to recognize gain or loss on a sale of Preferred Units equal to the difference between the amount realized by suchholder and tax basis in the Preferred Units sold. The amount realized generally will equal the sum of the cash and the fair market value of other property suchholder receives in exchange for such Preferred Units. Subject to general rules requiring a blended basis among multiple partnership interests, the tax basis of aPreferred Unit will generally be equal to the sum of the cash and the fair market value of other property paid by the holder of Preferred Units to acquire suchPreferred Unit. Gain or loss recognized by a holder of Preferred Units on the sale or exchange of a Preferred Unit held for more than one year generally will betaxable as long-term capital gain or loss. Because holders of Preferred Units will generally not be allocated a share of our items of depreciation, depletion oramortization, it is not anticipated that such holders would be required to recharacterize any portion of their gain as ordinary income as a result of therecapture rules.Investment in the Preferred Units by tax-exempt investors, such as employee benefit plans and IRAs, and non-U.S. persons raises issues unique to them. Anon-U.S. holder’s income from guaranteed payments and any gain from the sale or disposition35Table of Contentsof our units will generally be considered to be effectively connected income and subject to U.S. federal income tax. Distributions to non-U.S. holders ofPreferred Units will be subject to withholding taxes. If the amount of withholding exceeds the amount of U.S. federal income tax actually due, non-U.S.holders of Preferred Units may be required to file U.S. federal income tax returns in order to seek a refund of such excess. The Tax Cuts and Jobs Act imposes awithholding obligation of 10% of the amount realized upon a non-U.S. unitholder’s sale or disposition of Preferred Units. The IRS has temporarily suspendedthe application of the withholding requirements on sales of publicly traded interests, including our Preferred Units, pending promulgation of regulations orother guidance. It is not clear if or when such regulations or other guidance will be issued. Additionally, the treatment of guaranteed payments for the use ofcapital to tax exempt investors is not certain and such payments may be treated as unrelated business taxable income for federal income tax purposes.All holders of our Preferred Units are urged to consult a tax advisor with respect to the consequences of owning our Preferred Units.PROPERTIESOur principal properties are described above under the caption “Segments,” and that information is incorporated herein by reference. We believe that we havesatisfactory title to all of our properties. Although title to these properties is subject to encumbrances in some cases, such as customary interests generallyretained in connection with the acquisition of real property, liens for current taxes and other burdens and easements, and restrictions or other encumbrances,including those related to environmental liabilities associated with historical operations, to which the underlying properties were subject at the time ofacquisition by us or our predecessors, we believe that none of these burdens will materially detract from the value of these properties or from our interest inthese properties or will materially interfere with their use in the operation of our business. In addition, we believe that we have obtained sufficient right-of-way grants and permits from public authorities and private parties for us to operate our business in all material respects as described in this report. We performscheduled maintenance on all of our pipelines, terminals, crude oil tanks and related equipment and make repairs and replacements when necessary orappropriate. We believe that our pipelines, terminals, crude oil tanks and related equipment have been constructed and are maintained in all material respectsin accordance with applicable federal, state and local laws and the regulations and standards prescribed by the American Petroleum Institute, the DOT andaccepted industry practice.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 3. LEGAL PROCEEDINGSWe are named as a defendant in litigation and are a party to other claims and legal proceedings relating to our normal business operations, includingregulatory and environmental matters. Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim orproceeding would not have a material adverse effect on our results of operations, financial position or liquidity.We are insured against various business risks to the extent we believe is prudent; however, we cannot assure you that the nature and amount of such insurancewill be adequate, in every case, to protect us against liabilities arising from future legal proceedings as a result of our ordinary business activity.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.36Table of ContentsPART IIITEM 5.MARKET FOR REGISTRANT’S COMMON UNITS, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESCommon Unit DistributionsOur common units are listed and traded on the New York Stock Exchange under the symbol “NS.” At the close of business on February 8, 2018, we had 464holders of record of our common units. The following table presents the high and low sales prices for our common units during the periods presented(composite transactions as reported by the New York Stock Exchange) and the amount, record date and payment date of the quarterly cash distributions onour common units with respect to such periods: Price Range per Common Unit Cash Distributions High Low Amount PerCommon Unit Record Date Payment DateYear 2017 4th Quarter (a)$41.00 $26.21 $1.095 February 8, 2018 February 13, 20183rd Quarter$47.99 $37.30 $1.095 November 9, 2017 November 14, 20172nd Quarter$52.68 $42.40 $1.095 August 7, 2017 August 11, 20171st Quarter$55.64 $49.09 $1.095 May 8, 2017 May 12, 2017Year 2016 4th Quarter$50.87 $43.41 $1.095 February 8, 2017 February 13, 20173rd Quarter$50.72 $43.91 $1.095 November 8, 2016 November 14, 20162nd Quarter$53.47 $37.90 $1.095 August 9, 2016 August 12, 20161st Quarter$42.87 $25.65 $1.095 May 9, 2016 May 13, 2016(a)The distribution was announced on January 29, 2018.Our partnership agreement requires that we distribute all “Available Cash” to our common limited partners and general partner each quarter, and this term isdefined in the partnership agreement generally as cash on hand at the end of the quarter, plus certain permitted borrowings made subsequent to the end of thequarter, less cash reserves determined by our board of directors. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” for further information regarding our distributions.On February 7, 2018, NuStar Energy, Riverwalk Logistics, L.P., NuStar GP, LLC, Merger Sub, Riverwalk Holdings, LLC and NuStar GP Holdings entered intothe Merger Agreement pursuant to which Merger Sub will merge with and into NuStar GP Holdings with NuStar GP Holdings being the surviving entity, suchthat NuStar Energy will be the sole member of NuStar GP Holdings following the Merger. Additionally, on February 8, 2018, we announced that ourmanagement anticipates recommending to the board of directors of NuStar GP, LLC, and the board of directors expects to adopt, a reset of our quarterlydistribution per common unit to $0.60 ($2.40 on an annualized basis), starting with the first-quarter distribution payable in May 2018. Please refer to Note 28of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for further discussion of the Merger.General Partner DistributionsOur general partner is entitled to distributions as shown below: Percentage of DistributionQuarterly Distribution Amount per Common Unit CommonUnitholders General Partner IncludingIncentive DistributionsUp to $0.60 98% 2%Above $0.60 up to $0.66 90% 10%Above $0.66 75% 25%37Table of ContentsOur general partner’s incentive distributions totaled $45.7 million and $43.4 million for the years ended December 31, 2017 and 2016, respectively. Thegeneral partner’s share of our distributions for the years ended December 31, 2017 and 2016 was 11.9% and 13.0%, respectively, due to the impact of theincentive distributions. In the second quarter of 2017, our general partner amended and restated our partnership agreement in connection with the issuance ofthe Series B Preferred Units described below and our acquisition of Navigator Energy Services, LLC to waive up to an aggregate $22.0 million of thequarterly incentive distributions to our general partner for any NS common units issued from the date of the acquisition agreement (other than thoseattributable to NS common units issued under any equity compensation plan) for ten consecutive quarters, starting with the distributions for the secondquarter of 2017.Pursuant to the Merger Agreement and at the effective time of the Merger, our partnership agreement will be amended and restated to, among other things,cancel the incentive distribution rights held by our general partner and convert the 2% general partner interest in NuStar Energy held by our general partnerinto a non-economic management interest. As a result, after the Merger, our general partner will no longer receive incentive distributions or quarterly cashdistributions related to its ownership interest, from us. Please refer to Note 28 of the Notes to Consolidated Financial Statements in Item 8. “FinancialStatements and Supplementary Data” for further discussion of the Merger.Preferred Unit DistributionsThe following table provides the terms related to distributions for our Series A, Series B and Series C Fixed-to-Floating Rate Cumulative RedeemablePerpetual Preferred Units (collectively, the Preferred Units):Units Fixed Distribution Rate perAnnum (as a Percentage ofthe $25.00 LiquidationPreference per Unit) Fixed DistributionRate per Unit perAnnum Optional RedemptionDate/Date at WhichDistribution Rate BecomesFloating Floating Annual Rate (as aPercentage of the $25.00Liquidation Preference perUnit)Series A Preferred Units 8.50% $2.125 December 15, 2021 Three-month LIBOR plus6.766%Series B Preferred Units 7.625% $1.90625 June 15, 2022 Three-month LIBOR plus5.643%Series C Preferred Units 9.00% $2.25 December 15, 2022 Three-month LIBOR plus6.88%Distributions on the Preferred Units are payable out of any legally available funds, accrue and are cumulative from the original issuance dates, and arepayable on the 15th day (or the next business day) of each of March, June, September and December of each year to holders of record on the first business dayof each payment month. The Preferred Units rank equal to each other and senior to all of our other classes of equity securities with respect to distributionrights and rights upon liquidation.38Table of ContentsThe following table summarizes information related to our quarterly cash distributions on our Preferred Units:Period CashDistributionsPer Unit Record Date Payment Date Series A Preferred Units: December 15, 2017 - March 14, 2018 (a) $0.53125 March 1, 2018 March 15, 2018September 15, 2017 - December 14, 2017 $0.53125 December 1, 2017 December 15, 2017June 15, 2017 - September 14, 2017 $0.53125 September 1, 2017 September 15, 2017March 15, 2017 - June 14, 2017 $0.53125 June 1, 2017 June 15, 2017November 25, 2016 - March 14, 2017 $0.64930556 March 1, 2017 March 15, 2017 Series B Preferred Units: December 15, 2017 - March 14, 2018 (a) $0.47657 March 1, 2018 March 15, 2018September 15, 2017 - December 14, 2017 $0.47657 December 1, 2017 December 15, 2017April 28, 2017 - September 14, 2017 $0.725434028 September 1, 2017 September 15, 2017 Series C Preferred Units: November 30, 2017 - March 14, 2018 (a) $0.65625 March 1, 2018 March 15, 2018(a)The distribution was announced on January 29, 2018.39Table of ContentsITEM 6. SELECTED FINANCIAL DATAThe following table contains selected financial data derived from our audited financial statements: Year Ended December 31, 2017 2016 2015 2014 2013 (a) (Thousands of Dollars, Except Per Unit Data)Statement of Income Data: Revenues (b)$1,814,019 $1,756,682 $2,084,040 $3,075,118 $3,463,732Operating income (loss)$336,278 $359,109 $390,704 $346,901 $(19,121)Income (loss) from continuing operations (c)$147,964 $150,003 $305,946 $214,169 $(185,509)Income (loss) from continuing operations percommon unit (c)$0.64 $1.27 $3.29 $2.14 $(2.89)Cash distributions per unit applicableto common limited partners$4.38 $4.38 $4.38 $4.38 $4.38 December 31, 2017 (d) 2016 2015 2014 2013 (Thousands of Dollars)Balance Sheet Data: Property, plant and equipment, net$4,300,933 $3,722,283 $3,683,571 $3,460,732 $3,310,653Total assets$6,535,233 $5,030,545 $5,125,525 $4,918,796 $5,032,186Long-term debt, less current portion$3,263,069 $3,014,364 $3,055,612 $2,749,452 $2,655,553Total partners’ equity$2,480,089 $1,611,617 $1,609,844 $1,716,210 $1,903,794(a)The losses for the year ended December 31, 2013 are mainly due to goodwill impairment charges.(b)Declines in revenues from 2013 through 2017 are mainly from a reduction in marketing activity and lower commodity prices. We ceased marketing crude oil in the secondquarter of 2017 and exited our heavy fuels trading operations in the third quarter of 2017.(c)Includes the impact of a $58.7 million non-cash impairment charge on the Axeon term loan in 2016 and a $56.3 million non-cash gain associated with the Linden terminalacquisition in 2015.(d)The significant increases in balance sheet data are primarily due to our acquisition of Navigator Energy Services, LLC for approximately $1.5 billion in May 2017.40Table of ContentsITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following review of our results of operations and financial condition should be read in conjunction with “Cautionary Statement Regarding Forward-Looking Information,” Items 1., 1A. and 2. “Business, Risk Factors and Properties” and Item 8. “Financial Statements and Supplementary Data” included inthis report.OVERVIEWNuStar Energy L.P. (NYSE: NS) is engaged in the transportation of petroleum products and anhydrous ammonia, and the terminalling, storage and marketingof petroleum products. Unless otherwise indicated, the terms “NuStar Energy,” “NS,” “the Partnership,” “we,” “our” and “us” are used in this report to refer toNuStar Energy L.P., to one or more of our consolidated subsidiaries or to all of them taken as a whole. NuStar GP Holdings, LLC (NuStar GP Holdings orNSH) (NYSE: NSH) owns our general partner, Riverwalk Logistics, L.P., and owns an approximate 11% common limited partner interest in us as ofDecember 31, 2017. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented in seven sections:•Overview•Results of Operations•Trends and Outlook•Liquidity and Capital Resources•Related Party Transactions•Critical Accounting Policies•New Accounting PronouncementsRecent DevelopmentsMerger. On February 7, 2018, NuStar Energy, Riverwalk Logistics, L.P., NuStar GP, LLC, Marshall Merger Sub LLC, a wholly owned subsidiary of NuStarEnergy (Merger Sub), Riverwalk Holdings, LLC and NuStar GP Holdings, LLC (NuStar GP Holdings) entered into an Agreement and Plan of Merger (theMerger Agreement) pursuant to which Merger Sub will merge with and into NuStar GP Holdings with NuStar GP Holdings being the surviving entity (theMerger), such that NuStar Energy will be the sole member of NuStar GP Holdings following the Merger. Pursuant to the Merger Agreement and at theeffective time of the Merger, our partnership agreement will be amended and restated to, among other things, (i) cancel the incentive distribution rights heldby our general partner, (ii) convert the 2% general partner interest in NuStar Energy held by our general partner into a non-economic management interestand (iii) provide the holders of our common units with voting rights in the election of the members of the board of directors of NuStar GP, LLC at an annualmeeting, beginning in 2019. The Merger is subject to the satisfaction or waiver of certain conditions, including approval of the Merger Agreement by NuStarGP Holdings unitholders. Please refer to Note 28 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and SupplementaryData” for further discussion of the Merger.Hurricane Activity. In the third quarter of 2017, parts of the Caribbean and Gulf of Mexico experienced three major hurricanes. Several of our facilities wereaffected by the hurricanes, but our St. Eustatius terminal experienced the most damage and was temporarily shut down. We incurred approximately $2.6million of operating expenses to repair minor property damage at several of our domestic terminals. Additionally, we recorded a $5.0 million loss in “Other(expense) income, net” in the consolidated statements of income in the third quarter of 2017 for property damage at our St. Eustatius terminal, whichrepresents the amount of our property deductible under our insurance policy. The hurricane impacts lowered revenues for our bunker fuel operations in ourfuels marketing segment and lowered throughput and associated handling fees in our storage segment in the third and fourth quarters of 2017. We receivedinsurance proceeds of $12.5 million in 2017 for damages at our St. Eustatius terminal, of which $3.8 million was for business interruption and the remainderwas used for repairs and cleanup. Proceeds from business interruption insurance are included in “Operating expenses” in the consolidated statements ofincome and in “Cash flows from operating activities” in the consolidated statements of cash flows. In January 2018, we received $87.5 million of insuranceproceeds in settlement of our property damage claim for our St. Eustatius terminal. We expect that the costs to repair the property damage at the terminal willnot exceed the value of insurance proceeds received.Navigator Acquisition and Financing Transactions. On May 4, 2017, we completed the acquisition of Navigator Energy Services, LLC for approximately$1.5 billion (the Navigator Acquisition). In order to fund the purchase price, we issued 14,375,000 common units for net proceeds of $657.5 million, issued$550.0 million of 5.625% senior notes for net proceeds of $543.3 million and issued 15,400,000 of our 7.625% Series B Fixed-to-Floating Rate CumulativeRedeemable Perpetual Preferred Units (Series B Preferred Units) for net proceeds of $371.8 million. We collectively refer to the acquired assets as our41Table of ContentsPermian Crude System. Please refer to Notes 4, 12 and 19 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements andSupplementary Data” for further discussion.Axeon Term Loan. On February 22, 2017, we settled and terminated the $190.0 million term loan to Axeon Specialty Products, LLC (the Axeon Term Loan),pursuant to which we also provided credit support, such as guarantees, letters of credit and cash collateral, as applicable, of up to $125.0 million to AxeonSpecialty Products, LLC (Axeon). We received $110.0 million in settlement of the Axeon Term Loan, and our obligation to provide ongoing credit supportto Axeon ceased. In 2016, we recognized an impairment charge on the Axeon Term Loan of $58.7 million which is included in “Other (expense) income, net”in the consolidated statements of income. Please refer to Notes 7 and 15 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statementsand Supplementary Data” for additional information on the Axeon Term Loan and related credit support.Other EventsMartin Terminal Acquisition. On December 21, 2016, we acquired crude oil and refined product storage assets in Corpus Christi, TX for $95.7 million,including $2.1 million of capital expenditure reimbursements, from Martin Operating Partnership L.P. (the Martin Terminal Acquisition). The assets acquiredare in our storage segment and include 900,000 barrels of crude oil storage capacity, 250,000 barrels of refined product storage capacity and exclusive use ofthe Port of Corpus Christi’s new crude oil dock. The acquired assets, which are adjacent to our existing Corpus Christi North Beach terminal, increased ourstorage capacity in the Corpus Christi region and have direct connectivity to Eagle Ford crude oil production.Employee Transfer from NuStar GP, LLC. On March 1, 2016, NuStar GP, LLC, the general partner of our general partner and a wholly owned subsidiary ofNuStar GP Holdings, transferred and assigned to NuStar Services Company LLC (NuStar Services Co), a wholly owned subsidiary of NuStar Energy, all ofNuStar GP, LLC’s employees and related benefit plans, programs, contracts and policies (the Employee Transfer). As a result of the Employee Transfer, wepay employee costs directly and sponsor the long-term incentive plan and other employee benefit plans. Please refer to the Notes to Consolidated FinancialStatements in Item 8. “Financial Statements and Supplementary Data” for the following: Note 17 for further discussion of the Employee Transfer and ourrelated party agreements, Note 22 for a discussion of our employee benefit plans and Note 23 for a discussion of our long-term incentive plan.Linden Acquisition. On January 2, 2015, we acquired full ownership of ST Linden Terminal, LLC (Linden), which owns a refined products terminal inLinden, NJ with 4.3 million barrels of storage capacity, for $142.5 million (the Linden Acquisition). Prior to the Linden Acquisition, Linden operated as ajoint venture between Linden Holding Corp. and us, with each party owning 50%. On the acquisition date, we remeasured our existing 50% equityinvestment in Linden to its fair value of $128.0 million and we recognized a gain of $56.3 million in “Other (expense) income, net” in the consolidatedstatements of income for the year ended December 31, 2015. Please refer to Note 4 of the Notes to Consolidated Financial Statements in Item 8. “FinancialStatements and Supplementary Data” for further discussion of the Linden Acquisition.OperationsWe conduct our operations through our subsidiaries, primarily NuStar Logistics, L.P. (NuStar Logistics) and NuStar Pipeline Operating Partnership L.P.(NuPOP). Our operations are divided into three reportable business segments: pipeline, storage and fuels marketing. For a more detailed description of oursegments, please refer to “Segments” under Item 1. “Business.”Pipeline. We own 3,130 miles of refined product pipelines and 1,930 miles of crude oil pipelines, as well as approximately 5.0 million barrels of storagecapacity, which comprise our Central West System. In addition, we own 2,370 miles of refined product pipelines, consisting of the East and North Pipelines,and a 2,000-mile ammonia pipeline (the Ammonia Pipeline), which comprise our Central East System. The East and North Pipelines have storage capacity ofapproximately 6.8 million barrels.Storage. We own terminals and storage facilities in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and theUnited Kingdom (UK), with approximately 84.8 million barrels of storage capacity.Fuels Marketing. Within our fuels marketing operations, we purchase petroleum products for resale. The results of operations for the fuels marketing segmentdepend largely on the margin between our costs and the sales prices of the products we market. Therefore, the results of operations for this segment are moresensitive to changes in commodity prices compared to the operations of the pipeline and storage segments. We enter into derivative contracts to attempt tomitigate the effects of commodity price fluctuations. The derivative instruments we use consist primarily of commodity futures and swap contracts. Not all ofour derivative instruments qualify for hedge accounting treatment under U.S. generally accepted accounting principles. In such cases, our earnings for aperiod may include the gain or loss related to derivative instruments without including the offsetting effect of the hedged item, which could result in greaterearnings volatility.42Table of ContentsWe ceased marketing crude oil in the second quarter of 2017 and exited our heavy fuels trading operations in the third quarter of 2017. These actions are inline with our goal of reducing our exposure to commodity margins, and instead focusing on our core, fee-based pipeline and storage segments. The onlyoperations remaining in our fuels marketing segment are our bunkering operations at our St. Eustatius and Texas City terminals, as well as certain of ourblending operations.Factors That Affect Results of OperationsThe following factors affect the results of our operations:•company-specific factors, such as facility integrity issues and maintenance requirements that impact the throughput rates of our assets;•seasonal factors that affect the demand for products transported by and/or stored in our assets and the demand for products we sell;•industry factors, such as changes in the prices of petroleum products that affect demand and operations of our competitors;•economic factors, such as commodity price volatility that impact our fuels marketing segment; and•factors that impact the operations served by our pipeline and storage assets, such as utilization rates and maintenance turnaround schedules ofour refining company customers and drilling activity by our crude oil production customers.Current Market ConditionsThe price of crude oil has recovered somewhat since its sharp initial decline in 2014 and subsequent historic lows during 2015 and 2016. In 2017, globalsupply and demand moved into balance, which seems to have reduced crude price volatility, but crude prices remain stalled at approximately 50% of their2014 levels. Most energy industry experts now project a modest price recovery in 2018, but the duration and degree of price improvements will depend on,among other things, changes in global supply and demand.Increases or decreases in the price of crude oil affect sectors across the energy industry, including our customers in crude oil production, refining and trading,in different ways at different points in any given price cycle. For example, U.S. crude oil producers reduced their capital spending relatively early in thissustained low price cycle, which reduced drilling activity and lowered production, particularly in shale play regions with higher relative drilling costs. Asthis cycle has continued, producers focused their trimmed-back spending on the most capital-efficient regions, such as, notably, the Permian Basin. Refiners,on the other hand, have benefitted from lower crude oil prices, to the extent they have been able to take advantage of lower feedstock prices, especially thosepositioned for healthy regional demand for their refined products; however, as refined product inventories increase, refiners are incentivized to reduce theirproduction levels, which in turn may reduce their ability to benefit from low crude prices. Crude oil traders focus less on the current market commodity pricethan on whether that price is higher or lower than expected future market prices: if the future price for a product is believed to be higher than the currentmarket price, or a “contango market,” traders are more likely to purchase and store products to sell in the future at the higher price. On the other hand, whenthe current price of crude oil nears or exceeds the expected future market price, or “backwardation,” as is currently the case, traders are no longer incentivizedto purchase and store product for future sale.43Table of ContentsRESULTS OF OPERATIONSYear Ended December 31, 2017 Compared to Year Ended December 31, 2016Financial Highlights(Thousands of Dollars, Except Unit and Per Unit Data) Year Ended December 31, 2017 2016 ChangeStatement of Income Data: Revenues: Service revenues$1,128,726 $1,083,165 $45,561Product sales685,293 673,517 11,776Total revenues1,814,019 1,756,682 57,337 Costs and expenses: Cost of product sales651,599 633,653 17,946Operating expenses449,670 448,367 1,303General and administrative expenses112,240 98,817 13,423Depreciation and amortization expense264,232 216,736 47,496Total costs and expenses1,477,741 1,397,573 80,168 Operating income336,278 359,109 (22,831)Interest expense, net(173,083) (138,350) (34,733)Other expense, net(5,294) (58,783) 53,489Income before income tax expense157,901 161,976 (4,075)Income tax expense9,937 11,973 (2,036)Net income$147,964 $150,003 $(2,039)Basic and diluted net income per common unit$0.64 $1.27 $(0.63)Basic weighted-average common units outstanding88,825,964 78,080,484 10,745,480Annual OverviewNet income slightly decreased for the year ended December 31, 2017, compared to the year ended December 31, 2016. The decrease in other expense, net,mainly resulting from a $58.7 million impairment charge on the Axeon Term Loan in 2016, was offset by increased interest expense, increased general andadministrative expenses and decreased segment operating income.44Table of ContentsSegment Operating Highlights(Thousands of Dollars, Except Barrel/Day Information) Year Ended December 31, 2017 2016 ChangePipeline: Refined products pipelines throughput (barrels/day)516,736 535,946 (19,210)Crude oil pipelines throughput (barrels/day)583,323 392,181 191,142Total throughput (barrels/day)1,100,059 928,127 171,932Throughput revenues$516,288 $485,650 $30,638Operating expenses156,432 147,858 8,574Depreciation and amortization expense128,061 89,554 38,507Segment operating income$231,795 $248,238 $(16,443) Storage: Throughput (barrels/day)325,194 789,065 (463,871)Throughput terminal revenues$85,927 $117,586 $(31,659)Storage terminal revenues531,026 492,456 38,570Total revenues616,953 610,042 6,911Operating expenses270,041 276,578 (6,537)Depreciation and amortization expense127,473 118,663 8,810Segment operating income$219,439 $214,801 $4,638 Fuels Marketing: Product sales and other revenue$692,884 $681,934 $10,950Cost of product sales660,844 645,355 15,489Gross margin32,040 36,579 (4,539)Operating expenses26,057 33,173 (7,116)Segment operating income$5,983 $3,406 $2,577 Consolidation and Intersegment Eliminations: Revenues$(12,106) $(20,944) $8,838Cost of product sales(9,245) (11,702) 2,457Operating expenses(2,860) (9,242) 6,382Total$(1) $— $(1) Consolidated Information: Revenues$1,814,019 $1,756,682 $57,337Cost of product sales651,599 633,653 17,946Operating expenses449,670 448,367 1,303Depreciation and amortization expense255,534 208,217 47,317Segment operating income457,216 466,445 (9,229)General and administrative expenses112,240 98,817 13,423Other depreciation and amortization expense8,698 8,519 179Consolidated operating income$336,278 $359,109 $(22,831)45Table of ContentsPipelineTotal revenues increased $30.6 million and total throughputs increased 171,932 barrels per day for the year ended December 31, 2017, compared to the yearended December 31, 2016, primarily due to:•an increase in revenues of $42.6 million and an increase in throughputs of 192,958 barrels per day from our Permian Crude System acquired in May2017;•an increase in revenues of $5.5 million and an increase in throughputs of 2,929 barrels per day due to maintenance downtime in 2016 on a portion ofthe Ammonia Pipeline, as well as operational issues in 2016 at certain plants served by the pipeline; and•an increase in revenues of $3.4 million, despite a decrease in throughputs of 4,129 barrels per day, on our East Pipeline due to the completion ofvarious storage projects along the pipeline, as well as an increase in long-haul deliveries resulting in higher average tariffs. A turnaround andoperational issues at the refineries served by the East Pipeline in 2017 contributed to the decrease in throughputs.These increases in revenues and throughputs were partially offset by:•a decrease in revenues of $10.4 million and a decrease in throughputs of 16,839 barrels per day due to a turnaround in the fourth quarter of 2017 atthe refinery served by our McKee System pipelines;•a decrease in revenues of $6.8 million and a decrease in throughputs of 15,561 barrels per day on our Eagle Ford System, mainly due to reducedproduction in this sustained low crude oil price environment; and•a decrease in revenues of $4.8 million and a decrease in throughputs of 6,905 barrels per day due to a turnaround in the second quarter of 2017 at therefinery served by the North Pipeline.Operating expenses increased $8.6 million for the year ended December 31, 2017, compared to the year ended December 31, 2016. Operating expensesincreased $9.9 million as a result of our acquisition of the Permian Crude System, which was partially offset by a decrease of $2.1 million from productimbalances on the East Pipeline.Depreciation and amortization expense increased $38.5 million for the year ended December 31, 2017, compared to the year ended December 31, 2016, dueto our acquisition of the Permian Crude System and the completion of various pipeline projects.StorageBeginning January 1, 2017, our agreements for our refinery crude storage tanks at Corpus Christi, TX, Texas City, TX and Benicia, CA changed fromthroughput-based to storage-based. Excluding the effect of the change to these agreements, throughput terminal revenues would have increased $9.5 millionand throughputs would have increased 14,360 barrels per day for the year ended December 31, 2017, compared to the year ended December 31, 2016.Throughput terminal revenues increased at our Corpus Christi North Beach terminal by $15.1 million due to an increase in throughputs of 26,359 barrels perday, mainly resulting from the Martin Terminal Acquisition. The benefit of the Martin Terminal Acquisition was partially offset by lower revenues andthroughputs resulting from a decrease in Eagle Ford Shale crude oil being shipped to Corpus Christi due to reduced production in this sustained low crude oilprice environment. Throughputs increased 16,309 barrels per day, despite only a slight increase in revenues of $0.3 million, at our Central West Terminals,mainly due to a new customer contract and increased marine activity, mostly offset by decreased revenues from ancillary services. These increases in revenuesand throughputs were partially offset by decreased revenues of $5.8 million and decreased throughputs of 28,308 barrels per day at our Paulsboro, NJterminal as a customer diverted barrels to other terminals.Storage terminal revenues would have decreased $0.6 million for the year ended December 31, 2017, compared to the year ended December 31, 2016,excluding the effect of the change to the refinery storage tank agreements described above. Revenues at our Gulf Coast Terminals decreased $19.2 million,mainly at our St. James, LA terminal due to reduced unit train activity and at our Texas City, TX terminal as a result of the exit from our heavy fuels tradingoperations. These decreases were partially offset by increases in revenues of $8.2 million at our North East Terminals and $4.5 million at our West CoastTerminals, mainly due to new customer contracts and rate escalations.Storage terminal revenues also increased $5.5 million for the year ended December 31, 2017, compared to the year ended December 31, 2016, at ourInternational Terminals. Revenues increased $10.2 million at our St. Eustatius terminal, mainly due to new customer contracts and rate escalations, partiallyoffset by lower throughput and associated handling fees as a result of the temporary shutdown of the terminal and damage caused by hurricane activity in thethird quarter of 2017. This increase was partially offset by a decrease in revenues of $4.2 million at our Point Tupper terminal, mainly resulting from adecrease in customer base, tanks out of service and lower reimbursable revenues.46Table of ContentsOperating expenses decreased $6.5 million for the year ended December 31, 2017, compared to the year ended December 31, 2016, primarily due to:•a decrease of $8.7 million in maintenance and regulatory expenses, primarily at our St. Eustatius, North East and Point Tupper terminals; and•a decrease of $6.1 million in reimbursable expenses, mainly at our Texas City, TX and Point Tupper terminals, consistent with the decrease inreimbursable revenues;These decreases were partially offset by increased operating expenses of $8.5 million as a result of the Martin Terminal Acquisition.Depreciation and amortization expense increased $8.8 million for the year ended December 31, 2017, compared to the year ended December 31, 2016, due tothe Martin Terminal Acquisition and other various projects.Fuels MarketingSegment operating income increased $2.6 million for the year ended December 31, 2017, compared to the year ended December 31, 2016, primarily due to areduction in losses of $9.1 million from our heavy fuels trading operations following our exit of that business in 2017. Segment operating income from ourbunker fuel operations at our St. Eustatius terminal decreased $6.4 million, resulting from lower gross margins and the temporary shutdown of the terminalcaused by hurricane activity in the third quarter of 2017.Consolidation and Intersegment EliminationsRevenue and operating expense eliminations primarily relate to storage fees charged to the fuels marketing segment by the storage segment. Cost of productsales eliminations represent expenses charged to the fuels marketing segment for costs associated with inventory that are expensed once the inventory is sold.GeneralGeneral and administrative expenses increased $13.4 million for the year ended December 31, 2017, compared to the year ended December 31, 2016,primarily due to transaction costs related to the Navigator Acquisition.Interest expense, net increased $34.7 million for the year ended December 31, 2017, compared to the year ended December 31, 2016, mainly due to theissuance of $550.0 million of 5.625% senior notes in April 2017 and as a result of fees for a bridge loan commitment to potentially assist with the financingof the Navigator Acquisition. We did not enter into or borrow under the bridge loan. Interest expense, net also increased as a result of lower interest incomedue to the termination of the Axeon Term Loan in February 2017. Please refer to Note 7 of the Notes to Consolidated Financial Statements in Item 8.“Financial Statements and Supplementary Data” for a discussion of the Axeon Term Loan and related credit support.For the year ended December 31, 2017, we recorded other expense, net of $5.3 million, mainly due to property damage of $5.0 million at our St. Eustatiusterminal resulting from hurricane activity in the third quarter of 2017. For the year ended December 31, 2016, we recorded other expense, net of $58.8million, mainly due to an impairment charge of $58.7 million recognized on the Axeon Term Loan.Income tax expense decreased $2.0 million for the year ended December 31, 2017, compared to the year ended December 31, 2016, primarily due toreductions in withholding taxes related to certain of our foreign subsidiaries. This decrease was partially offset by increased tax expense resulting from theenactment of the Tax Cuts and Jobs Act in December 2017 (the Act), pursuant to which we recorded a one-time mandatory tax on previously deferredearnings of certain foreign subsidiaries. Please refer to Note 24 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements andSupplementary Data” for a discussion on income taxes, including the impact of the Act.47Table of ContentsYear Ended December 31, 2016 Compared to Year Ended December 31, 2015Financial Highlights(Thousands of Dollars, Except Unit and Per Unit Data) Year Ended December 31, 2016 2015 ChangeStatement of Income Data: Revenues: Service revenues$1,083,165 $1,114,153 $(30,988)Product sales673,517 969,887 (296,370)Total revenues1,756,682 2,084,040 (327,358) Costs and expenses: Cost of product sales633,653 907,574 (273,921)Operating expenses448,367 473,031 (24,664)General and administrative expenses98,817 102,521 (3,704)Depreciation and amortization expense216,736 210,210 6,526Total costs and expenses1,397,573 1,693,336 (295,763) Operating income359,109 390,704 (31,595)Interest expense, net(138,350) (131,868) (6,482)Other (expense) income, net(58,783) 61,822 (120,605)Income from continuing operations before income tax expense161,976 320,658 (158,682)Income tax expense11,973 14,712 (2,739)Income from continuing operations150,003 305,946 (155,943)Income from discontinued operations, net of tax— 774 (774)Net income$150,003 $306,720 $(156,717)Basic and diluted net income per common unit: Continuing operations$1.27 $3.29 $(2.02)Discontinued operations— 0.01 (0.01)Total$1.27 $3.30 $(2.03)Basic weighted-average common units outstanding78,080,484 77,886,078 194,406Annual OverviewNet income decreased $156.7 million for the year ended December 31, 2016, compared to the year ended December 31, 2015, primarily due to a $58.7million impairment charge on the Axeon Term Loan in 2016 and a $56.3 million gain associated with the Linden Acquisition in 2015. In addition, segmentoperating income decreased $35.3 million, resulting mainly from reductions in operating income for the pipeline and fuels marketing segments.48Table of ContentsSegment Operating Highlights(Thousands of Dollars, Except Barrel/Day Information) Year Ended December 31, 2016 2015 ChangePipeline: Refined products pipelines throughput (barrels/day)535,946 522,146 13,800Crude oil pipelines throughput (barrels/day)392,181 471,632 (79,451)Total throughput (barrels/day)928,127 993,778 (65,651)Throughput revenues$485,650 $508,522 $(22,872)Operating expenses147,858 153,222 (5,364)Depreciation and amortization expense89,554 84,951 4,603Segment operating income$248,238 $270,349 $(22,111) Storage: Throughput (barrels/day)789,065 899,606 (110,541)Throughput terminal revenues$117,586 $130,127 $(12,541)Storage terminal revenues492,456 494,781 (2,325)Total revenues610,042 624,908 (14,866)Operating expenses276,578 290,322 (13,744)Depreciation and amortization expense118,663 116,768 1,895Segment operating income$214,801 $217,818 $(3,017) Fuels Marketing: Product sales and other revenue$681,934 $976,216 $(294,282)Cost of product sales645,355 922,906 (277,551)Gross margin36,579 53,310 (16,731)Operating expenses33,173 39,803 (6,630)Segment operating income$3,406 $13,507 $(10,101) Consolidation and Intersegment Eliminations: Revenues$(20,944) $(25,606) $4,662Cost of product sales(11,702) (15,332) 3,630Operating expenses(9,242) (10,316) 1,074Total$— $42 $(42) Consolidated Information: Revenues$1,756,682 $2,084,040 $(327,358)Cost of product sales633,653 907,574 (273,921)Operating expenses448,367 473,031 (24,664)Depreciation and amortization expense208,217 201,719 6,498Segment operating income466,445 501,716 (35,271)General and administrative expenses98,817 102,521 (3,704)Other depreciation and amortization expense8,519 8,491 28Consolidated operating income$359,109 $390,704 $(31,595)49Table of ContentsPipelineTotal revenues decreased $22.9 million and total throughputs decreased 65,651 barrels per day for the year ended December 31, 2016, compared to the yearended December 31, 2015, primarily due to:•a decrease in revenues of $36.3 million and a decrease in throughputs of 81,779 barrels per day on our Eagle Ford System due to reducedproduction resulting from a sustained low crude oil price environment;•a decrease in revenues of $7.1 million and a decrease in throughputs of 6,586 barrels per day on our Ammonia Pipeline partly due to a shipper’sfacility reconfiguration, resulting in fewer barrels available for transportation, and maintenance downtime on a portion of the pipeline; and•a decrease in revenues of $3.9 million and a decrease in throughputs of 1,551 barrels per day on our Ardmore System due to operational issuesand a turnaround at our customer’s Ardmore refinery in 2016, as well as increased short-haul deliveries resulting in lower average tariffs.Those decreases in pipeline revenues and throughputs were partially offset by:•an increase in revenues of $12.1 million and an increase in throughputs of 14,803 barrels per day on our McKee and Three Rivers Systempipelines due to higher demand in those markets, increased production at our customer’s McKee refinery and increased volumes on pipelineswith higher average tariffs;•an increase in revenues of $9.6 million and an increase in throughputs of 11,441 barrels per day on our East Pipeline, mainly due to thecompletion of various expansion projects beginning in the fourth quarter of 2015, unfavorable pricing differentials in 2015 in markets servedby the East Pipeline and lower throughputs in 2015 due to maintenance downtime on a portion of the pipeline; and•an increase in revenues of $3.4 million and an increase in throughputs of 1,392 barrels per day on our North Pipeline due to increased refineryproduction shipped via pipeline and increased long-haul deliveries resulting in higher average tariffs.Operating expenses decreased $5.4 million for the year ended December 31, 2016, compared to the year ended December 31, 2015, primarily due to loweroperating expenses of $8.7 million on our Eagle Ford System, consistent with the decrease in throughputs. The decrease in pipeline operating expenses waspartially offset by higher maintenance and regulatory expenses of $3.2 million, mainly on our Central West Refined Products Pipelines.Depreciation and amortization expense increased $4.6 million for the year ended December 31, 2016, compared to the year ended December 31, 2015,mainly due to the completion of pipeline projects.StorageThroughput terminal revenues decreased $12.5 million and throughputs decreased 110,541 barrels per day for the year ended December 31, 2016, comparedto the year ended December 31, 2015, primarily due to:•a decrease in revenues of $10.9 million and a decrease in throughputs of 82,177 barrels per day at our Corpus Christi North Beach terminal dueto (i) a decrease in Eagle Ford Shale crude oil being shipped to Corpus Christi, consistent with the decrease in pipeline throughputs and (ii) thecompletion of a pipeline expansion project in the first quarter of 2016, in which we transport volumes from North Beach to our customer’srefineries, thus reducing volumes moved over our docks; and•a decrease in revenues of $3.3 million and a decrease in throughputs of 35,497 barrels per day due to turnarounds at the refineries served by ourBenicia and Corpus Christi crude oil storage tank facilities, as well as operational issues at a customer’s Corpus Christi refinery in 2016.The decreases were partially offset by an increase in revenue of $3.0 million and an increase in throughputs of 9,044 barrels per day at our McKee and ThreeRivers System terminals due to higher demand in those markets, as well as increased production at our customer’s McKee refinery.Storage terminal revenues decreased $2.3 million for the year ended December 31, 2016, compared to the year ended December 31, 2015. Revenues from ourInternational Terminals decreased $17.7 million, primarily due to a decrease in revenues at our St. Eustatius terminal of $8.3 million, resulting mainly fromlower throughput and related handling fees, as well as a decrease in revenues of $5.9 million at our UK Terminals, mainly due to fluctuations in foreignexchange rates. These decreases were partially offset by an increase of $15.3 million in domestic revenues. Domestic revenues increased $10.1 million fromrate escalations and new customer contracts mainly at our Selby, CA, Linden, NJ, Blue Island, IL and Piney Point, MD terminals. In addition, revenues at ourSt. James, LA terminal increased $3.1 million due to completed terminal expansion projects.50Table of ContentsOperating expenses decreased $13.7 million for the year ended December 31, 2016, compared to the year ended December 31, 2015, primarily due to:•a decrease of $11.8 million in operating expenses at our International Terminals, mainly at our St. Eustatius terminal facility due to higherproperty taxes in 2015, and lower employee related costs and reimbursable expenses in 2016;•a decrease of $3.1 million resulting from an insurance settlement for environmental remediation expenses incurred on a previously soldterminal; and•a decrease of $2.0 million resulting from lower wharfage and dockage costs at our Corpus Christi North Beach terminal.The decreases in storage operating expenses were partially offset by a $3.9 million increase in regulatory and maintenance expenses mainly at our CentralWest terminal facilities and $1.6 million in cancelled capital project costs.Fuels MarketingSegment operating income decreased $10.1 million for the year ended December 31, 2016, compared to the year ended December 31, 2015, primarily due toa decrease in gross margin of $7.9 million and $6.6 million from our fuel oil trading and bunker fuel operations, respectively. The lower gross margins werepartially offset by a reduction in operating expenses of $6.6 million mainly from our bunker fuel operations due to lower bad debt expense and decreasedproduct inspection and marine vessel costs.Consolidation and Intersegment EliminationsRevenue and operating expense eliminations primarily relate to storage fees charged to the fuels marketing segment by the storage segment. Cost of productsales eliminations represent expenses charged to the fuels marketing segment for costs associated with inventory that are expensed once the inventory is sold.GeneralGeneral and administrative expenses decreased $3.7 million for the year ended December 31, 2016, compared to the year ended December 31, 2015,primarily due to a decrease in employee benefit costs which was partially offset by increased compensation expense associated with our long-term incentiveplan.Interest expense, net increased $6.5 million for the year ended December 31, 2016, compared to the year ended December 31, 2015, primarily due toincreased interest costs associated with higher borrowings under our revolving credit agreement, as well as lower capitalized interest resulting from fewercapital projects.For the year ended December 31, 2016, we recorded other expense, net of $58.8 million, mainly due to an impairment charge of $58.7 million recognized onthe Axeon Term Loan. For the year ended December 31, 2015, we recorded other income, net of $61.8 million, mainly due to the $56.3 million gainassociated with the Linden Acquisition.Income tax expense decreased $2.7 million for the year ended December 31, 2016, compared to the year ended December 31, 2015, primarily due to lowermargin tax in Texas, a decrease in the UK tax rate and a reduction in our St. Eustatius and Canada withholding tax. Please refer to Note 24 of the Notes toConsolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for a discussion on income taxes.51Table of ContentsTRENDS AND OUTLOOKAs discussed in more detail in Note 28 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data,” we andNuStar GP Holdings entered into the Merger Agreement to simplify our corporate structure. At the closing of the Merger, which is subject to, among otherthings, approval of the NSH unitholders: (i) NuStar Energy will issue 0.55 of an NS common unit for each outstanding NSH unit; (ii) NSH’s economic rightsin the 2% general partner interest, the incentive distribution rights (the IDRs) in NS and the NS common units held by NSH will be cancelled; and (iii) NS willpay off and cancel NSH’s obligations under its revolving credit agreement.We believe simplifying our corporate structure and eliminating the IDRs will lower our cost of capital and create a more efficient and transparent structure. Inaddition, management anticipates recommending, and the NuStar Energy board of directors indicated it intends to approve, resetting NuStar Energy’squarterly distribution from $1.095 per common unit to $0.60 per common unit, effective with the first quarter 2018 distribution. We expect that resetting ourdistribution will improve our ability to fund cash requirements immediately, and, in the longer-term, will also serve to improve our leverage metrics andreduce our future need to access the capital markets.Historically, master limited partnerships (MLPs), like NuStar Energy, have typically funded strategic capital expenditures and acquisitions from externalsources, primarily through borrowings under revolving credit agreements and issuance of equity and debt securities. In the past few years, the total number of,and aggregate amount raised by, MLP common equity issuances has dropped dramatically, and MLPs with low coverage and high leverage have found itincreasingly difficult to issue common equity. Through the combination of the simplification and distribution reset discussed above, we expect to be able tofund a larger proportion of our capital projects with the cash generated by our operations, which should, over time, reduce our need to access capital marketsto finance future growth opportunities.During 2017, our legacy pipeline systems and storage assets, other than our Permian Crude System, faced several unanticipated challenges, on top of thecontinuing burden of the third year of sustained low crude prices. In September, hurricanes caused damage in the Gulf of Mexico and significant destructionin the Caribbean. Hurricane Harvey’s heavy rainfall caused only minimal damage to our six affected Gulf Coast facilities, but Hurricane Irma passed almostdirectly over our facility at St. Eustatius, causing a temporary shutdown and inflicting substantial damage. We received hurricane insurance proceeds of$12.5 million in the fourth quarter of 2017 and $87.5 million in January 2018. We expect to recognize a gain in our first quarter 2018 results equal to theamount by which the insurance proceeds received exceed our actual expense incurred during the period, or approximately $85 million. At this time, weexpect that costs incurred, over and above our deductible amount, will be covered by the insurance proceeds we have already received. We expect theserepairs to continue through next year and into 2020.Due to that fact that some of our current committed shippers’ contracts on our South Texas Crude System expire in the second half of 2018, as well as ourassessment of the current market conditions in the Eagle Ford, our 2018 forecast reflects our expectation that some of those customers will decline to renewtheir commitments and demand rates lower than previously contracted rates. As a result, we are projecting lower throughput and rates for the South TexasCrude System in the second half of 2018, which we expect to result in lower revenues for that system during 2018 as compared to 2017.Since we agree with the many energy experts who currently predict that backwardation, which tends to decrease demand for storage capacity, will continuethrough 2018, our 2018 forecast reflects lower storage rates and contract renewals at certain of our facilities, which we expect to result in lower revenues forthose facilities during 2018 as compared to 2017.In January 2018, as a result of the widely reported economic strife in Venezuela and the mounting financial and operational challenges facing our St.Eustatius anchor tenant, Petróleos de Venezuela, S.A. (PDVSA), we reduced our expectations for their utilization of the terminal during 2018 to reflect a moreconservative outlook. In 2017 and this year so far, news outlets around the world have reported the dramatic deterioration of economic conditions inVenezuela, and during 2017, we saw PDVSA’s activity at the terminal decrease to levels well below their historical levels. In addition, in August 2017, theUnited States imposed sanctions against Venezuela intended to limit PDVSA’s access to credit, and the Trump Administration has announced it may also banimports of Venezuelan crude into the U.S. and export of U.S. refined products to Venezuela. If implemented, these additional sanctions, together with thecurrent sanctions, could have a significant negative impact on Venezuela and on PDVSA.Largely due to the impact we believe those negative factors may have on PDVSA and their utilization of our facility, our current forecast reflects ourexpectation that our 2018 results of operations of our storage segment will be lower than 2017 and that it properly reflects our conservative assessment ofsignificant uncertainty and risk surrounding PDVSA’s ability to perform this year. That being said, since early January PDVSA’s activity at the terminal hasincreased, and, if they are able to continue this trend through all or a portion of the year, all other factors remaining constant, we could see improvement inour revenue generated for St. Eustatius, in comparison with our current forecast for 2018, as the year progresses. While we are hopeful that52Table of ContentsPDVSA will maintain its current activity and we continue to work to retain them as an important customer, we also continue to closely monitor PDVSA’sactivity and financial well-being and are working to diversify our St. Eustatius facility customer base.While our outlook for 2018 reflects all the challenges we have described, we believe that the consummation of the Merger and our board of director’sapproval of our recommended reset to our distribution will immediately increase our cash available to pay for capital expenditures, and, over time, willimprove our leverage metrics. We expect these steps to strengthen our balance sheet in 2018 and beyond. We also project that the Permian Crude System willcontinue to grow, and we expect its positive contributions to our pipeline segment’s overall results to grow accordingly.Our outlook for the partnership, both overall and for any of our segments, may change, as we base our expectations on our continuing evaluation of a numberof factors, many of which are outside our control. These factors include, but are not limited to, the state of the economy and the capital markets, changes toour customers’ refinery maintenance schedules and unplanned refinery downtime, crude oil prices, the supply of and demand for crude oil, refined productsand anhydrous ammonia, demand for our transportation and storage services and changes in laws or regulations affecting our assets.53Table of ContentsLIQUIDITY AND CAPITAL RESOURCESOverviewOur primary cash requirements are for distributions to our partners, debt service, capital expenditures, acquisitions and operating expenses.Our partnership agreement requires that we distribute all “Available Cash” to our common limited partners and general partner each quarter, and this term isdefined in the partnership agreement generally as cash on hand at the end of the quarter, plus certain permitted borrowings made subsequent to the end of thequarter, less cash reserves determined by our board of directors. After the Merger, our general partner will no longer receive incentive distributions orquarterly cash distributions, related to its ownership interest, from us. Additionally, on February 8, 2018, we announced that our management anticipatesrecommending to the board of directors of NuStar GP, LLC, and the board of directors expects to adopt, a reset of our quarterly distribution per common unitto $0.60 ($2.40 on an annualized basis), starting with the first-quarter distribution payable in May 2018. Please refer to Note 28 of the Notes to ConsolidatedFinancial Statements in Item 8. “Financial Statements and Supplementary Data” for further discussion of the Merger.Each year, our objective is to fund our reliability capital expenditures and distribution requirements with our net cash provided by operating activities duringthat year. If we do not generate sufficient cash from operations to meet that objective, we utilize cash on hand or other sources of cash flow, which in the pasthave primarily included borrowings under our revolving credit agreement, sales of non-strategic assets and, to the extent necessary, funds raised throughequity or debt offerings under our shelf registration statements. We have typically funded our strategic capital expenditures and acquisitions from externalsources, primarily borrowings under our revolving credit agreement or funds raised through equity or debt offerings. However, our ability to raise funds byissuing debt or equity depends on many factors beyond our control. Our risk factors in Item 1A. “Risk Factors” describe the risks inherent to these sources offunding and the availability thereof.During periods when our cash flow from operations is less than our distribution and reliability capital requirements, we may maintain our distribution levelbecause we can use other sources of Available Cash, as provided in our partnership agreement, including borrowings under our revolving credit agreementand proceeds from the sales of assets. Our risk factors in Item 1A. “Risk Factors” describe the risks inherent in our ability to maintain or grow our distribution.For the year ended December 31, 2017, our cash flow from operations did not exceed our distributions to our partners and our reliability capital expenditures.See below for discussion. For 2018, we expect to generate sufficient cash from operations to exceed our distribution and reliability capital requirements.Although we expect higher interest costs due to our issuances of debt and equity securities in 2017, we expect a decrease in distributions as a result of thedistribution reset and the Merger discussed above. See below for additional discussion of our 2017 equity and debt issuances.Cash Flows for the Years Ended December 31, 2017, 2016 and 2015The following table summarizes our cash flows from operating, investing and financing activities (please refer to our Consolidated Statements of Cash Flowsin Item 8. “Financial Statements and Supplementary Data”): Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)Net cash provided by (used in): Operating activities$406,799 $436,761 $524,937Investing activities(1,696,441) (311,078) (452,029)Financing activities1,276,272 (211,324) (29,229)Effect of foreign exchange rate changes on cash1,720 2,721 (12,729)Net (decrease) increase in cash and cash equivalents$(11,650) $(82,920) $30,950Net cash provided by operating activities for the year ended December 31, 2017 was $406.8 million, compared to $436.8 million for the year endedDecember 31, 2016, primarily due to changes in working capital. Our working capital increased by $26.5 million for the year ended December 31, 2017,compared to a decrease of $3.7 million for the year ended December 31, 2016. Please refer to the “Working Capital Requirements” section below for adiscussion of the changes in working capital.For the year ended December 31, 2017, net cash provided by operating activities, the proceeds from the termination of the Axeon Term Loan of $110.0million and cash on hand were used to fund our distributions to unitholders and our general partner in the aggregate amount of $485.1 million and reliabilitycapital expenditures of $57.5 million. Proceeds from our debt and54Table of Contentsequity issuances of approximately $1.5 billion were used to fund the purchase price of the Navigator Acquisition. The proceeds from debt borrowings, net ofrepayments, remaining proceeds from our equity issuances and cash on hand were used to fund our other strategic capital expenditures.For the year ended December 31, 2016, net cash provided by operating activities primarily was used to fund our distributions tounitholders and our general partner in the aggregate amount of $393.0 million and reliability capital expenditures of $38.2million. Proceeds from the issuance of common and preferred units and cash on hand were used to fund our strategic capital expenditures, including theMartin Terminal Acquisition.For the year ended December 31, 2015, the majority of net cash provided by operating activities was used to fund our distributions to unitholders and ourgeneral partner in the aggregate amount of $392.2 million and to fund $40.0 million of reliability capital expenditures. The proceeds from debt borrowings,net of repayments, combined with a portion of net cash provided by operating activities, were used to fund our strategic capital expenditures, including theLinden Acquisition.Debt Sources of LiquidityRevolving Credit Agreement. On August 22, 2017, NuStar Logistics amended its revolving credit agreement (the Revolving Credit Agreement), mainly toextend the maturity date from October 29, 2019 to October 29, 2020, and to increase the borrowing capacity from $1.50 billion to $1.75 billion. TheRevolving Credit Agreement includes the ability to borrow up to the equivalent of $250.0 million in Euros and up to the equivalent of $250.0 million inBritish Pounds Sterling. Obligations under the Revolving Credit Agreement are guaranteed by NuStar Energy and NuPOP.The Revolving Credit Agreement was also amended to increase the maximum allowed consolidated debt coverage ratio (as defined in the Revolving CreditAgreement) from 5.00-to-1.00 to 5.50-to-1.00 through the rolling period ending March 31, 2018. Subsequently, the maximum allowed consolidated debtcoverage ratio may not exceed 5.00-to-1.00 for any rolling period ending on or after June 30, 2018. If we complete one or more acquisitions for aggregate netconsideration of at least $50.0 million, our maximum consolidated debt coverage ratio will increase to 5.50-to-1.00 for two rolling periods. On November 22,2017, the Revolving Credit Agreement was amended to continue to exclude our $402.5 million fixed-to-floating rate subordinated notes from the definitionof consolidated debt for purposes of calculating our consolidated debt coverage ratio through December 31, 2018. The Revolving Credit Agreement alsocontains customary restrictive covenants, such as limitations on indebtedness, liens, mergers, asset transfers and certain investing activities.The requirement not to exceed a maximum consolidated debt coverage ratio may limit the amount we can borrow under the Revolving Credit Agreement toan amount less than the total amount available for borrowing. As of December 31, 2017, our consolidated debt coverage ratio was 4.9x and we had $853.0million available for borrowing.Letters of credit issued under the Revolving Credit Agreement totaled $3.7 million as of December 31, 2017. Letters of credit are limited to $400.0 million(including up to the equivalent of $25.0 million in Euros and up to the equivalent of $25.0 million in British Pounds Sterling) and also may restrict theamount we can borrow under the Revolving Credit Agreement.Receivables Financing Agreement. NuStar Energy and NuStar Finance LLC (NuStar Finance), a special purpose entity and wholly owned subsidiary ofNuStar Energy, are parties to a $125.0 million receivables financing agreement with third-party lenders (the Receivables Financing Agreement) andagreements with certain of NuStar Energy’s wholly owned subsidiaries (collectively with the Receivables Financing Agreement, the Securitization Program).On September 20, 2017, the Securitization Program was amended to add certain of NuStar Energy’s wholly owned subsidiaries resulting from the NavigatorAcquisition and to extend the Securitization Program’s scheduled termination date from June 15, 2018 to September 20, 2020, with the option to renew foradditional 364-day periods thereafter. The amount available for borrowing under the Receivables Financing Agreement is based on the availability ofeligible receivables and other customary factors and conditions. The Securitization Program contains various customary affirmative and negative covenantsand default, indemnification and termination provisions, and the Receivables Financing Agreement provides for acceleration of amounts owed upon theoccurrence of certain specified events.Issuance of 5.625% Senior Notes. On April 28, 2017, NuStar Logistics issued $550.0 million of 5.625% senior notes due April 28, 2027. We used the netproceeds of $543.3 million from the offering to fund a portion of the purchase price for the Navigator Acquisition and to pay related fees and expenses.Interest on the 5.625% senior notes is payable semi-annually in arrears on April 28 and October 28 of each year beginning on October 28, 2017. The 5.625%senior notes do not have sinking fund requirements. These notes rank equally with existing senior unsecured indebtedness and senior to existingsubordinated indebtedness of NuStar Logistics. The 5.625% senior notes contain restrictions on NuStar Logistics’ ability to incur secured indebtednessunless the same security is also provided for the benefit of holders of the senior notes. In addition, the senior notes55Table of Contentslimit NuStar Logistics’ ability to incur indebtedness secured by certain liens, engage in certain sale-leaseback transactions and engage in certainconsolidations, mergers or asset sales.Other Debt Sources of Liquidity. Other sources of liquidity consist of the following:•$365.4 million in revenue bonds pursuant to the Gulf Opportunity Zone Act of 2005 (the GoZone Bonds), with $42.5 million remaining in trust asof December 31, 2017, supported by $370.2 million in letters of credit; and•two short-term line of credit agreements with an aggregate uncommitted borrowing capacity of up to $85.0 million, with $35.0 million ofborrowings outstanding as of December 31, 2017.Please refer to Note 12 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for a discussion of ourdebt agreements.LOC AgreementNuStar Logistics is a party to a $100.0 million uncommitted letter of credit agreement, which provides for standby letters of credit or guarantees with a termof up to one year (LOC Agreement). Any letters of credit issued under the LOC Agreement do not reduce availability under the Revolving Credit Agreement.As of December 31, 2017, we had no letters of credit issued under the LOC Agreement.RepatriationWe may repatriate a portion of undistributed foreign earnings in order to provide greater flexibility to meet cash flow needs. During the years endedDecember 31, 2017 and 2016, we repatriated $9.5 million and $110.8 million, respectively, of cash from our foreign subsidiaries. We will continue toevaluate our cash flow needs and may repatriate funds from our foreign subsidiaries as a source of liquidity.Issuances of UnitsIn the fourth quarter of 2017, we issued 6,900,000 of our 9.00% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (Series CPreferred Units) representing limited partner interests at a price of $25.00 per unit. We used the net proceeds of $166.7 million from the issuance of the SeriesC Preferred Units for general partnership purposes, including the funding of capital expenditures and repayments of outstanding borrowings under theRevolving Credit Agreement.On April 28, 2017, we issued 15,400,000 of our Series B Preferred Units representing limited partner interests at a price of $25.00 per unit. We used the netproceeds of $371.8 million from the issuance of the Series B Preferred Units to fund a portion of the purchase price for the Navigator Acquisition and to payrelated fees and expenses.On April 18, 2017, we issued 14,375,000 common units representing limited partner interests at a price of $46.35 per unit. We used the net proceeds from thisoffering of $657.5 million, including a contribution of $13.6 million from our general partner to maintain its 2% general partner interest, to fund a portion ofthe purchase price for the Navigator Acquisition. Beginning with the distribution earned for the second quarter of 2017, our general partner will not receiveincentive distributions with respect to these common units. Our general partner amended and restated our partnership agreement to waive up to an aggregate$22.0 million of the quarterly incentive distributions to our general partner for any NS common units issued from the date of the Navigator Acquisitionagreement (other than those attributable to NS common units issued under any equity compensation plan) for ten consecutive quarters.In the fourth quarter of 2016, we issued 9,060,000 of our 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (Series APreferred Units) representing limited partner interests at a price of $25.00 per unit. We used the net proceeds of $218.4 million from this issuance for generalpartnership purposes, including the funding of capital expenditures and repayments of outstanding borrowings under the Revolving Credit Agreement.During the year ended December 31, 2016, we issued 595,050 common units representing limited partner interests at an average price of $47.39 per unit forproceeds of $28.3 million, net of $0.5 million of issuance costs. We used these proceeds, which include a contribution of $0.6 million from our generalpartner to maintain its 2% general partner interest, for general partnership purposes, including repayments of outstanding borrowings under the RevolvingCredit Agreement.Please refer to Note 19 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for additionalinformation on these issuances.56Table of ContentsCapital RequirementsOur operations require significant investments to maintain, upgrade or enhance the operating capacity of our existing assets. Our capital expenditures consistof:•strategic capital expenditures, such as those to expand or upgrade the operating capacity, increase efficiency or increase the earnings potential ofexisting assets, whether through construction or acquisition, as well as certain capital expenditures related to support functions; and•reliability capital expenditures, such as those required to maintain the existing operating capacity of existing assets or extend their useful lives, aswell as those required to maintain equipment reliability and safety.The following table summarizes our capital expenditures, and the amount we expect to spend for 2018: Strategic Acquisitions and Investmentsin Other Long-Term Assets Capital Expenditures (a) Reliability CapitalExpenditures (b) Total (Thousands of Dollars)For the year ended December 31: 2017$1,461,719 $327,141 $57,497 $1,846,3572016$95,657 $166,203 $38,155 $300,0152015$146,064 $284,806 $40,002 $470,872 Expected for the year ended December31, 2018 $ 360,000 - 390,000 $ 80,000 - 100,000 $ 440,000 - 490,000(a)Strategic capital for 2015, 2016 and 2017 mainly consists of terminal expansions. In addition, strategic capital in 2015 includes the reactivation and conversion of our200-mile pipeline between Mont Belvieu and Corpus Christi, Texas and strategic capital in 2017 includes pipeline expansions on our Permian Crude System.(b)Reliability capital expenditures primarily relate to maintenance upgrade projects at our terminals.For the year ended December 31, 2018, we expect a significant portion of our strategic capital spending to relate to our Permian Crude System and asignificant portion of reliability capital spending to relate to hurricane damage repairs at our St. Eustatius facility. We continue to evaluate our capitalbudget and make changes as economic conditions warrant, and our actual capital expenditures for 2018 may increase or decrease from the budgetedamounts. We believe cash on hand, combined with the sources of liquidity previously described, will be sufficient to fund our capital expenditures in 2018,and our internal growth projects can be accelerated or scaled back depending on market conditions or customer demand.Working Capital RequirementsWorking capital requirements, particularly in our fuels marketing segment, may vary with the seasonality of demand and the volatility of commodity pricesfor the products we market. This seasonality in demand and the volatility of commodity prices affect our accounts receivable and accounts payable balances,which vary depending on timing of payments.During the year ended December 31, 2017, accounts payable decreased $30.4 million and inventories decreased $11.9 million, primarily due to our exit fromour heavy fuels trading and crude oil marketing operations in 2017.During the year ended December 31, 2016, accounts receivable increased $23.2 million and accounts payable increased $14.1 million, primarily due to thetiming of payments related to our bunker fuel operations and crude oil trading activity.During the year ended December 31, 2015, inventories decreased $16.8 million, mainly due to the continued decline in crude oil prices. In addition,inventory volumes decreased in 2015 primarily due to decreased bunker fuel operations activity. During the year ended December 31, 2015, accountsreceivable decreased $67.3 million and accounts payable decreased $32.2 million, primarily due to decreased bunker fuel operations and crude oil tradingactivity.Axeon Term Loan and Credit SupportOn February 22, 2017, we settled and terminated the $190.0 million Axeon Term Loan, pursuant to which we also provided credit support, such asguarantees, letters of credit and cash collateral, as applicable, of up to $125.0 million to Axeon. We received $110.0 million in settlement of the Axeon TermLoan, and our obligation to provide ongoing credit support to Axeon ceased. In 2016, we recognized an impairment charge on the Axeon Term Loan of$58.7 million which is included in “Other (expense) income, net” in the consolidated statements of income. Please refer to Notes 7 and 15 of the Notes toConsolidated57Table of ContentsFinancial Statements in Item 8. “Financial Statements and Supplementary Data” for additional information on the Axeon Term Loan and related creditsupport.Defined Benefit Plans FundingDuring 2017, we contributed $11.2 million to our pension and postretirement benefit plans. We expect to contribute approximately $11.6 million to ourpension and postretirement benefit plans in 2018, which principally represents contributions either required by regulations or laws or, with respect tounfunded plans, necessary to fund current benefits. Pension and postretirement benefit plans funding beyond 2018 is uncertain as the funding varies fromyear to year based upon changes in the fair value of the plan assets and actuarial assumptions.DistributionsGeneral Partner and Common Limited Partners. NuStar Energy’s partnership agreement determines the amount and priority of cash distributions that ourunitholders and general partner may receive. The general partner receives a 2% distribution with respect to its general partner interest. The general partner isalso entitled to incentive distributions if the amount we distribute with respect to any quarter exceeds $0.60 per unit. For a detailed discussion of theincentive distribution targets, please read Item 5. “Market for Registrant’s Common Units, Related Unitholder Matters and Issuer Purchases of EquitySecurities.”The following table reflects the allocation of total cash distributions to the general partner and common limited partners applicable to the period in which thedistributions were earned: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars, Except Per Unit Data)General partner interest$9,252 $7,877 $7,844General partner incentive distribution45,669 43,407 43,220Total general partner distribution54,921 51,284 51,064Common limited partners’ distribution407,681 342,598 341,140Total cash distributions$462,602 $393,882 $392,204 Cash distributions per unit applicable to common limited partners$4.38 $4.38 $4.38Distribution payments to our general partner and common limited partners are made within 45 days after the end of each quarter as of a record date that is setafter the end of each quarter. The following table summarizes information related to our quarterly cash distributions to our general partner and commonlimited partners:Quarter Ended Cash DistributionsPer Unit Total Cash Distributions Record Date Payment Date (Thousands of Dollars) December 31, 2017 (a) $1.095 $115,267 February 8, 2018 February 13, 2018September 30, 2017 $1.095 $115,084 November 9, 2017 November 14, 2017June 30, 2017 $1.095 $115,083 August 7, 2017 August 11, 2017March 31, 2017 $1.095 $117,168 May 8, 2017 May 12, 2017(a)The distribution was announced on January 29, 2018.Pursuant to the Merger Agreement and at the effective time of the Merger, our partnership agreement will be amended and restated to, among other things,cancel the incentive distribution rights held by our general partner and convert the 2% general partner interest in NuStar Energy held by our general partnerinto a non-economic management interest. As a result, after the Merger, our general partner will no longer receive incentive distributions or quarterly cashdistributions related to its ownership interest from us. Please refer to Note 28 of the Notes to Consolidated Financial Statements in Item 8. “FinancialStatements and Supplementary Data” for further discussion of the Merger.58Table of ContentsPreferred Units. The following table provides the terms related to distributions for our Series A, Series B and Series C Fixed-to-Floating Rate CumulativeRedeemable Perpetual Preferred Units (collectively, the Preferred Units):Units Fixed Distribution Rate perAnnum (as a Percentage ofthe $25.00 LiquidationPreference per Unit) Fixed DistributionRate per Unit perAnnum Optional RedemptionDate/Date at WhichDistribution Rate BecomesFloating Floating Annual Rate (as aPercentage of the $25.00Liquidation Preference perUnit)Series A Preferred Units 8.50% $2.125 December 15, 2021 Three-month LIBOR plus6.766%Series B Preferred Units 7.625% $1.90625 June 15, 2022 Three-month LIBOR plus5.643%Series C Preferred Units 9.00% $2.25 December 15, 2022 Three-month LIBOR plus6.88%Distributions on the Preferred Units are payable out of any legally available funds, accrue and are cumulative from the original issuance dates, and arepayable on the 15th day (or next business day) of each of March, June, September and December of each year to holders of record on the first business day ofeach payment month.The following table summarizes information related to our quarterly cash distributions on our Preferred Units:Period CashDistributionsPer Unit Total CashDistributions Record Date Payment Date (Thousands of Dollars) Series A Preferred Units: December 15, 2017 - March 14, 2018 (a) $0.53125 $4,813 March 1, 2018 March 15, 2018September 15, 2017 - December 14, 2017 $0.53125 $4,813 December 1, 2017 December 15, 2017June 15, 2017 - September 14, 2017 $0.53125 $4,813 September 1, 2017 September 15, 2017March 15, 2017 - June 14, 2017 $0.53125 $4,813 June 1, 2017 June 15, 2017November 25, 2016 - March 14, 2017 $0.64930556 $5,883 March 1, 2017 March 15, 2017 Series B Preferred Units: December 15, 2017 - March 14, 2018 (a) $0.47657 $7,339 March 1, 2018 March 15, 2018September 15, 2017 - December 14, 2017 $0.47657 $7,339 December 1, 2017 December 15, 2017April 28, 2017 - September 14, 2017 $0.725434028 $11,172 September 1, 2017 September 15, 2017 Series C Preferred Units: November 30, 2017 - March 14, 2018 (a) $0.65625 $4,528 March 1, 2018 March 15, 2018(a)The distribution was announced on January 29, 2018.Debt ObligationsAs of December 31, 2017, we were a party to the following debt agreements:•Revolving Credit Agreement due October 29, 2020, with $893.3 million of borrowings outstanding as of December 31, 2017;•7.65% senior notes due April 15, 2018 with a face value of $350.0 million; 4.80% senior notes due September 1, 2020 with a face value of$450.0 million; 6.75% senior notes due February 1, 2021 with a face value of $300.0 million; 4.75% senior notes due February 1, 2022 with aface value of $250.0 million; 5.625% senior notes due April 28, 2027 with a face value of $550.0 million; and 7.625% fixed-to-floatingsubordinated notes due January 15, 2043 with a face value of $402.5 million;•$365.4 million in GoZone Bonds due from 2038 to 2041;•Line of credit agreements with $35.0 million of borrowings outstanding as of December 31, 2017; and•Receivables Financing Agreement due September 20, 2020, with $62.3 million of borrowings outstanding as of December 31, 2017.59Table of ContentsManagement believes that, as of December 31, 2017, we are in compliance with the ratios and covenants contained in our debt instruments. A default undercertain of our debt agreements would be considered an event of default under other of our debt instruments. Please refer to Note 12 of the Notes toConsolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for a discussion of our debt agreements.Credit RatingsThe following table reflects the current outlook and ratings that have been assigned to our debt as of December 31, 2017: Standard & Poor’s Ratings Services Moody’s Investor Service Inc. Fitch, Inc. RatingsBB Ba1 BBOutlookNegative Negative StableThe interest rates payable on the $350.0 million of 7.65% senior notes due 2018 (the 7.65% Senior Notes) and the Revolving Credit Agreement are subject toadjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies. In November 2017, Standard & Poor’s Rating Services loweredour credit rating from BB+ to BB, and the outlook was changed from stable to negative. The rating downgrade caused the interest rate on the 7.65% SeniorNotes to increase from 8.15% to 8.4% and had no impact on the interest rate payable on our Revolving Credit Agreement. In February 2018, Moody’sInvestor Service Inc. (Moody’s) lowered our credit rating from Ba1 to Ba2, which caused the interest rate on the 7.65% Senior Notes to also increase by0.25%, resulting in an interest rate of 8.65% applicable to the interest payment due April 15, 2018. This Moody’s downgrade also caused the interest rate onour Revolving Credit Agreement to increase by 0.25%.Interest Rate SwapsAs of December 31, 2017 and 2016, we were a party to forward-starting interest rate swap agreements for the purpose of hedging interest rate risk. As ofDecember 31, 2017 and 2016, the aggregate notional amount of these forward-starting interest rate swaps was $600.0 million. Please refer to Notes 2 and 16of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” and Item 7A. “Quantitative and QualitativeDisclosures about Market Risk” for a more detailed discussion of our interest rate swaps.Long-Term Contractual ObligationsThe following table presents our long-term contractual obligations and commitments and the related payments due, in total and by period, as ofDecember 31, 2017: Payments Due by Period 2018 2019 2020 2021 2022 Thereafter Total (Thousands of Dollars)Long-term debt maturities$350,000 $— $1,405,611 $300,000 $250,000 $1,317,940 $3,623,551Interest payments (a)174,937 169,162 165,124 102,586 86,715 1,150,198 1,848,722Operating leases (b)39,236 34,203 19,541 13,324 7,295 68,386 181,985Purchase obligations (c)6,963 6,133 4,686 4,690 4,480 300 27,252Total$571,136 $209,498 $1,594,962 $420,600 $348,490 $2,536,824 $5,681,510(a)The interest payments calculated for our variable-rate debt are based on forward LIBOR interest rates and the outstanding borrowings as of December 31, 2017. Theinterest payments on our fixed-rate debt are based on the stated interest rates and the outstanding borrowings as of December 31, 2017.(b)Our operating leases consist primarily of leases for tugs and barges utilized at our St. Eustatius facility and land leases at various terminal facilities.(c)A purchase obligation is an enforceable and legally binding agreement to purchase goods or services that specifies significant terms, including (i) fixed or minimumquantities to be purchased, (ii) fixed, minimum or variable price provisions and (iii) the approximate timing of the transaction.We also have pension and other postretirement benefit obligations recorded in “Other long-term liabilities” on our consolidated balance sheets which havebeen excluded from the contractual obligations table above due to the uncertainty in timing as to the future cash flows related to these obligations. Foradditional information on our pension and other postretirement benefit obligations see Note 22 of the Notes to Consolidated Financial Statements in Item 8.“Financial Statements and Supplementary Data.”60Table of ContentsEnvironmental, Health and SafetyOur operations are subject to extensive international, federal, state and local environmental laws and regulations, in the U.S. and in the other countries inwhich we operate, including those relating to the discharge of materials into the environment, waste management, remediation, the characteristics andcomposition of fuels, climate change and greenhouse gases. Our operations are also subject to extensive health, safety and security laws and regulations,including those relating to worker and pipeline safety, pipeline and storage tank integrity and operations security. Because more stringent environmental andsafety laws and regulations are continuously being enacted or proposed, the level of expenditures required for environmental, health and safety matters isexpected to increase in the future.The balance of and changes in our accruals for environmental matters as of and for the years ended December 31, 2017 and 2016 are included in Note 13 ofthe Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data.” We believe that we have adequately accrued forour environmental exposures.ContingenciesWe are subject to certain loss contingencies, the outcomes of which could have an adverse effect on our cash flows and results of operations, as furtherdisclosed in Note 14 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data.”RELATED PARTY TRANSACTIONSPlease refer to Note 17 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for a discussion of ourrelated party transactions.CRITICAL ACCOUNTING POLICIESThe preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to select accounting policiesand to make estimates and assumptions related thereto that affect the amounts reported in the consolidated financial statements and accompanying notes.Actual results could differ from those estimates. The accounting policies below are considered critical due to judgments made by management and thesensitivity of these estimates to deviations of actual results from management’s assumptions. The critical accounting policies should be read in conjunctionwith Note 2 of the Notes to the Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data,” which summarizes oursignificant accounting policies.DepreciationWe calculate depreciation expense using the straight-line method over the estimated useful lives of our property, plant and equipment. Due to the expectedlong useful lives of our property, plant and equipment, we depreciate our property, plant and equipment over periods ranging from 5 years to 40 years.Changes in the estimated useful lives of our property, plant and equipment could have a material adverse effect on our results of operations.Impairment of Long-Lived AssetsWe test long-lived assets for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not berecoverable. We evaluate recoverability using undiscounted estimated net cash flows generated by the related asset or asset group. If the results of thatevaluation indicate that the undiscounted cash flows are less than the carrying amount of the asset (i.e., the asset is not recoverable) we perform animpairment analysis. If our intent is to hold the asset for continued use, we determine the amount of impairment as the amount by which the net carryingvalue exceeds its fair value. If our intent is to sell the asset, and the criteria required to classify an asset as held for sale are met, we determine the amount ofimpairment as the amount by which the net carrying amount exceeds its fair value less costs to sell.Impairment of GoodwillWe perform an assessment of goodwill annually or more frequently if events or changes in circumstances warrant. We have the option to first perform aqualitative annual assessment to determine whether it is necessary to perform a quantitative goodwill impairment test. A qualitative assessment includes,among other things, industry and market considerations, overall financial performance, other entity-specific events and events affecting individual reportingunits. If after assessing the totality of events or circumstances for each reporting unit, we determine that it is more likely than not that the carrying valueexceeds its fair value, then we would perform an impairment test for that reporting unit. However, we chose to perform a quantitative goodwill impairmenttest for all reporting units as of October 1, 2017.We recognize an impairment of goodwill if the carrying value of goodwill exceeds its estimated fair value. In order to estimate the fair value of goodwill,management must make certain estimates and assumptions that affect the total fair value of the reporting unit including, among other things, an assessment ofmarket conditions, projected cash flows, discount rates and61Table of Contentsgrowth rates. Management’s estimates of projected cash flows related to the reporting unit include, but are not limited to, future earnings of the reporting unit,assumptions about the use or disposition of the asset, estimated remaining life of the asset, and future expenditures necessary to maintain the asset’s existingservice potential.We calculate the estimated fair value of each of our reporting units using a weighted-average of values calculated using an income approach and a marketapproach. The income approach involves estimating the fair value of each reporting unit by discounting its estimated future cash flows using a discount rate,consistent with a market participant’s assumption. The market approach bases the fair value measurement on information obtained from observed stock pricesof public companies and recent merger and acquisition transaction data of comparable entities.We determined that no impairment charges resulted from our October 1, 2017 impairment assessment. Furthermore, our assessment did not reflect anyreporting units at risk of failing step one of the goodwill impairment test, which compares the fair value of the reporting unit to its carrying value includinggoodwill.Derivative Financial InstrumentsWe utilize various derivative instruments to manage our exposure to interest rate risk and commodity price risk. We record derivative instruments in theconsolidated balance sheets at fair value, and apply hedge accounting when appropriate. We record changes to the fair values of derivative instruments inearnings for fair value hedges or as part of accumulated other comprehensive income (AOCI) for the effective portion of cash flow hedges. We reclassify theeffective portion of cash flow hedges from AOCI to earnings when the underlying forecasted transaction occurs or becomes probable not to occur. Werecognize ineffectiveness resulting from our derivatives immediately in earnings. With respect to cash flow hedges, we must exercise judgment to assess theprobability of the forecasted transaction, which, among other things, depends upon market factors and our ability to reliably operate our assets.Defined Benefit PlansWe estimate pension and other postretirement benefit obligations and costs based on actuarial valuations. The annual measurement date for our pension andother postretirement benefit plans is December 31. The actuarial valuations require the use of certain assumptions including discount rates, expected long-term rates of return on plan assets and expected rates of compensation increase. Changes in these assumptions are primarily influenced by factors outside ourcontrol. The discount rate is based on a hypothetical yield curve represented by a series of annualized individual discount rates. Each bond issue underlyingthe hypothetical yield curve required an average rating of double-A, when averaging all available ratings by Moody’s Investor Service Inc., Standard &Poor’s Ratings Services and Fitch, Inc. The resulting discount rates were 3.72% and 3.82% for our pension and other postretirement benefit plans,respectively, as of December 31, 2017. The expected long-term rate of return on plan assets is based on the weighted averages of the expected long-term ratesof return for each asset class of investments held in our plans as determined using historical data and the assumption that capital markets are informationallyefficient. The expected rate of compensation increase represents average long-term salary increases.These assumptions can have an effect on the amounts reported in our consolidated financial statements. The effect of a 0.25% change in the specifiedassumptions would have the following effects (thousands of dollars): Pension Benefits OtherPostretirementBenefitsIncrease in benefit obligation as of December 31, 2017 from: Discount rate decrease$5,200 $500Compensation rate increase$1,500 n/aIncrease in net periodic benefit cost for the year endingDecember 31, 2018 resulting from: Discount rate decrease$400 $100Expected long-term rate of returns on plan assets decrease$300 n/aCompensation rate increase$400 n/aPlease refer to Note 22 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for further discussion ofour pension and other postretirement benefit obligations.62Table of ContentsEnvironmental LiabilitiesEnvironmental remediation costs are expensed and an associated accrual is established when site restoration and environmental remediation and cleanupobligations are either known or considered probable and can be reasonably estimated. These environmental obligations are based on estimates of probableundiscounted future costs using currently available technology and applying current regulations, as well as our own internal environmental policies. Theenvironmental liabilities have not been reduced by possible recoveries from third parties. Environmental costs include initial site surveys, costs forremediation and restoration and ongoing monitoring costs, as well as fines, damages and other costs, when estimable. Adjustments to initial estimates arerecorded, from time to time, to reflect changing circumstances and estimates based upon additional information developed in subsequent periods.Environmental liabilities are difficult to assess and estimate due to unknown factors, such as the timing and extent of remediation, the determination of ourliability in proportion to other parties, improvements in cleanup technologies and the extent to which environmental laws and regulations may change in thefuture. We believe that we have adequately accrued for our environmental exposures.ContingenciesWe accrue for costs relating to litigation, claims and other contingent matters when such liabilities become probable and reasonably estimable. Suchestimates may be based on advice from third parties or on management’s judgment, as appropriate. Due to the inherent uncertainty of litigation, actualamounts paid may differ from amounts estimated, and such differences will be charged to income in the period when final determination is made.NEW ACCOUNTING PRONOUNCEMENTSPlease refer to Note 3 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for a discussion of newaccounting pronouncements.63Table of ContentsITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKInterest Rate RiskWe manage our exposure to changing interest rates principally through the use of a combination of fixed-rate debt and variable-rate debt. In addition, weutilize forward-starting interest rate swap agreements to lock in the rate on the interest payments related to forecasted debt issuances. Borrowings under ourvariable-rate debt expose us to increases in interest rates.Please refer to Note 2 and Note 16 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for a moredetailed discussion of our interest rate swaps. The following tables present principal cash flows and related weighted-average interest rates by expectedmaturity dates for our long-term debt: December 31, 2017 Expected Maturity Dates 2018 2019 2020 2021 2022 There-after Total FairValue (Thousands of Dollars, Except Interest Rates)Long-term Debt: Fixed-rate$350,000 $— $450,000 $300,000 $250,000 $952,500 $2,302,500 $2,355,535Weighted-averageinterest rate8.4% — 4.8% 6.8% 4.8% 6.5% 6.3% Variable-rate$— $— $955,611 $— $— $365,440 $1,321,051 $1,322,087Weighted-averageinterest rate— — 3.1% — — 1.7% 2.7% December 31, 2016 Expected Maturity Dates 2017 2018 2019 2020 2021 There-after Total FairValue (Thousands of Dollars, Except Interest Rates)Long-term Debt: Fixed-rate$— $350,000 $— $450,000 $300,000 $652,500 $1,752,500 $1,821,261Weighted-averageinterest rate— 8.2% — 4.8% 6.8% 6.5% 6.4% Variable-rate$— $58,400 $838,992 $— $— $365,440 $1,262,832 $1,263,501Weighted-averageinterest rate— 1.6% 2.5% — — 0.7% 1.9% The following table presents information regarding our forward-starting interest rate swap agreements:Notional Amount as of December 31, Period of Hedge Weighted-Average FixedRate Fair Value as of December 31,2017 2016 2017 2016(Thousands of Dollars) (Thousands of Dollars)$350,000 $350,000 04/2018 - 04/2028 2.6% $(5,394) $(1,333)250,000 250,000 09/2020 - 09/2030 2.8% (4,594) 15$600,000 $600,000 2.7% $(9,988) $(1,318)Commodity Price RiskSince the operations of our fuels marketing segment expose us to commodity price risk, we use derivative instruments to attempt to mitigate the effects ofcommodity price fluctuations. The derivative instruments we use consist primarily of commodity futures and swap contracts. Please refer to our derivativefinancial instruments accounting policy in Note 2 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and SupplementaryData” for further information on our various types of derivatives.We have a risk management committee that oversees our trading policies and procedures and certain aspects of risk management. Our risk managementcommittee also reviews all new risk management strategies in accordance with our risk management policy, as approved by our board of directors.64Table of ContentsThe commodity contracts disclosed below represent only those contracts exposed to commodity price risk at the end of the period. Please refer to Note 16 ofthe Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data” for the volume and related fair value of allcommodity contracts. December 31, 2017 ContractVolumes Weighted Average Fair Value ofCurrentAsset (Liability)Pay Price Receive Price (Thousandsof Barrels) (Thousands ofDollars)Fair Value Hedges: Futures – long: (refined products)2 $86.88 N/A $—Futures – short: (refined products)5 N/A $85.59 $(6)Swaps – short: (refined products)149 N/A $55.79 $(106) Economic Hedges and Other Derivatives: Futures – long: (refined products)10 $86.13 N/A $7Futures – short: (refined products)14 N/A $85.76 $(16)Swaps – long: (refined products)196 $55.05 N/A $264Swaps – short: (refined products)199 N/A $53.76 $(525) Total fair value of open positions exposed tocommodity price risk $(382)65Table of Contents December 31, 2016 ContractVolumes Weighted Average Fair Value ofCurrentAsset (Liability)Pay Price Receive Price (Thousandsof Barrels) (Thousands ofDollars)Fair Value Hedges: Futures – long: (crude oil and refined products)47 $55.53 N/A $2Futures – short: (crude oil and refined products)107 N/A $58.79 $(243)Swaps – long: (refined products)84 $45.99 N/A $141Swaps – short: (refined products)573 N/A $41.87 $(3,322) Economic Hedges and Other Derivatives: Futures – long: (crude oil and refined products)18 $72.06 N/A $10Futures – short: (crude oil and refined products)9 N/A $71.88 $(7)Swaps – long: (refined products)869 $42.20 N/A $4,737Swaps – short: (refined products)874 N/A $41.40 $(5,459)Forward purchase contracts: (crude oil)310 $52.78 N/A $499Forward sales contracts: (crude oil)310 N/A $52.76 $(507) Total fair value of open positions exposed tocommodity price risk $(4,149)66Table of ContentsITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAManagement’s Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under theSecurities Exchange Act of 1934. Our management assessed the effectiveness of NuStar Energy L.P.’s internal control over financial reporting as ofDecember 31, 2017. In its evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission(COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, management believes that, as of December 31, 2017, our internalcontrol over financial reporting was effective based on those criteria.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systemsdetermined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.Management’s evaluation of and conclusion regarding the effectiveness of our internal control over financial reporting excludes the internal control overNavigator Energy Services, LLC acquired on May 4, 2017 (as described in Note 4), which contributed approximately 2% of our total revenues for the yearended December 31, 2017 and accounted for approximately 23% of our total assets as of December 31, 2017. We plan to fully integrate these assets andoperations into our internal control over financial reporting in 2018.The effectiveness of internal control over financial reporting as of December 31, 2017 has been audited by KPMG LLP, the independent registered publicaccounting firm who audited our consolidated financial statements included in this Form 10-K. KPMG LLP’s attestation on the effectiveness of our internalcontrol over financial reporting appears on page 69.67Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors of NuStar GP, LLCand Unitholders of NuStar Energy L.P.:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of NuStar Energy L.P. (a Delaware limited partnership) and subsidiaries (the “Partnership”)as of December 31, 2017 and 2016, the related consolidated statements of income, comprehensive income, partners’ equity, and cash flows for each of theyears in the three‑year period ended December 31, 2017, and the related notes (collectively, the “consolidated financial statements”). In our opinion, theconsolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2017 and 2016, and theresults of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2017, in conformity with U.S. generally acceptedaccounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2018 expressed an unqualified opinion on theeffectiveness of the Partnership’s internal control over financial reporting.Basis for OpinionThese consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent withrespect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures thatrespond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating theoverall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.We have served as the Partnership’s auditor since 2004./s/ KPMG LLPSan Antonio, TexasFebruary 28, 201868Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors of NuStar GP, LLCand Unitholders of NuStar Energy L.P.:Opinion on Internal Control Over Financial ReportingWe have audited NuStar Energy L.P. (a Delaware limited partnership) and subsidiaries’ (the “Partnership”) internal control over financial reporting as ofDecember 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizationsof the Treadway Commission. In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as ofDecember 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizationsof the Treadway Commission.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidatedbalance sheets of the Partnership as of December 31, 2017 and 2016, the related consolidated statements of income, comprehensive income, partners’ equity,and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively, the “consolidated financialstatements”), and our report dated February 28, 2018 expressed an unqualified opinion on those consolidated financial statements.The Partnership acquired Navigator Energy Services, LLC during 2017, and management excluded from its assessment of the effectiveness of thePartnership’s internal control over financial reporting as of December 31, 2017, Navigator Energy Services, LLC’s internal control over financial reportingwhose financial statements reflect 23 percent of total assets and 2 percent of total revenues of the related consolidated financial statement amounts of NuStarEnergy L.P. as of and for the year ended December 31, 2017. Our audit of internal control over financial reporting of the Partnership also excluded anevaluation of the internal control over financial reporting of Navigator Energy Services, LLC.Basis for OpinionThe Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financialreporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ KPMG LLPSan Antonio, TexasFebruary 28, 201869Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Thousands of Dollars, Except Unit Data) December 31, 2017 2016Assets Current assets: Cash and cash equivalents$24,292 $35,942Accounts receivable, net of allowance for doubtful accounts of $9,948 and $7,756as of December 31, 2017 and 2016, respectively176,570 170,293Receivable from related party205 317Inventories26,857 37,945Other current assets22,508 132,686Total current assets250,432 377,183Property, plant and equipment, at cost6,243,481 5,435,278Accumulated depreciation and amortization(1,942,548) (1,712,995)Property, plant and equipment, net4,300,933 3,722,283Intangible assets, net784,479 127,083Goodwill1,097,475 696,637Deferred income tax asset233 2,051Other long-term assets, net101,681 105,308Total assets$6,535,233 $5,030,545Liabilities and Partners’ Equity Current liabilities: Accounts payable$145,932 $118,686Short-term debt35,000 54,000Current portion of long-term debt349,990 —Accrued interest payable40,449 34,030Accrued liabilities61,578 60,485Taxes other than income tax14,385 15,685Income tax payable4,172 6,510Total current liabilities651,506 289,396Long-term debt, less current portion3,263,069 3,014,364Deferred income tax liability22,272 22,204Other long-term liabilities118,297 92,964Commitments and contingencies (Note 14) Partners’ equity (Note 19): Preferred limited partners756,603 218,400Common limited partners (93,176,683 and 78,616,228 common units outstandingas of December 31, 2017 and 2016, respectively)1,770,587 1,455,642General partner37,826 31,752Accumulated other comprehensive loss(84,927) (94,177)Total partners’ equity2,480,089 1,611,617Total liabilities and partners’ equity$6,535,233 $5,030,545See Notes to Consolidated Financial Statements.70Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Thousands of Dollars, Except Unit and Per Unit Data) Year Ended December 31, 2017 2016 2015Revenues: Service revenues$1,128,726 $1,083,165 $1,114,153Product sales685,293 673,517 969,887Total revenues1,814,019 1,756,682 2,084,040Costs and expenses: Cost of product sales651,599 633,653 907,574Operating expenses (excluding depreciation and amortization expense): Third parties449,670 426,686 337,466Related party— 21,681 135,565Total operating expenses449,670 448,367 473,031General and administrative expenses (excluding depreciation and amortization expense): Third parties112,240 88,324 35,752Related party— 10,493 66,769Total general and administrative expenses112,240 98,817 102,521Depreciation and amortization expense264,232 216,736 210,210Total costs and expenses1,477,741 1,397,573 1,693,336Operating income336,278 359,109 390,704Interest expense, net(173,083) (138,350) (131,868)Other (expense) income, net(5,294) (58,783) 61,822Income from continuing operations before income tax expense157,901 161,976 320,658Income tax expense9,937 11,973 14,712Income from continuing operations147,964 150,003 305,946Income from discontinued operations, net of tax— — 774Net income$147,964 $150,003 $306,720Basic and diluted net income per common unit: Continuing operations$0.64 $1.27 $3.29Discontinued operations— — 0.01Total (Note 20)$0.64 $1.27 $3.30Basic weighted-average common units outstanding88,825,964 78,080,484 77,886,078 Diluted weighted-average common units outstanding88,825,964 78,113,002 77,886,078See Notes to Consolidated Financial Statements.71Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Thousands of Dollars) Year Ended December 31, 2017 2016 2015Net income$147,964 $150,003 $306,720Other comprehensive income (loss): Foreign currency translation adjustment17,466 (8,243) (31,987)Net loss on pension and other postretirement benefit adjustments, net of income tax benefit of$184, $60 and $0(6,170) (2,850) —Net (loss) gain on cash flow hedges(2,046) 5,710 11,105Total other comprehensive income (loss)9,250 (5,383) (20,882)Comprehensive income$157,214 $144,620 $285,838See Notes to Consolidated Financial Statements.72Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Thousands of Dollars) Year Ended December 31, 2017 2016 2015Cash Flows from Operating Activities: Net income$147,964 $150,003 $306,720Adjustments to reconcile net income to net cash provided byoperating activities: Depreciation and amortization expense264,232 216,736 210,210Unit-based compensation expense8,132 7,579 —Amortization of debt related items6,147 7,477 8,840Loss (gain) from sale or disposition of assets4,984 64 (1,617)Gain associated with the Linden Acquisition— — (56,277)Impairment loss— 58,655 —Deferred income tax expense (benefit)6 (469) 2,058Distributions of equity in earnings of joint ventures— — 2,500Changes in current assets and current liabilities (Note 21)(26,493) 3,716 50,559Other, net1,827 (7,000) 1,944Net cash provided by operating activities406,799 436,761 524,937Cash Flows from Investing Activities: Capital expenditures(384,638) (204,358) (324,808)Change in accounts payable related to capital expenditures36,903 (11,063) (3,156)Acquisitions(1,461,719) (95,657) (142,500)Proceeds from Axeon term loan110,000 — —Proceeds from insurance recoveries977 — 4,867Proceeds from sale or disposition of assets2,036 — 17,132Investment in other long-term assets— — (3,564)Net cash used in investing activities(1,696,441) (311,078) (452,029)Cash Flows from Financing Activities: Proceeds from long-term debt borrowings1,465,767 752,729 860,131Proceeds from short-term debt borrowings1,051,000 654,000 823,500Proceeds from note offering, net of issuance costs543,333 — —Long-term debt repayments(1,417,539) (772,152) (500,410)Short-term debt repayments(1,070,000) (684,000) (816,500)Proceeds from issuance of preferred units, net of issuance costs538,560 218,400 —Proceeds from issuance of common units, net of issuance costs643,878 27,710 —Contributions from general partner13,737 680 —Distributions to preferred unitholders(38,833) — —Distributions to common unitholders and general partner(446,306) (392,962) (392,204)Increase (decrease) in cash book overdrafts1,736 (11,237) (2,954)Other, net(9,061) (4,492) (792)Net cash provided by (used in) financing activities1,276,272 (211,324) (29,229)Effect of foreign exchange rate changes on cash1,720 2,721 (12,729)Net (decrease) increase in cash and cash equivalents(11,650) (82,920) 30,950Cash and cash equivalents as of the beginning of the period35,942 118,862 87,912Cash and cash equivalents as of the end of the period$24,292 $35,942 $118,862See Notes to Consolidated Financial Statements.73Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF PARTNERS’ EQUITYYears Ended December 31, 2017, 2016 and 2015(Thousands of Dollars, Except Unit Data) Limited Partners Preferred (Note 19) Common GeneralPartner AccumulatedOtherComprehensiveLoss (Note 19) Total Partners’Equity Units Amount Units Amount Balance as of January 1, 2015— $— 77,886,078 $1,744,810 $39,312 $(67,912) $1,716,210Net income— — — 258,230 48,490 — 306,720Other comprehensive loss— — — — — (20,882) (20,882)Distributions to partners— — — (341,140) (51,064) — (392,204)Balance as of December 31, 2015— — 77,886,078 1,661,900 36,738 (88,794) 1,609,844Net income— 1,925 — 102,580 45,498 — 150,003Other comprehensive loss— — — — — (5,383) (5,383)Distributions to partners— (1,925) — (341,798) (51,164) — (394,887)Issuance of common units, includingcontribution from general partner— — 595,050 27,710 575 — 28,285Issuance of preferred units9,060,000 218,400 — — — — 218,400Unit-based compensation— — 135,100 5,250 105 — 5,355Balance as of December 31, 20169,060,000 218,400 78,616,228 1,455,642 31,752 (94,177) 1,611,617Net income— 40,448 — 60,610 46,906 — 147,964Other comprehensive income— — — — — 9,250 9,250Distributions to partners— (40,448) — (391,737) (54,569) — (486,754)Issuance of common units, includingcontribution from general partner— — 14,375,000 643,878 13,597 — 657,475Issuance of preferred units22,300,000 538,560 — — — — 538,560Unit-based compensation— — 185,455 2,516 140 — 2,656Other— (357) — (322) — — (679)Balance as of December 31, 201731,360,000 $756,603 93,176,683 $1,770,587 $37,826 $(84,927) $2,480,089See Notes to Consolidated Financial Statements.74Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears Ended December 31, 2017, 2016 and 20151. ORGANIZATION AND OPERATIONSOrganizationNuStar Energy L.P. (NYSE: NS) is engaged in the transportation of petroleum products and anhydrous ammonia, and the terminalling, storage and marketingof petroleum products. Unless otherwise indicated, the terms “NuStar Energy,” “NS,” “the Partnership,” “we,” “our” and “us” are used in this report to refer toNuStar Energy L.P., to one or more of our consolidated subsidiaries or to all of them taken as a whole. NuStar GP Holdings, LLC (NuStar GP Holdings orNSH) (NYSE: NSH) owns our general partner, Riverwalk Logistics, L.P., and owns an approximate 11% common limited partner interest in us as ofDecember 31, 2017.Employee Transfer from NuStar GP, LLC. On March 1, 2016, NuStar GP, LLC, the general partner of our general partner and a wholly owned subsidiary ofNuStar GP Holdings, transferred and assigned to NuStar Services Company LLC (NuStar Services Co), a wholly owned subsidiary of NuStar Energy, all ofNuStar GP, LLC’s employees and related benefit plans, programs, contracts and policies (the Employee Transfer). As a result of the Employee Transfer, wepay employee costs directly and sponsor the long-term incentive plan and other employee benefit plans. Please refer to Note 17 for further discussion of theEmployee Transfer and our related party agreements, Note 22 for a discussion of our employee benefit plans and Note 23 for a discussion of our long-termincentive plan.Recent DevelopmentsMerger. On February 7, 2018, NuStar Energy, Riverwalk Logistics, L.P., NuStar GP, LLC, Marshall Merger Sub LLC, a wholly owned subsidiary of NuStarEnergy (Merger Sub), Riverwalk Holdings, LLC and NuStar GP Holdings, LLC (NuStar GP Holdings) entered into an Agreement and Plan of Merger (theMerger Agreement) pursuant to which Merger Sub will merge with and into NuStar GP Holdings with NuStar GP Holdings being the surviving entity (theMerger), such that NuStar Energy will be the sole member of NuStar GP Holdings following the Merger. Pursuant to the Merger Agreement and at theeffective time of the Merger, our partnership agreement will be amended and restated to, among other things, (i) cancel the incentive distribution rights heldby our general partner, (ii) convert the 2% general partner interest in NuStar Energy held by our general partner into a non-economic management interestand (iii) provide the holders of our common units with voting rights in the election of the members of the board of directors of NuStar GP, LLC at an annualmeeting, beginning in 2019. The Merger is subject to the satisfaction or waiver of certain conditions, including approval of the Merger Agreement by NuStarGP Holdings unitholders. Please refer to Note 28 for further discussion of the Merger.Hurricane Activity. In the third quarter of 2017, parts of the Caribbean and Gulf of Mexico experienced three major hurricanes. Several of our facilities wereaffected by the hurricanes, but our St. Eustatius terminal experienced the most damage and was temporarily shut down. We incurred approximately $2.6million of operating expenses to repair minor property damage at several of our domestic terminals. Additionally, we recorded a $5.0 million loss in “Other(expense) income, net” in the consolidated statements of income in the third quarter of 2017 for property damage at our St. Eustatius terminal, whichrepresents the amount of our property deductible under our insurance policy. The hurricane impacts lowered revenues for our bunker fuel operations in ourfuels marketing segment and lowered throughput and associated handling fees in our storage segment in the third and fourth quarters of 2017. We receivedinsurance proceeds of $12.5 million in 2017 for damages at our St. Eustatius terminal, of which $3.8 million was for business interruption and the remainderwas used for repairs and cleanup. Proceeds from business interruption insurance are included in “Operating expenses” in the consolidated statements ofincome and in “Cash flows from operating activities” in the consolidated statements of cash flows. In January 2018, we received $87.5 million of insuranceproceeds in settlement of our property damage claim for our St. Eustatius terminal. We expect that the costs to repair the property damage at the terminal willnot exceed the value of insurance proceeds received.Navigator Acquisition and Financing Transactions. On May 4, 2017, we completed the acquisition of Navigator Energy Services, LLC for approximately$1.5 billion (the Navigator Acquisition). In order to fund the purchase price, we issued 14,375,000 common units for net proceeds of $657.5 million, issued$550.0 million of 5.625% senior notes for net proceeds of $543.3 million and issued 15,400,000 of our 7.625% Series B Fixed-to-Floating Rate CumulativeRedeemable Perpetual Preferred Units (Series B Preferred Units) for net proceeds of $371.8 million. Please refer to Notes 4, 12 and 19 for further discussion.Axeon Term Loan. On February 22, 2017, we settled and terminated the $190.0 million term loan to Axeon Specialty Products, LLC (the Axeon Term Loan),pursuant to which we also provided credit support, such as guarantees, letters of credit and cash collateral, as applicable, of up to $125.0 million to AxeonSpecialty Products, LLC (Axeon). We received $110.0 million in75Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)settlement of the Axeon Term Loan, and our obligation to provide ongoing credit support to Axeon ceased. Please refer to Notes 7 and 15 for furtherdiscussion of the Axeon Term Loan and related credit support.OperationsWe conduct our operations through our subsidiaries, primarily NuStar Logistics, L.P. (NuStar Logistics) and NuStar Pipeline Operating Partnership L.P.(NuPOP). We have three business segments: pipeline, storage and fuels marketing.Pipeline. We own 3,130 miles of refined product pipelines and 1,930 miles of crude oil pipelines, as well as approximately 5.0 million barrels of storagecapacity, which comprise our Central West System. In addition, we own 2,370 miles of refined product pipelines, consisting of the East and North Pipelines,and a 2,000-mile ammonia pipeline, which comprise our Central East System. The East and North Pipelines have storage capacity of approximately 6.8million barrels. We charge tariffs on a per barrel basis for transporting refined products, crude oil and other feedstocks in our refined product and crude oilpipelines and on a per ton basis for transporting anhydrous ammonia in the Ammonia Pipeline.Storage. We own terminal and storage facilities in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and theUnited Kingdom, with approximately 84.8 million barrels of storage capacity. Our terminal and storage facilities provide storage, handling and other serviceson a fee basis for petroleum products, crude oil, specialty chemicals and other liquids.Fuels Marketing. Within our fuels marketing operations, we purchase petroleum products for resale. The activities of the fuels marketing segment expose usto the risk of fluctuations in commodity prices, which has a direct impact on the segment’s results of operations. We enter into derivative contracts to attemptto mitigate the effect of commodity price fluctuations.We ceased marketing crude oil in the second quarter of 2017 and exited our heavy fuels trading operations in the third quarter of 2017. These actions are inline with our goal of reducing our exposure to commodity margins, and instead focusing on our core, fee-based pipeline and storage segments. The onlyoperations remaining in our fuels marketing segment are our bunkering operations at our St. Eustatius and Texas City terminals, as well as certain of ourblending operations.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESConsolidationThe accompanying consolidated financial statements represent the consolidated operations of the Partnership and our subsidiaries. Inter-partnership balancesand transactions have been eliminated in consolidation. The operations of certain pipelines and terminals in which we own an undivided interest areproportionately consolidated in the accompanying consolidated financial statements.Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to makeestimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ fromthose estimates. On an ongoing basis, management reviews its estimates based on currently available information. Management may revise estimates due tochanges in facts and circumstances.Cash and Cash EquivalentsCash equivalents are all highly liquid investments with an original maturity of three months or less when acquired.Accounts ReceivableAccounts receivable represent valid claims against non-affiliated customers for products sold or services rendered. We extend credit terms to certaincustomers after review of various credit indicators, including the customer’s credit rating. Outstanding customer receivable balances are regularly reviewedfor possible non-payment indicators and allowances for doubtful accounts are recorded based upon management’s estimate of collectability at the time of itsreview.InventoriesInventories consist of petroleum products, materials and supplies. Inventories, except those associated with a qualifying fair value hedge, are valued at thelower of cost or net realizable value. Cost is determined using the weighted-average cost method. Our inventory, other than materials and supplies, consists ofone end-product category, petroleum products, which we include in the fuels marketing segment. Accordingly, we determine lower of cost or net realizablevalue adjustments on an aggregate76Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)basis. Inventories associated with qualifying fair value hedges are valued at current market prices. Materials and supplies are valued at the lower of averagecost or net realizable value.Property, Plant and EquipmentWe record additions to property, plant and equipment, including reliability and strategic capital expenditures, at cost. Repair and maintenance costsassociated with existing assets that are minor in nature and do not extend the useful life of existing assets are charged to operating expenses as incurred.Depreciation of property, plant and equipment is recorded on a straight-line basis over the estimated useful lives of the related assets. When property orequipment is retired, sold or otherwise disposed of, the difference between the carrying value and the net proceeds is recognized in “Other (expense) income,net” in the consolidated statements of income in the year of disposition.We capitalize overhead costs and interest costs incurred on funds used to construct property, plant and equipment while the asset is under construction. Theoverhead costs and capitalized interest are recorded as part of the asset to which they relate and are amortized over the asset’s estimated useful life as acomponent of depreciation expense.GoodwillWe assess goodwill for impairment annually on October 1, or more frequently if events or changes in circumstances indicate it might be impaired. We havethe option to first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. We performed aquantitative goodwill impairment test as of October 1, 2017 and 2016, and determined that no impairment charges occurred.We calculate the estimated fair value of each of our reporting units using a weighted-average of values calculated using an income approach and a marketapproach. The income approach involves estimating the fair value of each reporting unit by discounting its estimated future cash flows using a discount ratethat would be consistent with a market participant’s assumption. The market approach bases the fair value measurement on information obtained fromobserved stock prices of public companies and recent merger and acquisition transaction data of comparable entities.Our reporting units to which goodwill has been allocated consist of the following:•crude oil pipelines;•refined product pipelines;•terminals, excluding our St. Eustatius and Point Tupper facilities and our refinery crude storage tanks; and•bunkering activity at our St. Eustatius and Point Tupper facilities.The quantitative impairment test for goodwill consists of a two-step process. Step 1 compares the fair value of the reporting unit to its carrying valueincluding goodwill. The carrying value of each reporting unit equals the total identified assets (including goodwill) less the sum of each reporting unit’sidentified liabilities. We used reasonable and supportable methods to assign the assets and liabilities to the appropriate reporting units in a consistentmanner. If the carrying value exceeds fair value, there is a potential impairment and step 2 must be performed to determine the amount of goodwillimpairment. Step 2 compares the carrying value of the reporting unit’s goodwill to its implied fair value using a hypothetical allocation of the reportingunit’s fair value. If the goodwill carrying value exceeds its implied fair value, the excess is reported as impairment.Impairment of Long-Lived AssetsWe review long-lived assets, including property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carryingamount may not be recoverable. We evaluate recoverability using undiscounted estimated net cash flows generated by the related asset or asset group. If theresults of that evaluation indicate that the undiscounted cash flows are less than the carrying amount of the asset (i.e., the asset is not recoverable) we performan impairment analysis. If our intent is to hold the asset for continued use, we determine the amount of impairment as the amount by which the net carryingvalue exceeds its fair value. If our intent is to sell the asset, and the criteria required to classify an asset as held for sale are met, we determine the amount ofimpairment as the amount by which the net carrying amount exceeds its fair value less costs to sell. We believe that the carrying amounts of our long-livedassets as of December 31, 2017 are recoverable.Income TaxesWe are a limited partnership and generally are not subject to federal or state income taxes. Accordingly, our taxable income or loss, which may varysubstantially from income or loss reported for financial reporting purposes, is generally included in the federal and state income tax returns of our partners.For transfers of publicly held units subsequent to our initial public offering,77Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)we have made an election permitted by Section 754 of the Internal Revenue Code (the Code) to adjust the common unit purchaser’s tax basis in ourunderlying assets to reflect the purchase price of the units. This results in an allocation of taxable income and expenses to the purchaser of the common units,including depreciation deductions and gains and losses on sales of assets, based upon the new unitholder’s purchase price for the common units.We conduct certain of our operations through taxable wholly owned corporate subsidiaries. We account for income taxes related to our taxable subsidiariesusing the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the future tax consequences attributable todifferences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred taxes usingenacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled.We recognize a tax position if it is more likely than not that the tax position will be sustained, based on the technical merits of the position, uponexamination. We record uncertain tax positions in the financial statements at the largest amount of benefit that is more likely than not to be realized. We hadno unrecognized tax benefits as of December 31, 2017 and 2016. NuStar Energy and certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. For U.S. federaland state purposes, as well as for our major non-U.S. jurisdictions, tax years subject to examination are 2013 through 2016, according to standard statute oflimitations.Asset Retirement ObligationsWe record a liability for asset retirement obligations at the fair value of the estimated costs to retire a tangible long-lived asset at the time we incur thatliability, which is generally when the asset is purchased, constructed or leased, when we have a legal obligation to incur costs to retire the asset and when areasonable estimate of the fair value of the obligation can be made. If a reasonable estimate cannot be made at the time the liability is incurred, we record theliability when sufficient information is available to estimate the fair value.We have asset retirement obligations with respect to certain of our assets due to various legal obligations to clean and/or dispose of those assets at the timethey are retired. However, these assets can be used for an extended and indeterminate period of time as long as they are properly maintained and/or upgraded.It is our practice and current intent to maintain our assets and continue making improvements to those assets based on technological advances. As a result, webelieve that our assets have indeterminate lives for purposes of estimating asset retirement obligations because dates or ranges of dates upon which we wouldretire these assets cannot reasonably be estimated at this time. When a date or range of dates can reasonably be estimated for the retirement of any asset, weestimate the costs of performing the retirement activities and record a liability for the fair value of these costs.We also have legal obligations in the form of leases and right-of-way agreements, which require us to remove certain of our assets upon termination of theagreement. However, these lease or right-of-way agreements generally contain automatic renewal provisions that extend our rights indefinitely or we haveother legal means available to extend our rights. We have recorded a liability of $0.7 million and $0.6 million as of December 31, 2017 and 2016,respectively, which is included in “Other long-term liabilities” in the consolidated balance sheets, for conditional asset retirement obligations related to theretirement of terminal assets with lease and right-of-way agreements.Environmental Remediation CostsEnvironmental remediation costs are expensed and an associated accrual established when site restoration and environmental remediation and cleanupobligations are either known or considered probable and can be reasonably estimated. These environmental obligations are based on estimates of probableundiscounted future costs using currently available technology and applying current regulations, as well as our own internal environmental policies. Theenvironmental liabilities have not been reduced by possible recoveries from third parties. Environmental costs include initial site surveys, costs forremediation and restoration and ongoing monitoring costs, as well as fines, damages and other costs, when estimable. Adjustments to initial estimates arerecorded, from time to time, to reflect changing circumstances and estimates based upon additional information developed in subsequent periods.78Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Product ImbalancesWe incur product imbalances as a result of variances in pipeline meter readings and volume fluctuations due to pressure and temperature changes. We usequoted market prices as of the reporting date to value our assets and liabilities related to product imbalances. Product imbalance liabilities are included in“Accrued liabilities” and product imbalance assets are included in “Other current assets” in the consolidated balance sheets.Revenue RecognitionRevenues for the pipeline segment are derived from interstate and intrastate pipeline transportation of refined products, crude oil and anhydrous ammonia.Transportation revenues (based on pipeline tariffs) are recognized as the refined product, crude oil or anhydrous ammonia is delivered out of the pipelines.Revenues for the storage segment include fees for tank storage agreements, whereby a customer agrees to pay for a certain amount of storage in a tank over aperiod of time (storage terminal revenues), and throughput agreements, whereby a customer pays a fee per barrel for volumes moving through our terminals(throughput terminal revenues). Our terminals also provide blending, additive injections, handling and filtering services for which we charge additional fees.Certain of our facilities charge fees to provide marine services such as pilotage, tug assistance, line handling, launch service, emergency response servicesand other ship services. Storage terminal revenues are recognized when services are provided to the customer. Throughput revenues are recognized as refinedproducts or crude oil are received in or delivered out of our terminal. Revenues for marine services are recognized as those services are provided.Revenues from the sale of petroleum products, which are included in our fuels marketing segment, are recognized when product is delivered to the customerand title and risk pass to the customer.We collect taxes on certain revenue transactions to be remitted to governmental authorities, which may include sales, use, value-added and some excisetaxes. These taxes are not included in revenue.Income AllocationOur partnership agreement, as amended, sets forth the calculation to be used to determine the amount and priority of cash distributions that the unitholdersand general partner will receive. The partnership agreement also contains provisions for the allocation of net income to the unitholders and the generalpartner; however, losses are only allocated to the common unitholders and the general partner. Our net income for each quarterly reporting period is firstallocated to the preferred limited partner unitholders in an amount equal to the earned distributions for the respective reporting period and then to the generalpartner in an amount equal to the general partner’s incentive distribution calculated based upon the declared distribution for the respective reporting period.We allocate the remaining net income or loss among the common unitholders (98%) and general partner (2%), as set forth in our partnership agreement.Basic and Diluted Net Income Per Common UnitBasic and diluted net income per common unit are determined pursuant to the two-class method. Under this method, all earnings are allocated to our commonlimited partners and participating securities based on their respective rights to receive distributions earned during the period. Participating securities includeour general partner interest and restricted units awarded under our long-term incentive plan.We compute basic net income per common unit by dividing net income attributable to our common limited partners by the weighted-average number ofcommon units outstanding during the period. We compute diluted net income per common unit by dividing net income attributable to our common limitedpartners by the sum of (i) the weighted-average number of common units outstanding during the period and (ii) the effect of dilutive potential common unitsoutstanding during the period. Dilutive potential common units include contingently issuable performance units awarded under our long-term incentiveplan. See Note 23 for additional information on our performance units.Derivative Financial InstrumentsWe formally document all relationships between hedging instruments and hedged items. This process includes identification of the hedging instrument andthe hedged transaction, the nature of the risk being hedged and how the hedging instrument’s effectiveness will be assessed. To qualify for hedge accounting,at inception of the hedge we assess whether the derivative instruments that are used in our hedging transactions are expected to be highly effective inoffsetting changes in cash flows or the fair value of the hedged items. Throughout the designated hedge period and at least quarterly, we assess whether thederivative instruments are highly effective and continue to qualify for hedge accounting. To assess the effectiveness of the hedging relationship bothprospectively and retrospectively, we use regression analysis to calculate the correlation of the changes in the fair values of the derivative instrument andrelated hedged item.79Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)We record commodity derivative instruments in the consolidated balance sheets at fair value. We recognize mark-to-market adjustments for derivativeinstruments designated and qualifying as fair value hedges (Fair Value Hedges) and the related change in the fair value of the associated hedged physicalinventory or firm commitment within “Cost of product sales.” For derivative instruments designated and qualifying as cash flow hedges (Cash Flow Hedges),we record the effective portion of mark-to-market adjustments as a component of accumulated other comprehensive income (loss) (AOCI) until theunderlying hedged forecasted transactions occur. Any hedge ineffectiveness is recognized immediately in “Cost of product sales.” Once a hedged transactionoccurs, we reclassify the effective portion from AOCI to “Cost of product sales.” If it becomes probable that a hedged transaction will not occur, then theassociated gains or losses are reclassified from AOCI to “Cost of product sales” immediately. For derivative instruments that have associated underlyingphysical inventory but do not qualify for hedge accounting (Economic Hedges and Other Derivatives), we record the mark-to-market adjustments in “Cost ofproduct sales.”Under the terms of our forward-starting interest rate swap agreements, we pay a fixed rate and receive a variable rate. We entered into the forward-startingswaps in order to hedge the risk of changes in the interest payments attributable to changes in the benchmark interest rate during the period from the effectivedate of the swap to the issuance of the forecasted debt. We account for the forward-starting interest rate swaps as Cash Flow Hedges, and we recognize the fairvalue of each interest rate swap in the consolidated balance sheets. We record the effective portion of mark-to-market adjustments as a component of AOCI,and any hedge ineffectiveness is recognized immediately in “Interest expense, net.” The amount accumulated in AOCI is amortized into “Interest expense,net” as the forecasted interest payments occur or if the interest payments are probable not to occur.We classify cash flows associated with our derivative instruments as operating cash flows in the consolidated statements of cash flows, except for receipts orpayments associated with terminated forward-starting interest rate swap agreements, which are included in cash flows from financing activities. See Note 16for additional information regarding our derivative financial instruments.Operating LeasesWe recognize rent expense on a straight-line basis over the lease term, including the impact of both scheduled rent increases and free or reduced rents(commonly referred to as “rent holidays”).Unit-based CompensationUnit-based compensation for our long-term incentive plan is recorded in our consolidated balance sheets based on the fair value of the awards granted andrecognized as compensation expense primarily on a straight-line basis over the requisite service period. Forfeitures of our unit-based compensation awardsare recognized as an adjustment to compensation expense when they occur. Unit-based compensation expense is included in “General and administrativeexpenses” on our consolidated statements of income. See Note 23 for additional information regarding our unit-based compensation.Margin DepositsMargin deposits relate to our exchange-traded derivative contracts and generally vary based on changes in the value of the contracts. Margin deposits areincluded in “Other current assets” in the consolidated balance sheets.Foreign Currency TranslationThe functional currencies of our foreign subsidiaries are the local currencies of the countries in which the subsidiaries are located, except for our subsidiarieslocated in St. Eustatius in the Caribbean (formerly the Netherlands Antilles), whose functional currency is the U.S. dollar. The assets and liabilities of ourforeign subsidiaries with local functional currencies are translated to U.S. dollars at period-end exchange rates, and income and expense items are translatedto U.S. dollars at weighted-average exchange rates in effect during the period. These translation adjustments are included in “Accumulated othercomprehensive loss” in the equity section of the consolidated balance sheets. Gains and losses on foreign currency transactions are included in “Other(expense) income, net” in the consolidated statements of income.3. NEW ACCOUNTING PRONOUNCEMENTSDerivatives and HedgingIn August 2017, the Financial Accounting Standards Board (FASB) issued amended guidance intended to improve the financial reporting of hedgingrelationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amended guidance also makescertain targeted improvements to simplify the application of current hedge accounting guidance. The guidance is effective for annual and interim periodsbeginning after December 15, 2018, with early adoption permitted. Certain of the new requirements should be applied prospectively while others should beapplied using a modified retrospective transition method. We currently expect to adopt the amended guidance on January 1, 2019. We do not80Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)expect the guidance to have a material impact on our financial position or results of operations, and we are assessing the impact on our disclosures.Unit-Based PaymentsIn May 2017, the FASB issued amended guidance that clarifies when a change to the terms and conditions of a unit-based payment award is accounted for asa modification. Under the amended guidance, an entity will apply modification accounting if the value, vesting or classification of the unit-based paymentaward changes. The guidance is effective for annual and interim periods beginning after December 15, 2017, and amendments should be appliedprospectively. We adopted these provisions January 1, 2018, and the guidance did not have a material impact on our financial position, results of operationsor disclosures.Defined Benefit PlansIn March 2017, the FASB issued amended guidance that changes the presentation of net periodic pension cost related to defined benefit plans. Under theamended guidance, the service cost component of net periodic benefit cost will be presented in the same income statement line items as other currentemployee compensation costs, but the remaining components of net periodic benefit cost will be presented outside of operating income. The changes areeffective for annual and interim periods beginning after December 15, 2017, and amendments should be applied retrospectively. We adopted these provisionsJanuary 1, 2018, and the guidance did not have a material impact on our financial position, results of operations or disclosures.GoodwillIn January 2017, the FASB issued amended guidance that simplifies the accounting for goodwill impairment by eliminating step 2 of the goodwillimpairment test. Under the amended guidance, goodwill impairment will be measured as the excess of the reporting unit’s carrying value over its fair value,not to exceed the carrying amount of goodwill for that reporting unit. The changes are effective for annual and interim periods beginning after December 15,2019, and amendments should be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017, and we arecurrently evaluating whether we will adopt these provisions early. Regardless of our decision, we do not expect the guidance to have a material impact on ourfinancial position, results of operations or disclosures.Definition of a BusinessIn January 2017, the FASB issued amended guidance that clarifies the definition of a business used in evaluating whether a set of transferred assets andactivities constitutes a business. Under the amended guidance, if substantially all of the fair value of the gross assets acquired is concentrated in a singleidentifiable asset or a group of similar identifiable assets, the set of transferred assets and activities would not represent a business. To be considered abusiness, the set of assets transferred is also required to include at least one substantive process that together significantly contribute to the ability to createoutputs. In addition, the amended guidance narrows the definition of outputs to be consistent with how outputs are described in the new revenue recognitionstandard. The changes are effective for annual and interim periods beginning after December 15, 2017, and amendments should be applied prospectively. Weadopted these provisions January 1, 2018, and they did not have an impact on our financial position, results of operations or disclosures.Statement of Cash FlowsIn August 2016, the FASB issued amended guidance that clarifies how entities should present certain cash receipts and cash payments on the statement ofcash flows, including, but not limited to, debt prepayment or debt extinguishment costs, contingent consideration payments made after a businesscombination, proceeds from the settlement of insurance claims and distributions received from equity method investees. The changes are effective for annualand interim periods beginning after December 15, 2017, and amendments should be applied retrospectively. We adopted these provisions January 1, 2018,and they did not have an impact on our statements of cash flows or disclosures.Credit LossesIn June 2016, the FASB issued amended guidance that requires the use of a “current expected loss” model for financial assets measured at amortized cost andcertain off-balance sheet credit exposures. Under this model, entities will be required to estimate the lifetime expected credit losses on such instruments basedon historical experience, current conditions, and reasonable and supportable forecasts. This amended guidance also expands the disclosure requirements toenable users of financial statements to understand an entity’s assumptions, models and methods for estimating expected credit losses. The changes areeffective for annual and interim periods beginning after December 15, 2019, and amendments should be applied using a modified retrospective approach. Wecurrently expect to adopt the amended guidance on January 1, 2020 and are assessing the impact of this amended guidance on our financial position, resultsof operations and disclosures. We plan to provide additional information about the expected financial impact at a future date.81Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)LeasesIn February 2016, the FASB issued amended guidance that requires lessees to recognize the assets and liabilities that arise from most leases on the balancesheet. For lessors, this amended guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The changes areeffective for annual and interim periods beginning after December 15, 2018, and amendments should be applied using a modified retrospective approach forleases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, with the option to use certain expedients.In January 2018, the FASB issued additional guidance that provides an optional transition practical expedient for land easements. We currently expect toadopt these provisions on January 1, 2019 using the modified retrospective approach of adoption. We are working to identify our lease arrangements andhave begun the process of system implementation. We are continuing to evaluate the impact of this amended guidance on our financial position, results ofoperations, disclosures and internal controls and plan to provide additional information about the expected financial impact at a future date.Financial InstrumentsIn January 2016, the FASB issued new guidance that addresses certain aspects of recognition, measurement, presentation and disclosure of financialinstruments. The changes are effective for annual and interim periods beginning after December 15, 2017, and amendments should be applied by means of acumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. We adopted these provisions January 1, 2018, and theydid not have an impact on our financial position, results of operations or disclosures.Revenue RecognitionIn May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard that requires anentity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to beentitled to in exchange for those goods or services. The standard is effective for public entities for annual and interim periods beginning after December 15,2017, using one of two retrospective transition methods. We adopted these provisions January 1, 2018 using the modified retrospective approach. Thetransition adjustment related to the adoption was immaterial (less than 1% of total revenues for the year ended December 31, 2017 and total partners’ equityas of December 31, 2017), and we do not expect the adoption of this standard to materially impact the amount or timing of our revenue going forward. Underthe new guidance, we will no longer recognize the fair value of product imbalance assets or liabilities on our consolidated balance sheets. We intend toprovide additional disclosures as required by the new standard, which we are currently assessing, in our quarterly report on Form 10-Q for the first quarter of2018.4. ACQUISITIONSNavigator AcquisitionOn April 11, 2017, we entered into a Membership Interest Purchase and Sale Agreement (the Acquisition Agreement) with FR Navigator Holdings LLC toacquire all of the issued and outstanding limited liability company interests in Navigator Energy Services, LLC (Navigator) for approximately $1.5 billion.We closed the Navigator Acquisition on May 4, 2017 and funded the purchase price with the net proceeds of the equity and debt issuances described inNotes 12 and 19. We acquired crude oil transportation, pipeline gathering and storage assets located in the Midland Basin of West Texas consisting of: (i)more than 500 miles of crude oil gathering and transportation pipelines with approximately 92,000 barrels per day ship-or-pay volume commitments anddeliverability of approximately 412,000 barrels per day; (ii) a pipeline gathering system with more than 200 connected producer tank batteries capable ofmore than 400,000 barrels per day of pumping capacity covering over 500,000 dedicated acres with fixed fee contracts; and (iii) approximately 1.0 millionbarrels of crude oil storage capacity with 440,000 barrels contracted to third parties. We collectively refer to the acquired assets as our Permian Crude System.The assets acquired are included in our pipeline segment within the Central West System.The Navigator Acquisition broadens our geographic footprint by marking our entry into the Permian Basin and complements our existing asset base. Webelieve the Permian Crude System will provide a strong growth platform that, when coupled with our assets in the Eagle Ford region, serve to solidify ourpresence in two of the most prolific basins in the United States.82Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)We accounted for the Navigator Acquisition using the acquisition method. The fair value estimates of the assets acquired and liabilities assumed are based onpreliminary assumptions, pending the completion of an independent appraisal and other evaluations as information becomes available to us. The followingtable reflects the preliminary purchase price allocation as of December 31, 2017: Preliminary Purchase Price Allocation (Thousands of Dollars)Accounts receivable$4,747Other current assets2,359Property, plant and equipment, net376,690Intangible assets (a)700,000Goodwill (b)400,838Other long-term assets, net2,199Current liabilities(25,114)Preliminary purchase price allocation, net of cash acquired$1,461,719(a)Intangible assets, which consist of customer contracts and relationships, are expected to be amortized on a straight-line basis over a period of 20 years.(b)The goodwill acquired represents the expected benefit from entering new geographic areas and the anticipated opportunities to generate future cash flows from the assetsacquired and potential future projects.The values used in the purchase price allocation above are preliminary and subject to change after we finalize our review of certain of Navigator’s pre-acquisition liabilities, and pending the completion of an independent appraisal. Although a change in the value used for the assets acquired and liabilitiesassumed would cause a corresponding increase or decrease in goodwill, we do not expect any change to be significant.The consolidated statements of income include the results of operations for Navigator commencing on May 4, 2017. The table below presents certainfinancial information included in the consolidated statements of income related to the Navigator Acquisition: Year Ended December 31, 2017 (Thousands of Dollars)Permian Crude System: Revenues$42,620Operating loss$(1,724) Transaction costs: General and administrative expenses$10,391Interest expense, net3,688Total transaction costs$14,07983Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The unaudited pro forma information for the years ended December 31, 2017 and 2016 presented below combines the historical financial information forNavigator and the Partnership for those periods. The information assumes we completed the Navigator Acquisition on January 1, 2016 and the following:•we issued approximately 14.4 million common units;•we received a contribution from our general partner of $13.6 million to maintain its 2% interest;•we issued 15.4 million Series B Preferred Units;•we issued $550.0 million of 5.625% senior notes;•additional depreciation and amortization that would have been incurred assuming the fair value adjustments to property, plant and equipment andintangible assets reflected in the preliminary purchase price allocation above; and•we satisfied Navigator’s outstanding obligations under its revolving credit agreement. Pro FormaYear Ended December 31, 2017 2016 (Thousands of Dollars, Except Per Unit Data)Revenues$1,828,418 $1,782,932Net income$127,433 $78,664 Basic and diluted net income per common unit$0.31 $0.01The pro forma information for the year ended December 31, 2017 includes transaction costs of $14.1 million, which were directly attributable to theNavigator Acquisition. The pro forma information is unaudited and is not necessarily indicative of the results of operations that would have resulted had theNavigator Acquisition occurred on January 1, 2016 or that may result in the future.Martin Terminal Acquisition. On December 21, 2016, we acquired crude oil and refined product storage assets in Corpus Christi, TX for $95.7 million,including $2.1 million of capital expenditure reimbursements, from Martin Operating Partnership L.P. (the Martin Terminal Acquisition). The assets acquiredare in our storage segment and include 900,000 barrels of crude oil storage capacity, 250,000 barrels of refined product storage capacity and exclusive use ofthe Port of Corpus Christi’s new crude oil dock.Linden Acquisition. On January 2, 2015, we acquired full ownership of ST Linden Terminal, LLC (Linden), which owns a refined products terminal inLinden, NJ with 4.3 million barrels of storage capacity (the Linden Acquisition). Linden is located on a 44-acre facility that provides deep-water terminallingcapabilities in the New York Harbor and primarily stores petroleum products, including gasoline, jet fuel and fuel oils. Prior to the Linden Acquisition,Linden operated as a joint venture between Linden Holding Corp. and us, with each party owning 50%.In connection with the Linden Acquisition, we ceased applying the equity method of accounting and consolidated Linden, which is included in our storagesegment. The consolidated statements of income include the results of operations for Linden commencing on January 2, 2015. On the acquisition date, weremeasured our existing 50% equity investment in Linden to its fair value of $128.0 million and we recognized a gain of $56.3 million in “Other (expense)income, net” in the consolidated statement of income for the year ended December 31, 2015. We estimated the fair value using a market approach and anincome approach. The market approach estimates the enterprise value based on an earnings multiple. The income approach calculates fair value bydiscounting the estimated net cash flows. We funded the acquisition with borrowings under our revolving credit agreement. The acquisition complements ourexisting storage operations, and having sole ownership of Linden strengthens our presence in the New York Harbor and the East Coast market.84Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)We accounted for the Linden Acquisition using the acquisition method. The purchase price has been allocated based on the estimated fair values of theindividual assets acquired and liabilities assumed at the date of the acquisition.The final purchase price allocation was as follows (in thousands of dollars):Cash paid for the Linden Acquisition$142,500Fair value of liabilities assumed22,865Consideration165,365Acquisition date fair value of previously held equity interest128,000Total$293,365 Current assets (a)$9,513Property, plant and equipment134,484Goodwill79,208Intangible assets (b)70,050Other long-term assets110Purchase price allocation$293,365(a)Current assets include a receivable of $7.8 million related to a pre-acquisition insurance claim, for which proceeds were received in 2015.(b)Intangible assets primarily consist of customer contracts and relationships and are being amortized over 10 years.5. ALLOWANCE FOR DOUBTFUL ACCOUNTSThe changes in the allowance for doubtful accounts consisted of the following: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)Balance as of beginning of year$7,756 $8,473 $7,808Increase in allowance, net2,217 24 965Accounts charged against the allowance(25) (741) (300)Balance as of end of year$9,948 $7,756 $8,4736. INVENTORIESInventories consisted of the following: December 31, 2017 2016 (Thousands of Dollars)Petroleum products$17,027 $28,044Materials and supplies9,830 9,901Total$26,857 $37,945We purchase petroleum products for resale. Our petroleum products consist of intermediates, gasoline, distillates and other petroleum products. Materials andsupplies mainly consist of blending and additive chemicals and maintenance materials used in our pipeline and storage segments.85Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)7. OTHER CURRENT ASSETSOther current assets consisted of the following: December 31, 2017 2016 (Thousands of Dollars)Axeon Term Loan$— $110,000Prepaid expenses15,982 14,894Derivative assets— 155Other6,526 7,637Other current assets$22,508 $132,686Axeon Term Loan. In December 2016, Lindsay Goldberg LLC, the private investment firm that owned Axeon, informed us that they entered into an agreementto sell Axeon’s retail asphalt sales and distribution business (the Axeon Sale), and we entered into an agreement with Axeon (the Axeon Letter Agreement) tosettle and terminate the Axeon Term Loan for a $110.0 million payment to us upon closing of the Axeon Sale. Therefore, we recorded a charge of $58.7million, included in “Other (expense) income, net” in the consolidated statements of income, to reduce the carrying amount of the Axeon Term Loan to$110.0 million and reclassified the Axeon Term Loan from “Other long-term assets, net” to “Other current assets” on the consolidated balance sheet as ofDecember 31, 2016. The Axeon Sale closed on February 22, 2017, at which time we received the $110.0 million payment in accordance with the AxeonLetter Agreement. Furthermore, the Axeon Term Loan and our obligation to provide ongoing credit support to Axeon all terminated concurrently onFebruary 22, 2017. Please refer to Note 15 for a discussion of the guarantees. In addition, in connection with the closing of the Axeon Sale, the terminalstorage agreements that Axeon has with our Jacksonville, FL and Baltimore, MD terminal facilities were amended to increase the storage fees.Prior to the closing of the Axeon Sale, we reviewed the financial information of Axeon monthly for possible credit loss indicators. We recognized interestincome associated with the Axeon Term Loan ratably over the term of the loan in “Interest expense, net” on the consolidated statements of income.8. PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment, at cost, consisted of the following: Estimated Useful Lives December 31, 2017 2016 (Years) (Thousands of Dollars)Land - $143,527 $138,224Land and leasehold improvements5-40 203,085 187,930Buildings15-40 151,702 144,773Pipelines, storage and terminals20-40 5,080,795 4,647,718Rights-of-way20-40 264,170 202,311Construction in progress - 400,202 114,322Total 6,243,481 5,435,278Less accumulated depreciation and amortization (1,942,548) (1,712,995)Property, plant and equipment, net $4,300,933 $3,722,283Capitalized interest costs added to property, plant and equipment totaled $5.5 million, $3.4 million and $5.5 million for the years ended December 31, 2017,2016 and 2015, respectively. Depreciation and amortization expense for property, plant and equipment totaled $222.5 million, $200.7 million and $192.3million for the years ended December 31, 2017, 2016 and 2015, respectively.86Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)9. INTANGIBLE ASSETSIntangible assets consisted of the following: December 31, 2017 December 31, 2016 Weighted-AverageAmortization Period Cost AccumulatedAmortization Cost AccumulatedAmortization (Years) (Thousands of Dollars)Customer contracts and relationships18 $863,950 $(81,136) $166,950 $(41,582)Other47 2,359 (694) 2,359 (644)Total $866,309 $(81,830) $169,309 $(42,226)All of our intangible assets are amortized on a straight-line basis. Amortization expense for intangible assets was $39.6 million, $13.9 million and $16.7million for the years ended December 31, 2017, 2016 and 2015, respectively. The estimated aggregate amortization expense is approximately $51.0 millionfor each of the years 2018 through 2022.10. GOODWILLChanges in the carrying amount of goodwill by segment were as follows: Pipeline Storage FuelsMarketing Total (Thousands of Dollars)Balances as of January 1, 2016 and December 31, 2016: Goodwill$306,207 $691,220 $53,255 $1,050,682Accumulated impairment losses— (331,913) (22,132) (354,045)Net goodwill306,207 359,307 31,123 696,637 Activity for the year ended December 31, 2017: Navigator Acquisition preliminary purchase price allocation (a)400,838 — — 400,838 Balances as of December 31, 2017: Goodwill707,045 691,220 53,255 1,451,520Accumulated impairment losses— (331,913) (22,132) (354,045)Net goodwill$707,045 $359,307 $31,123 $1,097,475(a)See Note 4 for discussion of the Navigator Acquisition.11. ACCRUED LIABILITIESAccrued liabilities consisted of the following: December 31, 2017 2016 (Thousands of Dollars)Employee wages and benefit costs$16,963 $30,807Unearned income18,243 14,355Other26,372 15,323Accrued liabilities$61,578 $60,48587Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)12. DEBTLong-term debt consisted of the following: December 31, Maturity 2017 2016 (Thousands of Dollars)Revolving Credit Agreement 2020 $893,311 $838,9927.65% senior notes 2018 350,000 350,0004.80% senior notes 2020 450,000 450,0006.75% senior notes 2021 300,000 300,0004.75% senior notes 2022 250,000 250,0005.625% senior notes 2027 550,000 —Subordinated Notes 2043 402,500 402,500GoZone Bonds2038thru2041 365,440 365,440Receivables Financing Agreement 2020 62,300 58,400Net fair value adjustments, unamortized discounts and unamortized debt issuancecosts N/A (10,492) (968)Total long-term debt 3,613,059 3,014,364 Less current portion 349,990 —Long-term debt, less current portion $3,263,069 $3,014,364The long-term debt repayments are due as follows (in thousands of dollars):2018$350,0002019—20201,405,6112021300,0002022250,000Thereafter1,317,940Total repayments3,623,551Net fair value adjustments, unamortized discounts and unamortized debt issuance costs(10,492)Total long-term debt$3,613,059Interest payments totaled $163.6 million, $146.1 million and $138.9 million for the years ended December 31, 2017, 2016 and 2015, respectively. Weamortized an aggregate of $5.0 million, $4.4 million and $4.0 million of debt issuance costs and debt discount for the years ended December 31, 2017, 2016and 2015, respectively.Revolving Credit AgreementOn August 22, 2017, NuStar Logistics amended its revolving credit agreement (the Revolving Credit Agreement), mainly to extend the maturity date fromOctober 29, 2019 to October 29, 2020, and to increase the borrowing capacity from $1.50 billion to $1.75 billion. The Revolving Credit Agreement includesthe ability to borrow up to the equivalent of $250.0 million in Euros and up to the equivalent of $250.0 million in British Pounds Sterling. Obligations underthe Revolving Credit Agreement are guaranteed by NuStar Energy and NuPOP. For the year ended December 31, 2017, we recorded deferred issuance costs of$3.1 million associated with the Revolving Credit Agreement to “Other long-term assets, net” on the consolidated balance sheet.The Revolving Credit Agreement was also amended to increase the maximum allowed consolidated debt coverage ratio (as defined in the Revolving CreditAgreement) from 5.00-to-1.00 to 5.50-to-1.00 through the rolling period ending March 31, 2018. Subsequently, the maximum allowed consolidated debtcoverage ratio may not exceed 5.00-to-1.00 for any rolling period ending on or after June 30, 2018. If we complete one or more acquisitions for aggregate netconsideration of at least $50.0 million, our maximum consolidated debt coverage ratio will increase to 5.50-to-1.00 for two rolling periods. On November 22,2017, the Revolving Credit Agreement was amended to continue to exclude our $402.5 million fixed-to-floating rate subordinated notes from the definitionof consolidated debt for purposes of calculating our consolidated debt coverage ratio88Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)through December 31, 2018. The Revolving Credit Agreement also contains customary restrictive covenants, such as limitations on indebtedness, liens,mergers, asset transfers and certain investing activities.The requirement not to exceed a maximum consolidated debt coverage ratio may limit the amount we can borrow under the Revolving Credit Agreement toan amount less than the total amount available for borrowing. As of December 31, 2017, we had $853.0 million available for borrowing.The Revolving Credit Agreement bears interest, at our option, based on an alternative base rate, a LIBOR-based rate or a EURIBOR-based rate. The interestrate on the Revolving Credit Agreement is subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies. As ofDecember 31, 2017, our weighted-average interest rate was 3.2%. During the year ended December 31, 2017, the weighted-average interest rate related toborrowings under the Revolving Credit Agreement was 2.8%.Letters of credit issued under the Revolving Credit Agreement totaled $3.7 million as of December 31, 2017. Letters of credit are limited to $400.0 million(including up to the equivalent of $25.0 million in Euros and up to the equivalent of $25.0 million in British Pounds Sterling) and also may restrict theamount we can borrow under the Revolving Credit Agreement.In February 2018, Moody’s Investor Service Inc. (Moody’s) lowered our credit rating from Ba1 to Ba2. This rating downgrade caused the interest rate on ourRevolving Credit Agreement to increase by 0.25% effective February 2018.NotesNuStar Logistics Senior Notes. On April 28, 2017, NuStar Logistics issued $550.0 million of 5.625% senior notes due April 28, 2027. We used the netproceeds of $543.3 million from the offering to fund a portion of the purchase price for the Navigator Acquisition and to pay related fees and expenses. Theinterest on the 5.625% senior notes is payable semi-annually in arrears on April 28 and October 28 of each year beginning on October 28, 2017.Interest is payable semi-annually in arrears for the $350.0 million of 7.65% senior notes, $450.0 million of 4.80% senior notes, $300.0 million of 6.75%senior notes, $250.0 million of 4.75% senior notes and $550.0 million of 5.625% senior notes (collectively, the NuStar Logistics Senior Notes). The interestrate payable on the 7.65% senior notes is subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies and was8.40% as of December 31, 2017. In November 2017, Standard & Poor’s Rating Services lowered our credit rating from BB+ to BB. Additionally, the outlookwas changed from stable to negative. The rating downgrade caused the interest rate on the 7.65% senior notes due 2018 to increase from 8.15% to 8.40%. Thecredit rating downgrade by Moody’s in February 2018 also increased the interest rate by 0.25%, resulting in an interest rate of 8.65% applicable to theinterest payment due April 15, 2018.The NuStar Logistics Senior Notes do not have sinking fund requirements. These notes rank equally with existing senior unsecured indebtedness and seniorto existing subordinated indebtedness of NuStar Logistics and contain restrictions on NuStar Logistics’ ability to incur additional secured indebtednessunless the same security is also provided for the benefit of holders of the NuStar Logistics Senior Notes. In addition, the NuStar Logistics Senior Notes limitNuStar Logistics’ ability to incur indebtedness secured by certain liens and to engage in certain sale-leaseback transactions. At the option of NuStarLogistics, the NuStar Logistics Senior Notes may be redeemed in whole or in part at any time at a redemption price, which includes a make-whole premium,plus accrued and unpaid interest to the redemption date. If we undergo a change of control, as defined in the supplemental indentures for the 6.75% seniornotes or the 5.625% senior notes, each holder of the 6.75% senior notes or the 5.625% senior notes may require us to repurchase all or a portion of its notes ata price equal to 101% of the principal amount of the notes, plus any accrued and unpaid interest to the date of repurchase. The NuStar Logistics Senior Notesare fully and unconditionally guaranteed by NuStar Energy and NuPOP.NuStar Logistics 7.625% Fixed-to-Floating Rate Subordinated Notes. NuStar Logistics’ $402.5 million of 7.625% fixed-to-floating rate subordinated notesare due January 15, 2043 (the Subordinated Notes). The Subordinated Notes are fully and unconditionally guaranteed on an unsecured and subordinatedbasis by NuStar Energy and NuPOP. The Subordinated Notes bore interest at a fixed annual rate of 7.625%, payable quarterly in arrears beginning on April15, 2013 and ending on January 15, 2018. Thereafter, the Subordinated Notes bear interest at an annual rate equal to the sum of the three-month LIBOR ratefor the related quarterly interest period, plus 6.734% payable quarterly, commencing April 15, 2018, unless payment is deferred in accordance with the termsof the notes. NuStar Logistics may elect to defer interest payments on the Subordinated Notes on one or more occasions for up to five consecutive years.Deferred interest will accumulate additional interest at a rate equal to the interest rate then applicable to the Subordinated Notes until paid. If NuStarLogistics elects to defer interest payments, NuStar Energy cannot declare or make cash distributions to its unitholders during the period that interestpayments are deferred.89Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The Subordinated Notes do not have sinking fund requirements and are subordinated to existing senior unsecured indebtedness of NuStar Logistics andNuPOP. The Subordinated Notes do not contain restrictions on NuStar Logistics’ ability to incur additional indebtedness, including debt that ranks senior inpriority of payment to the notes. In addition, the Subordinated Notes do not limit NuStar Logistics’ ability to incur indebtedness secured by liens or toengage in certain sale-leaseback transactions. Effective January 15, 2018, we may redeem the Subordinated Notes in whole or in part at a redemption priceequal to 100% of the principal amount plus accrued and unpaid interest to the redemption date.Gulf Opportunity Zone Revenue BondsIn 2008, 2010 and 2011, the Parish of St. James, Louisiana issued Revenue Bonds Series 2008, Series 2010, Series 2010A, Series 2010B and Series 2011associated with our St. James terminal expansions pursuant to the Gulf Opportunity Zone Act of 2005 for an aggregate $365.4 million (collectively, theGoZone Bonds). The interest rates on these bonds are based on a weekly tax-exempt bond market interest rate, and interest is paid monthly. Following theissuances, the proceeds were deposited with a trustee and are disbursed to us upon our request for reimbursement of expenditures related to our St. Jamesterminal expansions. We include the amount remaining in the trust in “Other long-term assets, net,” and we include the amount of bonds issued in “Long-term debt” in our consolidated balance sheets. We did not receive any proceeds from the trustee for the year ended December 31, 2017, and for the year endedDecember 31, 2016, we received $12.5 million from the trustee.NuStar Logistics is solely obligated to service the principal and interest payments associated with the GoZone Bonds. Letters of credit were issued by variousindividual banks on our behalf to guarantee the payment of interest and principal on the bonds. All letters of credit rank equally with existing seniorunsecured indebtedness of NuStar Logistics. Obligations under the letters of credit issued are guaranteed by NuStar Energy and NuPOP. The letters of creditissued by individual banks do not restrict the amount we can borrow under the Revolving Credit Agreement.The following table summarizes the GoZone Bonds outstanding as of December 31, 2017:Date Issued Maturity Date AmountOutstanding Amount ofLetter ofCredit AmountReceived fromTrustee AmountRemaining inTrust (a) Interest Rate (b) (Thousands of Dollars) June 26, 2008 June 1, 2038 $55,440 $56,169 $55,440 $— 1.8%July 15, 2010 July 1, 2040 100,000 101,315 100,000 — 1.7%October 7, 2010 October 1, 2040 50,000 50,658 43,741 6,546 1.7%December 29, 2010 December 1, 2040 85,000 86,118 49,782 35,997 1.7%August 29, 2011 August 1, 2041 75,000 75,986 75,000 — 1.8% Total $365,440 $370,246 $323,963 $42,543 (a)Amount remaining in trust includes accrued interest.(b)For the year ended December 31, 2017, our weighted-average interest rate on borrowings was 0.9%.Receivables Financing AgreementNuStar Energy and NuStar Finance LLC (NuStar Finance), a special purpose entity and wholly owned subsidiary of NuStar Logistics, are parties to a $125.0million receivables financing agreement with third-party lenders (the Receivables Financing Agreement) and agreements with certain of NuStar Energy’swholly owned subsidiaries (collectively with the Receivables Financing Agreement, the Securitization Program). Under the Securitization Program, certain ofNuStar Energy’s wholly owned subsidiaries (collectively, the Originators), sell their accounts receivable to NuStar Finance on an ongoing basis, and NuStarFinance provides the newly acquired accounts receivable as collateral for its revolving borrowings under the Receivables Financing Agreement. NuStarEnergy provides a performance guarantee in connection with the Securitization Program. The maximum amount available for borrowing by NuStar Financeunder the Receivables Financing Agreement is $125.0 million, with an option for NuStar Finance to request an increase of up to $75.0 million from thelenders (for aggregate total borrowings not to exceed $200.0 million). The amount available for borrowing is based on the availability of eligible receivablesand other customary factors and conditions. The Securitization Program contains various customary affirmative and negative covenants and default,indemnification and termination provisions, and the Receivables Financing Agreement provides for acceleration of amounts owed upon the occurrence ofcertain specified events. NuStar Finance’s sole activity consists of purchasing such receivables and providing them as collateral under the SecuritizationProgram. NuStar Finance is a separate legal entity and the assets of NuStar Finance, including these accounts receivable, are not available to satisfy the claimsof creditors of NuStar Energy, the Originators or their affiliates.90Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)On September 20, 2017, the Securitization Program was amended to add certain of NuStar Energy’s wholly owned subsidiaries resulting from the NavigatorAcquisition and to extend the Securitization Program’s scheduled termination date from June 15, 2018 to September 20, 2020, with the option to renew foradditional 364-day periods thereafter. Borrowings by NuStar Finance under the Receivables Financing Agreement bear interest at the applicable bank rate, asdefined under the Receivables Financing Agreement. As of December 31, 2017 and 2016, accounts receivable totaling $92.6 million and $104.5 million,respectively, were included in the Securitization Program. The weighted average interest rate related to outstanding borrowings under the SecuritizationProgram during the year ended December 31, 2017 was 2.0%.Short-Term Lines of CreditNuStar Logistics is party to two short-term line of credit agreements with an aggregate uncommitted borrowing capacity of up to $85.0 million, which allowus to better manage fluctuations in our daily cash requirements and minimize our excess cash balances. The interest rate and maturity vary and are determinedat the time of borrowing. We had $35.0 million outstanding under these lines of credit as of December 31, 2017. Obligations under these short-term line ofcredit agreements are guaranteed by NuStar Energy. The weighted-average interest rate related to outstanding borrowings under our short-term lines of creditduring the years ended December 31, 2017 and 2016, was 2.7% and 2.0%, respectively.13. HEALTH, SAFETY AND ENVIRONMENTAL MATTERSOur operations are subject to extensive international, federal, state and local environmental laws and regulations, in the U.S. and in the other countries inwhich we operate, including those relating to the discharge of materials into the environment, waste management, remediation, the characteristics andcomposition of fuels, climate change and greenhouse gases. Our operations are also subject to extensive health, safety and security laws and regulations,including those relating to worker and pipeline safety, pipeline and storage tank integrity and operations security. The principal environmental, health,safety and security risks associated with our operations relate to unauthorized emissions into the air, releases into soil, surface water or groundwater, personalinjury and property damage. We have adopted policies, practices, systems and procedures to comply with the laws and regulations, mitigate these risks, limitthe liability that could result from such events, prevent material environmental or other damage, ensure the safety of our employees and the public and secureour pipelines, terminals and operations. Compliance with environmental, health, safety and security laws, regulations and related permits increases ourcapital expenditures and operating expenses, and violation of these laws, regulations or permits could result in significant civil and criminal liabilities,injunctions or other penalties.Most of our pipelines are subject to federal regulation by one or more of the following governmental agencies: the Federal Energy Regulatory Commission(the FERC), the Surface Transportation Board (the STB), the Department of Transportation (DOT), the Environmental Protection Agency (EPA) and theDepartment of Homeland Security. Additionally, the operations and integrity of the pipelines are subject to the respective state jurisdictions along the routesof the systems.We have adopted policies, practices and procedures to address pollution control, pipeline integrity, operator qualifications, public relations and education,process safety management, risk management planning, hazard communication, emergency response planning, community right-to-know, occupationalhealth and the handling, storage, use and disposal of hazardous materials. Our policies are designed to comply with applicable federal, state and localregulations and to prevent material environmental or other damage, to ensure the safety of our pipelines, our employees, the public and the environment andto limit the financial liability that could result from such events. Future governmental action and regulatory initiatives could necessitate changes to expectedoperating permits and procedures, additional remedial actions or increased capital expenditures and operating costs. Risks of additional costs and liabilitiesare inherent within the industry, and there can be no assurances that significant costs and liabilities will not be incurred in the future.Environmental and safety exposures and liabilities are difficult to assess and estimate due to unknown factors such as the timing and extent of remediation,the determination of our liability in proportion to other parties, improvements in cleanup technologies and the extent to which environmental and safety lawsand regulations may change in the future. Although environmental and safety costs may have a significant impact on the results of operations for any singleperiod, we believe that such costs will not have a material adverse effect on our financial position.91Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The balance of and changes in the accruals for environmental matters were as follows: Year Ended December 31, 2017 2016 (Thousands of Dollars)Balance as of the beginning of year$5,120 $7,667Additions to accrual3,186 870Payments(2,675) (3,302)Foreign currency translation52 (115)Balance as of the end of year$5,683 $5,120 Accruals for environmental matters are included in the consolidated balance sheets as follows: December 31, 2017 2016 (Thousands of Dollars)Accrued liabilities$3,054 $3,281Other long-term liabilities2,629 1,839Accruals for environmental matters$5,683 $5,12014. COMMITMENTS AND CONTINGENCIESContingenciesWe have contingent liabilities resulting from various litigation, claims and commitments. We record accruals for loss contingencies when losses areconsidered probable and can be reasonably estimated. Legal fees associated with defending the Partnership in legal matters are expensed as incurred. Weaccrued $7.3 million for contingent losses as of December 31, 2017, and had no accrual for contingent losses as of December 31, 2016. The amount that willultimately be paid related to such matters may differ from the recorded accruals, and the timing of such payments is uncertain. In addition, due to the inherentuncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on ourresults of operations, financial position or liquidity.CommitmentsLessee Commitments. Future minimum rental payments applicable to all noncancellable operating leases and purchase obligations as of December 31, 2017are as follows: Payments Due by Period 2018 2019 2020 2021 2022 There-after Total (Thousands of Dollars)Operating leases$39,236 $34,203 $19,541 $13,324 $7,295 $68,386 $181,985Purchase obligations$6,963 $6,133 $4,686 $4,690 $4,480 $300 $27,252Rental expense for all operating leases totaled $36.2 million, $37.0 million and $39.7 million for the years ended December 31, 2017, 2016 and 2015,respectively. Our operating leases consist primarily of the following:•a ten-year lease for tugs and barges utilized at our St. Eustatius facility for bunker fuel sales, with two five-year renewal options; and•land leases at various terminal facilities, with original terms ranging from 10 to 100 years.Our purchase obligations primarily consist of an eleven-year chemical supply agreement related to our pipelines.Lessor Revenues. We have entered into certain revenue arrangements where we are considered to be the lessor in accordance with GAAP. Under thesearrangements we lease certain of our storage tanks in exchange for a fixed fee, subject to an annual consumer price index adjustment. The arrangementscommenced on January 1, 2017, and have initial terms of ten years with successive ten-year automatic renewal terms. We recognized $39.1 million of leaserevenues from these leases for the year ended December 31, 2017, which is included in “Service revenues” in the consolidated statements of income. Futureminimum92Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)revenues we expect to receive under these lease arrangements as of December 31, 2017 total $352.2 million, which we will recognize ratably over thefollowing nine years. As of December 31, 2017, the cost and accumulated depreciation of leased storage assets totaled $229.8 million and $104.9 million,respectively.15. FAIR VALUE MEASUREMENTSWe segregate the inputs used in measuring fair value into three levels: Level 1, defined as observable inputs such as quoted prices for identical assets orliabilities in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such asquoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active; and Level 3,defined as unobservable inputs for which little or no market data exists. We consider counterparty credit risk and our own credit risk in the determination ofall estimated fair values.Recurring Fair Value MeasurementsThe following assets and liabilities are measured at fair value on a recurring basis: December 31, 2017 Level 1 Level 2 Level 3 Total (Thousands of Dollars)Assets: Other current assets: Product imbalances$3,890 $— $— $3,890Liabilities: Accrued liabilities: Product imbalances$(1,534) $— $— $(1,534)Commodity derivatives(878) — — (878)Interest rate swaps— (5,394) — (5,394)Other long-term liabilities: Interest rate swaps— (4,594) — (4,594)Total$(2,412) $(9,988) $— $(12,400) December 31, 2016 Level 1 Level 2 Level 3 Total (Thousands of Dollars)Assets: Other current assets: Product imbalances$1,551 $— $— $1,551Commodity derivatives— 155 — 155Other long-term assets, net: Interest rate swaps— 1,314 — 1,314Total$1,551 $1,469 $— $3,020Liabilities: Accrued liabilities: Product imbalances$(1,577) $— $— $(1,577)Commodity derivatives(4,887) (165) — (5,052)Other long-term liabilities: Guarantee liability— — (1,230) (1,230)Interest rate swaps— (2,632) — (2,632)Total$(6,464) $(2,797) $(1,230) $(10,491)93Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Product Imbalances. Since we value our assets and liabilities related to product imbalances using quoted market prices in active markets as of the reportingdate, we include these product imbalances in Level 1 of the fair value hierarchy.Commodity Derivatives. We base the fair value of certain of our commodity derivative instruments on quoted prices on an exchange; accordingly, we includethese items in Level 1 of the fair value hierarchy. We also had derivative instruments for which we determined fair value using industry pricing services andother observable inputs, such as quoted prices on an exchange for similar derivative instruments, and we included these derivative instruments in Level 2 ofthe fair value hierarchy. See Note 16 for a discussion of our derivative instruments.Interest Rate Swaps. Because we estimate the fair value of our forward-starting interest rate swaps using discounted cash flows, which use observable inputssuch as time to maturity and market interest rates, we include these interest rate swaps in Level 2 of the fair value hierarchy.Guarantees. We previously provided guarantees for commodity purchases, lease obligations and certain utilities for Axeon. As of December 31, 2016, weprovided guarantees totaling $54.1 million, and one guarantee that did not specify a maximum amount. We estimated the fair value based on the guaranteesoutstanding and an estimate of the amount we would be obligated to pay under the guarantees at the time of default and considering the probability ofdefault by Axeon. Our estimate of the fair value was based on significant inputs not observable in the market and thus fell within Level 3 of the fair valuehierarchy. In conjunction with the termination of the Axeon Term Loan on February 22, 2017, our obligation to provide credit support to Axeon ceased. SeeNote 7 for additional information on the Axeon Term Loan.Fair Value of Financial InstrumentsWe recognize cash equivalents, receivables, payables and debt in our consolidated balance sheets at their carrying amounts. The fair values of these financialinstruments, except for long-term debt, approximate their carrying amounts. The estimated fair values and carrying amounts of the long-term debt, includingthe current portion, and the Axeon Term Loan were as follows: December 31, 2017 December 31, 2016 Long-term Debt Long-term Debt Axeon Term Loan (Thousands of Dollars)Fair value$3,677,622 $3,084,762 $110,000Carrying amount$3,613,059 $3,014,364 $110,000We estimated the fair value of our publicly traded senior notes based upon quoted prices in active markets; therefore, we determined that the fair value of ourpublicly traded senior notes falls in Level 1 of the fair value hierarchy. For our other debt, for which a quoted market price is not available, we estimated thefair value using a discounted cash flow analysis using current incremental borrowing rates for similar types of borrowing arrangements and determined thatthe fair value falls in Level 2 of the fair value hierarchy. We determined that the fair value of the Axeon Term Loan approximated its carrying value as ofDecember 31, 2016, which is included in “Other current assets” on the consolidated balance sheet. See Note 7 for additional information on the Axeon TermLoan.16. DERIVATIVES AND RISK MANAGEMENT ACTIVITIESWe utilize various derivative instruments to manage our exposure to interest rate risk and commodity price risk. Our risk management policies andprocedures are designed to monitor interest rates, futures and swap positions and over-the-counter positions, as well as physical volumes, grades, locationsand delivery schedules, to help ensure that our hedging activities address our market risks.Interest Rate RiskWe are a party to certain interest rate swap agreements to manage our exposure to changes in interest rates, which include forward-starting interest rate swapagreements related to forecasted debt issuances in 2018 and 2020. We entered into these swaps during the year ended December 31, 2015, in order to hedgethe risk of changes in the interest payments attributable to changes in the benchmark interest rate during the period from the effective date of the swap to theissuance of the forecasted debt. Under the terms of the swaps, we pay a fixed rate and receive a rate based on the three-month USD LIBOR. These swapsqualify as cash flow hedges, and we designate them as such. We record the effective portion of mark-to-market adjustments as a component of AOCI, and theamount in AOCI will be recognized in “Interest expense, net” as the forecasted interest payments occur or if the interest payments are probable not to occur.As of December 31, 2017 and 2016, the aggregate notional amount of forward-starting interest rate swaps totaled $600.0 million.94Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The remaining fair value amount associated with unwound fixed-to-floating interest rate swap agreements totaled a $15.6 million and a $21.1 million gain asof December 31, 2017 and 2016, respectively, and is included in “Long-term debt” on the consolidated balance sheets. The remaining fair value amountassociated with unwound forward-starting interest rate swap agreements totaled a $14.3 million and a $20.9 million loss as of December 31, 2017 and 2016,respectively, and is included in AOCI on the consolidated balance sheets. These amounts are amortized ratably over the remaining life of the related debtinstrument into “Interest expense, net” on the consolidated statements of income.Commodity Price RiskWe are exposed to market risks related to the volatility of petroleum product prices. In order to reduce the risk of commodity price fluctuations with respect toour petroleum product inventories and related firm commitments to purchase and/or sell such inventories, we utilize commodity futures and swap contracts,which qualify and we designate as fair value hedges. Derivatives that are intended to hedge our commodity price risk, but fail to qualify as fair value or cashflow hedges, are considered economic hedges, and we record associated gains and losses in net income. Our risk management committee oversees our tradingcontrols and procedures and certain aspects of commodity and trading risk management. Our risk management committee also reviews all new commodityand trading risk management strategies in accordance with our risk management policy, as approved by our board of directors. We ceased marketing crude oilin the second quarter of 2017 and exited our heavy fuels trading operations in the third quarter of 2017, thereby reducing our overall hedging activity.The volume of commodity contracts is based on open derivative positions and represents the combined volume of our long and short open positions on anabsolute basis, which totaled 1.2 million barrels and 4.7 million barrels as of December 31, 2017 and 2016, respectively. We had $0.3 million and $1.8million of margin deposits as of December 31, 2017 and December 31, 2016, respectively.The fair values of our derivative instruments included in our consolidated balance sheets were as follows: Asset Derivatives Liability Derivatives Balance Sheet Location December 31, 2017 2016 2017 2016 (Thousands of Dollars)Derivatives Designated asHedging Instruments: Interest rate swapsOther long-term assets, net $— $1,314 $— $—Commodity contractsAccrued liabilities — 144 (112) (3,566)Interest rate swapsAccrued liabilities — — (5,394) —Interest rate swapsOther long-term liabilities — — (4,594) (2,632)Total — 1,458 (10,100) (6,198) Derivatives Not Designatedas Hedging Instruments: Commodity contractsOther current assets — 265 — (110)Commodity contractsAccrued liabilities 742 9,128 (1,508) (10,758)Total 742 9,393 (1,508) (10,868) Total Derivatives $742 $10,851 $(11,608) $(17,066) Certain of our derivative instruments are eligible for offset in the consolidated balance sheets and subject to master netting arrangements. Under our masternetting arrangements, there is a legally enforceable right to offset amounts, and we intend to settle such amounts on a net basis. The following are the netamounts presented on the consolidated balance sheets: December 31,Commodity Contracts 2017 2016 (Thousands of Dollars)Net amounts of assets presented in the consolidated balance sheets $— $155Net amounts of liabilities presented in the consolidated balance sheets $(878) $(5,052)95Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)We recognize the impact of our commodity contracts on earnings in “Cost of product sales” on the consolidated income statements, and that impact was asfollows: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)Derivatives Designated as Fair Value Hedging Instruments: Gain (loss) recognized in income on derivative $806 $(11,254) $21,589(Loss) gain recognized in income on hedged item (656) 15,295 (18,047)Gain recognized in income for ineffective portion $150 $4,041 $3,542 Derivatives Not Designated as Hedging Instruments: (Loss) gain recognized in income on derivative $(668) $225 $2,208Our interest rate swaps had the following impact on earnings: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)Derivatives Designated as Cash Flow Hedging Instruments: (Loss) gain recognized in other comprehensive (loss) income on derivative (effective portion) $(8,670) $(2,621) $1,303Loss reclassified from AOCI into interest expense, net (effective portion) (6,624) (8,331) (9,802)As of December 31, 2017, we expect to reclassify a loss of $5.1 million to “Interest expense, net” within the next twelve months associated with unwoundforward-starting interest rate swaps.17. RELATED PARTY TRANSACTIONSPlease refer to Note 28 for a discussion of the merger of a subsidiary of ours with and into NuStar GP Holdings, pursuant to which we will become the solemember of NuStar GP Holdings.GP Services Agreement. Prior to the Employee Transfer discussed in Note 1, our operations were managed by NuStar GP, LLC under a services agreementeffective January 1, 2008 pursuant to which employees of NuStar GP, LLC performed services for our U.S. operations. Employees of NuStar GP, LLCprovided services to us and NuStar GP Holdings; therefore, we reimbursed NuStar GP, LLC for all employee costs incurred prior to the Employee Transfer,other than the expenses allocated to NuStar GP Holdings. The following table summarizes information pertaining to our related party transactions prior to theEmployee Transfer: Year Ended December 31, 2016 2015 (Thousands of Dollars)Operating expenses$21,681 $135,565General and administrative expenses$10,493 $66,769Expenses included in discontinued operations, net of tax$— $2In conjunction with the Employee Transfer, we entered into an Amended and Restated Services Agreement with NuStar GP, LLC, effective March 1, 2016(the Amended GP Services Agreement). The Amended GP Services Agreement provides that we will furnish administrative services necessary to conduct thebusiness of NuStar GP Holdings. NuStar GP Holdings will compensate us for these services through an annual fee of $1.0 million, subject to adjustment basedon the annual merit increase percentage applicable to our employees for the most recently completed fiscal year and for changes in level of service. TheAmended GP Services Agreement will terminate on March 1, 2020 and will automatically renew for successive two-year terms, unless terminated by eitherparty.96Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Assignment and Assumption Agreement. Also on March 1, 2016 and in connection with the Employee Transfer, we entered into an Assignment andAssumption Agreement with NuStar GP, LLC (the Assignment Agreement). Under the Assignment Agreement, NuStar GP, LLC assigned all of its employeebenefit plans, programs, contracts, policies, and various of its other agreements and contracts with certain employees, affiliates and third-party serviceproviders (collectively, the Assigned Programs) to NuStar Services Co. In addition, NuStar Services Co agreed to assume the sponsorship of and allobligations relating to the ongoing maintenance and administration of each of the plans and agreements in the Assigned Programs. Certain of our officers arealso officers of NuStar GP Holdings and are considered dual employees of ours and NuStar GP Holdings.The following table summarizes the related party transactions and changes to amounts reported on our consolidated balance sheet as a result of the EmployeeTransfer on March 1, 2016 (thousands of dollars):Decrease in related party payable: Current$16,014Long-term32,656Decrease in related party payable$48,670 Changes to our consolidated balance sheet: Current and long-term assets$2,154Current liabilities5,609Other long-term liabilities34,042Limited partners’ equity2,664Accumulated other comprehensive loss4,201Changes to our consolidated balance sheet$48,670Non-Compete Agreement. On July 19, 2006, we entered into a non-compete agreement with NuStar GP Holdings, Riverwalk Logistics, L.P. and NuStar GP,LLC (the Non-Compete Agreement). The Non-Compete Agreement became effective on December 22, 2006 when NuStar GP Holdings ceased to be subject tothe Amended and Restated Omnibus Agreement, dated March 31, 2006. Under the Non-Compete Agreement, we will have a right of first refusal with respectto the potential acquisition of assets that relate to the transportation, storage or terminalling of crude oil, feedstocks or refined petroleum products (includingpetrochemicals) in the United States and internationally. NuStar GP Holdings will have a right of first refusal with respect to the potential acquisition ofgeneral partner and other equity interests in publicly traded partnerships under common ownership with the general partner interest. With respect to any otherbusiness opportunities, neither the Partnership nor NuStar GP Holdings are prohibited from engaging in any business, even if the Partnership and NuStar GPHoldings would have a conflict of interest with respect to such other business opportunity.18. OTHER (EXPENSE) INCOMEOther (expense) income consisted of the following: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)(Loss) gain from sale or disposition of assets$(4,984) $(64) $1,617Impairment loss on Axeon Term Loan— (58,655) —Gain associated with Linden Acquisition— — 56,277Foreign exchange (losses) gains(344) (660) 3,891Other, net34 596 37Other (expense) income, net$(5,294) $(58,783) $61,82297Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)19. PARTNERS’ EQUITYPlease refer to Note 28 for a discussion of the merger of a subsidiary of ours with and into NuStar GP Holdings, pursuant to which we will become the solemember of NuStar GP Holdings.Amendment of Partnership AgreementIn the second quarter of 2017, our general partner amended and restated our partnership agreement in connection with the issuance of the Series B PreferredUnits as described below and the Navigator Acquisition to waive up to an aggregate $22.0 million of the quarterly incentive distributions to our generalpartner for any NS common units issued from the date of the Acquisition Agreement (other than those attributable to NS common units issued under anyequity compensation plan) for ten consecutive quarters, starting with the distributions for the second quarter of 2017. The partnership agreement wasamended and restated again in connection with the issuance of our Series C Preferred Units described below.Issuance of Common UnitsOn April 18, 2017, we issued 14,375,000 common units representing limited partner interests at a price of $46.35 per unit. We used the net proceeds from thisoffering of $657.5 million, including a contribution of $13.6 million from our general partner to maintain its 2% general partner interest, to fund a portion ofthe purchase price for the Navigator Acquisition.During the year ended December 31, 2016, we issued 595,050 common units representing limited partner interests at an average price of $47.39 per unit forproceeds of $28.3 million, net of $0.5 million of issuance costs. We used these proceeds, which include a contribution of $0.6 million from our generalpartner to maintain its 2% general partner interest, for general partnership purposes, including repayments of outstanding borrowings under the RevolvingCredit Agreement.For the years ended December 31, 2017 and 2016, we issued 185,455 and 135,100 common units, respectively, representing limited partner interests inconnection with the vestings of awards issued under our long-term incentive plan.Preferred UnitsThe following is a summary of our fixed-to-floating rate cumulative redeemable perpetual preferred units issued and outstanding as of December 31, 2017:Units OriginalIssuance Date Number of UnitsIssued andOutstanding Price perUnit Net Proceeds(in millions) Fixed DistributionRate per Annum (as aPercentage of the$25.00 LiquidationPreference per Unit) FixedDistributionRate per Unitper Annum Optional RedemptionDate/Date at WhichDistribution RateBecomes Floating Floating AnnualRate (as aPercentage ofthe $25.00LiquidationPreference perUnit)Series APreferredUnits November 25, 2016 9,060,000 $25.00 $218.4 8.50% $2.125 December 15, 2021 Three-monthLIBOR plus6.766%Series BPreferredUnits April 28, 2017 15,400,000 $25.00 $371.8 7.625% $1.90625 June 15, 2022 Three-monthLIBOR plus5.643%Series CPreferredUnits November 30, 2017 6,900,000 $25.00 $166.7 9.00% $2.25 December 15, 2022 Three-monthLIBOR plus6.88%Distributions on the Series A, Series B and Series C Preferred Units (collectively, the Preferred Units) are payable out of any legally available funds, accrueand are cumulative from the original issuance dates, and are payable on the 15th day (or the next business day) of each of March, June, September andDecember of each year to holders of record on the first business day of each payment month. The Preferred Units rank equal to each other and senior to all ofour other classes of equity securities with respect to distribution rights and rights upon liquidation.We may redeem any of our outstanding Preferred Units at any time on or after the optional redemption date set forth above for each series of Preferred Units,in whole or in part, at a redemption price of $25.00 per unit plus an amount equal to all accumulated and unpaid distributions to, but not including, the dateof redemption, whether or not declared. We may also redeem the Preferred Units upon the occurrence of certain rating events or a change of control as definedin our partnership agreement. In the case of the latter instance, if we choose not to redeem the Preferred Units, the preferred unitholders may have the abilityto convert their Preferred Units to common units at the then applicable conversion rate. Holders of the Preferred Units have no voting rights except for certainexceptions set forth in our partnership agreement.98Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The following table summarizes financial information related to our preferred units: Preferred Limited Partners Series A Series B Series C TotalBalance as of January 1, 2016$— $— $— $—Issuance of units218,400 — — 218,400Net income1,925 — — 1,925Distributions to partners(1,925) — — (1,925)Balance as of December 31, 2016218,400 — — 218,400Issuance of units— 371,823 166,737 538,560Net income19,253 19,815 1,380 40,448Distributions to partners(19,253) (19,815) (1,380) (40,448)Other(93) (189) (75) (357)Balance as of December 31, 2017$218,307 $371,634 $166,662 $756,603Net Income Applicable to the General PartnerThe following table details the calculation of net income applicable to the general partner: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)Net income attributable to NuStar Energy L.P.$147,964 $150,003 $306,720Less preferred limited partner interest40,448 1,925 —Less general partner incentive distribution45,669 43,407 43,220Net income after general partner incentive distribution and preferredlimited partner interest61,847 104,671 263,500General partner interest allocation2% 2% 2%General partner interest allocation of net income1,237 2,091 5,270General partner incentive distribution45,669 43,407 43,220Net income applicable to general partner$46,906 $45,498 $48,490 Cash DistributionsGeneral Partner and Common Limited Partners. We make quarterly distributions to common unitholders and the general partner of 100% of our availablecash, generally defined as cash receipts less cash disbursements (including distributions to the Preferred Units) and cash reserves established by the generalpartner, in its sole discretion. These quarterly distributions are declared and paid within 45 days subsequent to each quarter-end. The common unitholdersreceive a distribution each quarter as determined by the board of directors, subject to limitation by the distributions in arrears, if any, to the Preferred Units.Our available cash is distributed based on the percentages shown below: Percentage of DistributionQuarterly Distribution Amount per Common Unit Common Unitholders General PartnerIncluding Incentive DistributionsUp to $0.60 98% 2%Above $0.60 up to $0.66 90% 10%Above $0.66 75% 25%99Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The following table reflects the allocation of total cash distributions to the general partner and common limited partners applicable to the period in which thedistributions were earned: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars, Except Per Unit Data)General partner interest$9,252 $7,877 $7,844General partner incentive distribution45,669 43,407 43,220Total general partner distribution54,921 51,284 51,064Common limited partners’ distribution407,681 342,598 341,140Total cash distributions$462,602 $393,882 $392,204 Cash distributions per unit applicable to common limited partners$4.38 $4.38 $4.38The following table summarizes information related to our quarterly cash distributions to our general partner and common limited partners:Quarter Ended Cash DistributionsPer Unit Total Cash Distributions Record Date Payment Date (Thousands of Dollars) December 31, 2017 (a) $1.095 $115,267 February 8, 2018 February 13, 2018September 30, 2017 $1.095 $115,084 November 9, 2017 November 14, 2017June 30, 2017 $1.095 $115,083 August 7, 2017 August 11, 2017March 31, 2017 $1.095 $117,168 May 8, 2017 May 12, 2017(a)The distribution was announced on January 29, 2018.Preferred Units. The following table summarizes information related to our quarterly cash distributions on our Preferred Units:Period CashDistributionsPer Unit Total CashDistributions Record Date Payment Date (Thousands of Dollars) Series A Preferred Units: December 15, 2017 - March 14, 2018 (a) $0.53125 $4,813 March 1, 2018 March 15, 2018September 15, 2017 - December 14, 2017 $0.53125 $4,813 December 1, 2017 December 15, 2017June 15, 2017 - September 14, 2017 $0.53125 $4,813 September 1, 2017 September 15, 2017March 15, 2017 - June 14, 2017 $0.53125 $4,813 June 1, 2017 June 15, 2017November 25, 2016 - March 14, 2017 $0.64930556 $5,883 March 1, 2017 March 15, 2017 Series B Preferred Units: December 15, 2017 - March 14, 2018 (a) $0.47657 $7,339 March 1, 2018 March 15, 2018September 15, 2017 - December 14, 2017 $0.47657 $7,339 December 1, 2017 December 15, 2017April 28, 2017 - September 14, 2017 $0.725434028 $11,172 September 1, 2017 September 15, 2017 Series C Preferred Units: November 30, 2017 - March 14, 2018 (a) $0.65625 $4,528 March 1, 2018 March 15, 2018(a)The distribution was announced on January 29, 2018.100Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Accumulated Other Comprehensive Income (Loss)The balance of and changes in the components included in “Accumulated other comprehensive income (loss)” were as follows: ForeignCurrencyTranslation Cash Flow Hedges Pension andOtherPostretirementBenefits Total (Thousands of Dollars)Balance as of January 1, 2015$(28,839) $(39,073) $— $(67,912)Other comprehensive (loss) income before reclassification adjustments(31,987) 1,303 — (30,684)Net loss on cash flow hedges reclassified into interest expense, net— 9,802 — 9,802Other comprehensive (loss) income(31,987) 11,105 — (20,882)Balance as of December 31, 2015(60,826) (27,968) — (88,794)Employee Transfer— — 4,201 4,201Deferred income tax adjustments— — 2,414 2,414Other comprehensive loss before reclassification adjustments(8,243) (2,621) (7,852) (18,716)Net gain on pension costs reclassified into operating expense— — (1,200) (1,200)Net gain on pension costs reclassified into general and administrative expense— — (413) (413)Net loss on cash flow hedges reclassified into interest expense, net— 8,331 — 8,331Other comprehensive (loss) income(8,243) 5,710 (2,850) (5,383)Balance as of December 31, 2016(69,069) (22,258) (2,850) (94,177)Other comprehensive income (loss) before reclassification adjustments17,466 (8,670) (4,641) 4,155Net gain on pension costs reclassified into operatingexpense— — (1,143) (1,143)Net gain on pension costs reclassified into general andadministrative expense— — (386) (386)Net loss on cash flow hedges reclassified into interest expense, net— 6,624 — 6,624Other comprehensive income (loss)17,466 (2,046) (6,170) 9,250Balance as of December 31, 2017$(51,603) $(24,304) $(9,020) $(84,927)101Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)20. NET INCOME PER COMMON UNITThe following table details the calculation of net income per common unit: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars, Except Per Unit Data)Net income attributable to NuStar Energy L.P.$147,964 $150,003 $306,720Less: Distributions to general partner (including incentive distribution rights)54,921 51,284 51,064Less: Distributions to common limited partners407,681 342,598 341,140Less: Distributions to preferred limited partners40,448 1,925 —Less: Distribution equivalent rights to restricted units2,965 2,697 —Distributions in excess of earnings$(358,051) $(248,501) $(85,484) Net income attributable to common units: Distributions to common limited partners$407,681 $342,598 $341,140Allocation of distributions in excess of earnings(350,890) (243,530) (83,774)Total$56,791 $99,068 $257,366 Basic weighted-average common units outstanding88,825,964 78,080,484 77,886,078 Diluted common units outstanding: Basic weighted-average common units outstanding88,825,964 78,080,484 77,886,078Effect of dilutive potential common units— 32,518 —Diluted weighted-average common units outstanding88,825,964 78,113,002 77,886,078 Basic and diluted net income per common unit$0.64 $1.27 $3.30102Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)21. STATEMENTS OF CASH FLOWSChanges in current assets and current liabilities were as follows: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)Decrease (increase) in current assets: Accounts receivable$(865) $(23,234) $67,257Receivable from related parties112 (317) —Inventories11,936 940 16,776Other current assets3,393 8,128 4,414Increase (decrease) in current liabilities: Accounts payable(30,409) 14,071 (32,152)Payable to related party, net— 894 (872)Accrued interest payable6,489 (256) 941Accrued liabilities(11,157) 161 (7,834)Taxes other than income tax(3,529) 2,690 (1,522)Income tax payable(2,463) 639 3,551Changes in current assets and current liabilities$(26,493) $3,716 $50,559The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable consolidated balance sheets dueto:•current assets and current liabilities acquired and disposed of during the period;•the change in the amount accrued for capital expenditures;•the effect of foreign currency translation;•reclassification of the Axeon Term Loan to other current assets from other long-term assets, net;•changes in the fair values of our interest rate swap agreements;•reclassification of our 7.65% senior notes due April 15, 2018 from long-term debt to current portion of long-term debt; and•non-cash related party transactions associated with the Employee Transfer (see Note 17 for further information).Cash flows related to interest and income taxes were as follows: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)Cash paid for interest, net of amount capitalized$158,089 $142,663 $133,388Cash paid for income taxes, net of tax refunds received$11,338 $11,847 $9,971103Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)22. EMPLOYEE BENEFIT PLANSEmployee TransferOn March 1, 2016, and in conjunction with the Employee Transfer, we assumed $22.5 million and $10.2 million in benefit obligations associated with thepension plans and other postretirement benefit plans, respectively. Prior to the Employee Transfer, we reimbursed all costs incurred by NuStar GP, LLCrelated to these employee benefit plans at cost. For comparability purposes this footnote presents information related to these benefit plans on a combinedbasis for periods prior to the Employee Transfer and after the Employee Transfer, including changes in the benefit obligation and fair value of plan assets,components of net periodic benefit cost (income), and adjustments to other comprehensive income (loss). Consequently, certain amounts presented belowwill differ from amounts reflected in our consolidated financial statements. See Note 17 for additional discussion on the Employee Transfer.Thrift PlansThe NuStar Thrift Plan (the Thrift Plan) is a qualified defined contribution plan that became effective June 26, 2006. Participation in the Thrift Plan isvoluntary and open to substantially all our domestic employees upon their dates of hire. Thrift Plan participants can contribute from 1% up to 30% of theirtotal annual compensation to the Thrift Plan in the form of pre-tax and/or after tax employee contributions. We make matching contributions in an amountequal to 100% of each participant’s employee contributions up to a maximum of 6% of the participant’s total annual compensation. The matchingcontributions to the Thrift Plan for the years ended December 31, 2017, 2016 and 2015 totaled $6.9 million, $6.6 million and $6.3 million, respectively.The NuStar Excess Thrift Plan (the Excess Thrift Plan) is a nonqualified deferred compensation plan that became effective July 1, 2006. The Excess ThriftPlan provides benefits to those employees whose compensation and/or annual contributions under the Thrift Plan are subject to the limitations applicable toqualified retirement plans under the Code.We also maintain several other defined contribution plans for certain international employees located in Canada, the Netherlands and the UnitedKingdom. For the years ended December 31, 2017, 2016 and 2015, our costs for these plans totaled $2.5 million, $2.4 million and $2.6 million, respectively.Pension and Other Postretirement BenefitsThe NuStar Pension Plan (the Pension Plan) is a qualified non-contributory defined benefit pension plan that provides eligible U.S. employees withretirement income as calculated under a cash balance formula. Under the cash balance formula, benefits are determined based on age, service and interestcredits, and employees become fully vested in their benefits upon attaining three years of vesting service. Prior to January 1, 2014, eligible employees werecovered under either a cash balance formula or a final average pay formula (FAP). Effective January 1, 2014, the Pension Plan was amended to freeze the FAPbenefits as of December 31, 2013, and going forward, all eligible employees are covered under the cash balance formula discussed above.We also maintain an excess pension plan (the Excess Pension Plan), which is a nonqualified deferred compensation plan that provides benefits to a selectgroup of management or other highly compensated employees. Neither the Excess Thrift Plan nor the Excess Pension Plan is intended to constitute either aqualified plan under the provisions of Section 401 of the Code or a funded plan subject to the Employee Retirement Income Security Act.The Pension Plan and Excess Pension Plan are collectively referred to as the Pension Plans in the tables and discussion below. Our other postretirementbenefit plans include a contributory medical benefits plan for U.S. employees that retired prior to April 1, 2014 and for employees that retire on or after April1, 2014, a partial reimbursement for eligible third-party health care premiums. We use December 31 as the measurement date for our pension and otherpostretirement plans.104Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The changes in the benefit obligation, the changes in fair value of plan assets, the funded status and the amounts recognized in the consolidated balancesheets for our Pension Plans and other postretirement benefit plans as of and for the years ended December 31, 2017 and 2016 were as follows: Pension Plans Other PostretirementBenefit Plans 2017 2016 2017 2016 (Thousands of Dollars)Change in benefit obligation: Benefit obligation, January 1$127,402 $109,202 $11,061 $10,042Service cost8,955 7,703 456 419Interest cost4,507 4,023 430 401Benefits paid(5,941) (2,554) (342) (422)Participant contributions— — 215 253Actuarial loss14,894 9,028 590 368Benefit obligation, December 31$149,817 $127,402 $12,410 $11,061Change in plan assets: Plan assets at fair value, January 1$107,644 $87,706 $— $—Actual return on plan assets17,070 6,891 — —Employer contributions11,105 15,601 127 169Benefits paid(5,941) (2,554) (342) (422)Participant contributions— — 215 253Plan assets at fair value, December 31$129,878 $107,644 $— $—Reconciliation of funded status: Fair value of plan assets at December 31$129,878 $107,644 $— $—Less: Benefit obligation at December 31149,817 127,402 12,410 11,061Funded status at December 31$(19,939) $(19,758) $(12,410) $(11,061)Amounts recognized in the consolidated balance sheets (a): Accrued liabilities$(210) $(162) $(376) $(321)Other long-term liabilities(19,729) (19,596) (12,034) (10,740)Net pension liability$(19,939) $(19,758) $(12,410) $(11,061)(a)For the Pension Plan, since assets exceed the present value of expected benefit payments for the next 12 months, all of the liability is noncurrent. For the Excess PensionPlan and the other postretirement benefit plans, since there are no assets, the current liability is the present value of expected benefit payments for the next 12 months; theremainder is noncurrent.The accumulated benefit obligation is the present value of benefits earned to date, assuming no future salary increases. The aggregate accumulated benefitobligation for our Pension Plans as of December 31, 2017 and 2016 was $146.3 million and $125.0 million, respectively. As of December 31, 2017 and 2016,the aggregate accumulated benefit obligation for the Pension Plans exceeded plan assets.105Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The components of net periodic benefit cost (income) related to our Pension Plans and other postretirement benefit plans were as follows: Pension Plans Other PostretirementBenefit Plans Year Ended December 31, Year Ended December 31, 2017 2016 2015 2017 2016 2015 (Thousands of Dollars)Service cost$8,955 $7,703 $7,676 $456 $419 $470Interest cost4,507 4,023 4,389 430 401 448Expected return on plan assets(6,411) (5,407) (5,018) — — —Amortization of prior service credit(2,059) (2,063) (2,063) (1,145) (1,145) (1,145)Amortization of net actuarial loss1,484 1,091 1,845 191 181 269Net periodic benefit cost (income)$6,476 $5,347 $6,829 $(68) $(144) $42We amortize prior service costs and credits on a straight-line basis over the average remaining service period of employees expected to receive benefits underour Pension Plans and other postretirement benefit plans (“Amortization of prior service credit” in table above). We amortize the actuarial gains and lossesthat exceed 10 percent of the greater of the projected benefit obligation or market-related value of plan assets (smoothed asset value) over the averageremaining service period of active employees expected to receive benefits under our Pension Plans and other postretirement benefit plans (“Amortization ofnet actuarial loss” in table above).Adjustments to other comprehensive (loss) income related to our Pension Plans and other postretirement benefit plans were as follows: Pension Plans Other PostretirementBenefit Plans Year Ended December 31, Year Ended December 31, 2017 2016 2015 2017 2016 2015 (Thousands of Dollars)Net unrecognized (loss) gain arising duringthe year: Net actuarial (loss) gain$(4,235) $(7,544) $1,000 $(590) $(368) $1,056Net (gain) loss reclassified into income: Amortization of prior service credit(2,059) (2,063) (2,063) (1,145) (1,145) (1,145)Amortization of net actuarial loss1,484 1,091 1,845 191 181 269Net gain reclassified into income(575) (972) (218) (954) (964) (876) Income tax benefit (expense)162 57 (362) 22 3 (382)Total changes to othercomprehensive (loss) income$(4,648) $(8,459) $420 $(1,522) $(1,329) $(202)106Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The amounts recorded as a component of “Accumulated other comprehensive loss” on the consolidated balance sheets related to our Pension Plans and otherpostretirement benefit plans were as follows: Pension Plans Other PostretirementBenefit Plans December 31, December 31, 2017 2016 2017 2016 (Thousands of Dollars)Unrecognized actuarial loss$(31,178) $(28,427) $(4,154) $(3,755)Prior service credit16,604 18,663 9,464 10,609Deferred tax asset219 57 25 3Accumulated other comprehensive (loss) income,net of tax$(14,355) $(9,707) $5,335 $6,857The following pre-tax amounts in accumulated other comprehensive loss as of December 31, 2017 are expected to be recognized as components of netperiodic benefit cost (income) in 2018: Pension Plans OtherPostretirementBenefit Plans (Thousands of Dollars)Actuarial loss$2,174 $214Prior service credit$(2,057) $(1,145)Investment Policies and StrategiesThe investment policies and strategies for the assets of our qualified Pension Plan incorporate a well-diversified approach that is expected to earn long-termreturns from capital appreciation and a growing stream of current income. This approach recognizes that assets are exposed to risk, and the market value ofthe Pension Plan’s assets may fluctuate from year to year. Risk tolerance is determined based on our financial ability to withstand risk within the investmentprogram and the willingness to accept return volatility. In line with the investment return objective and risk parameters, the Pension Plan’s mix of assetsincludes a diversified portfolio of equity and fixed-income instruments. The aggregate asset allocation is reviewed on an annual basis. As of December 31,2017, the target allocations for plan assets are 65% equity securities and 35% fixed income investments, with certain fluctuations permitted.The overall expected long-term rate of return on plan assets for the Pension Plan is estimated using various models of asset returns. Model assumptions arederived using historical data with the assumption that capital markets are informationally efficient. Three models are used to derive the long-term expectedreturns for each asset class. Since each method has distinct advantages and disadvantages and differing results, an equal weighted average of the methods’results is used.Fair Value of Plan AssetsWe disclose the fair value for each major class of plan assets in the Pension Plan into three levels: Level 1, defined as observable inputs such as quoted pricesfor identical assets or liabilities in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectlyobservable, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are notactive; and Level 3, defined as unobservable inputs for which little or no market data exists.107Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The major classes of plan assets measured at fair value for the Pension Plan were as follows: December 31, 2017 Level 1 Level 2 Level 3 Total (Thousands of Dollars)Cash equivalent securities$381 $— $— $381Equity securities: U.S. large cap equity fund (a)— 75,353 — 75,353International stock index fund (b)14,480 — — 14,480Fixed income securities: Bond market index fund (c)39,664 — — 39,664Total$54,525 $75,353 $— $129,878 December 31, 2016 Level 1 Level 2 Level 3 Total (Thousands of Dollars)Cash equivalent securities$738 $— $— $738Equity securities: U.S. large cap equity fund (a)— 64,813 — 64,813International stock index fund (b)10,459 — — 10,459Fixed income securities: Bond market index fund (c)31,634 — — 31,634Total$42,831 $64,813 $— $107,644(a)This fund is a low-cost equity index fund not actively managed that tracks the S&P 500. Fair values were estimated using pricing models, quoted prices of securities withsimilar characteristics or discounted cash flows.(b)This fund tracks the performance of the Total International Composite Index.(c)This fund tracks the performance of the Barclays Capital U.S. Aggregate Bond Index.Contributions to the Pension PlansFor the year ended December 31, 2017, we contributed $11.1 million and $0.1 million to the Pension Plans and other postretirement benefit plans,respectively. During 2018, we expect to contribute approximately $11.2 million and $0.4 million to the Pension Plans and other postretirement benefit plans,respectively, which principally represents contributions either required by regulations or laws, or with respect to unfunded plans, necessary to fund currentbenefits.Estimated Future Benefit PaymentsThe following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the years ending December 31: Pension Plans OtherPostretirementBenefit Plans (Thousands of Dollars)2018$8,823 $3762019$9,699 $4162020$10,432 $4342021$11,050 $4642022$11,650 $497Years 2023-2027$64,799 $3,090108Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)AssumptionsThe weighted-average assumptions used to determine the benefit obligations were as follows: Pension Plans OtherPostretirementBenefit Plans December 31, December 31, 2017 2016 2017 2016Discount rate3.72% 4.33% 3.82% 4.49%Rate of compensation increase3.51% 3.51% n/a n/a The weighted-average assumptions used to determine the net periodic benefit cost (income) were as follows: Pension Plans Other PostretirementBenefit Plans Year Ended December 31, Year Ended December 31, 2017 2016 2015 2017 2016 2015Discount rate4.33% 4.61% 4.22% 4.49% 4.75% 4.34%Expected long-term rate ofreturn on plan assets6.00% 6.25% 6.50% n/a n/a n/a Rate of compensation increase3.51% 3.51% 3.51% n/a n/a n/a The assumed health care cost trend rates were as follows: December 31, 2017 2016Health care cost trend rate assumed for next year6.84% 6.84%Rate to which the cost trend rate was assumed to decrease (the ultimate trend rate)5.00% 5.00%Year that the rate reaches the ultimate trend rate2028 2028Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. We sponsor a contributory postretirement healthcare plan for employees that retired prior to April 1, 2014. The plan has an annual limitation (a cap) on the increase of the employer’s share of the cost ofcovered benefits. The cap on the increase in employer’s cost is 2.5% per year. The assumed increase in total health care cost exceeds the 2.5% indexed cap, soincreasing or decreasing the health care cost trend rate by 1% does not materially change our obligation or expense for the postretirement health care plan.23. UNIT-BASED COMPENSATIONPlease refer to Note 28 for a discussion of the merger of a subsidiary of ours with and into NuStar GP Holdings, pursuant to which we will become the solemember of NuStar GP Holdings.OverviewOn January 28, 2016, our unitholders approved the Fifth Amended and Restated 2000 Long-Term Incentive Plan (the 2000 LTIP) which, among other items,provides that we may use newly issued common units from NuStar Energy to satisfy unit awards and extends the term of the 2000 LTIP to January 28,2026. Prior to the Employee Transfer, NuStar GP, LLC sponsored the 2000 LTIP, and we reimbursed NuStar GP, LLC for awards under this plan. Followingthe approval of the 2000 LTIP and the Employee Transfer in 2016, most of our currently outstanding awards are now classified as equity awards as we intendto settle these awards through the issuance of our common units.Effective March 1, 2016, we assumed sponsorship of the 2000 LTIP, which provides the Compensation Committee of the Board of Directors of NuStar GP,LLC (the Compensation Committee) with the right to issue and award up to 3,250,000 of our common units to employees and non-employee directors(NEDs). Awards available under the 2000 LTIP include restricted units, performance units, unit options, unit awards and distribution equivalent rights(DERs). The Compensation Committee may also include a tandem grant of a DER that will entitle the participant to receive cash equal to cash distributionsmade on109Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)any award prior to its vesting. As of December 31, 2017, common units that remained available to be awarded under the 2000 LTIP totaled 679,045.On March 1, 2016, we assumed all outstanding awards under the 2000 LTIP. The transfer of the outstanding awards qualifies as a plan modification.Therefore, we measured the fair value of the outstanding awards based on the common unit price on the transfer date.The following table summarizes information pertaining to our long-term incentive plan compensation expense: Units Outstanding December 31, Transferred Units Compensation Expense Year Ended December 31, 2017 2016 March 1, 2016 2017 2016 (Thousands of Dollars)Restricted Units: Domestic employees736,746 647,340 586,524 $7,881 $5,980Non-employee directors (NEDs)27,097 18,134 17,629 251 388International employees58,107 50,609 49,121 595 715Performance Units80,961 77,014 77,014 — 1,211Total902,911 793,097 730,288 $8,727 $8,294Prior to the Employee Transfer, we reimbursed NuStar GP, LLC for our long-term incentive plan compensation expense which totaled $6.4 million for theyear ended December 31, 2015.Restricted UnitsOur restricted unit awards are considered phantom units as they represent the right to receive our common units upon vesting.We account for restricted units as either equity-classified awards or liability-classified awards depending on expected method of settlement. Awards we settlewith the issuance of common units upon vesting are equity-classified. Awards we settle in cash upon vesting are liability-classified. We record compensationexpense ratably over the vesting period based on the fair value of the common units at the grant date (for domestic employees) or the fair value of thecommon units measured at each reporting period (for NEDs and international employees). DERs paid with respect to outstanding equity-classified unvestedrestricted units reduce equity, similar to cash distributions to unitholders, whereas DERs paid with respect to outstanding liability-classified unvestedrestricted units are expensed. In connection with the DERs, we paid or expect to pay $3.0 million and $2.7 million, respectively, in cash, for the years endedDecember 31, 2017 and 2016. A summary of our restricted unit activity is as follows: Domestic Employees Number ofRestrictedUnits Weighted-AverageGrant-DateFair ValuePer Unit Number ofRestrictedUnits toNEDs Number ofRestrictedUnits toInternationalEmployeesNonvested units as of January 1, 2016— $— — —Transferred586,524 35.03 17,629 49,121Granted246,070 47.70 8,730 20,107Vested(180,724) 35.50 (8,225) (14,812)Forfeited(4,530) 35.03 — (3,807)Nonvested units as of December 31, 2016647,340 39.72 18,134 50,609Granted307,009 29.56 17,110 24,533Vested(201,466) 38.74 (8,147) (16,440)Forfeited(16,137) 40.00 — (595)Nonvested units as of December 31, 2017736,746 $35.95 27,097 58,107The total fair value of our equity-classified awards vested for the years ended December 31, 2017 and 2016 was $6.5 million and $9.0 million, respectively.We issued 152,017 common units in connection with these award vestings, net of employee tax withholding requirements, for the year ended December 31,2017. Unrecognized compensation cost related to our equity-110Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)classified employee awards totaled $25.5 million as of December 31, 2017, which we expect to recognize over a weighted-average period of 3.7 years.Domestic Employees. The outstanding restricted units granted to domestic employees are equity-classified awards and generally vest over five years,beginning one year after the grant date. The fair value of these awards is measured at the transfer date (or grant date for issuances subsequent to the EmployeeTransfer).Non-Employee Directors. The outstanding restricted units granted to NEDs are equity-classified awards that vest over three years. The fair value of theseawards is equal to the market price of our common units at each reporting period.International Employees. The outstanding restricted units granted to international employees are cash-settled and accounted for as liability-classified awards.These awards vest over three to five years and the fair value is equal to the market price of our common units at each reporting period.Performance UnitsPerformance units are issued to certain of our key employees and represent rights to receive our common units upon achieving an objective performancemeasure for the performance period. The objective performance measure is determined each year by the NuStar GP, LLC Compensation Committee for thefollowing year. Achievement of the performance measure determines the rate at which the performance units convert into our common units, which can rangefrom zero to 200%.Performance units vest in three annual increments (tranches), based upon our achievement of the performance measure set by the Compensation Committeeduring the one-year performance periods that end on December 31 of each year following the date of grant. Therefore, the performance units are notconsidered granted for accounting purposes until the Compensation Committee has set the performance measure for each tranche of awards. Performanceunits are equity-classified awards measured at the grant date fair value. In addition, since the performance units granted do not receive DERs, the grant datefair value of these awards is reduced by the per unit distributions expected to be paid to common unitholders during the vesting period. We recordcompensation expense ratably for each vesting tranche over its requisite service period (one year) if it is probable that the specified performance measure willbe achieved. Additionally, changes in the actual or estimated outcomes that affect the quantity of performance units expected to be converted are recognizedas a cumulative adjustment.For the period from the Employee Transfer date to December 31, 2016, no performance units were granted or forfeited. For the year ended December 31, 2017,we issued 33,438 common units in connection with the performance award vestings related to 2016 performance, net of employee tax withholdingrequirements. For 2017, we did not achieve the performance measure.A summary of our performance units is shown below: Granted for Accounting Purposes Total PerformanceUnits Awarded Performance Units Weighted-Average Grant DateFair Value per UnitOutstanding as of January 1, 201777,014 35,373 $31.75Granted39,320 38,865 50.04Vested(35,373) (35,373) 31.75Outstanding as of December 31, 201780,961 38,865 $50.04Performance units vested during the year ended December 31, 2017 with respect to 2016 performance were as follows: Vested Units Actual Conversion Rate Gross Number of Units Issued2014 awards9,613 150% 14,4202015 awards9,878 150% 14,8182016 awards15,882 150% 23,825Total35,373 53,063111Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)24. INCOME TAXESOn December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (“the Act”). The Act, which is also commonly referred to as “U.S. tax reform,”significantly changes U.S. corporate income tax laws by, among other things, reducing the U.S. corporate tax rate from 35% to 21%, starting in 2018, andcreating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. As a result, we recorded anexpense of $0.8 million in the fourth quarter of 2017. This amount, which is included in “Income tax expense” on the consolidated statements of income,consists of two components: (i) $0.7 million relating to the one-time mandatory tax on previously deferred earnings of certain non-U.S. subsidiaries that arewholly owned by one of our U.S. subsidiaries and (ii) $0.1 million resulting from the revaluation of our net deferred tax assets in the U.S. based on the newlower corporate income tax rate.Although the $0.8 million expense represents what we believe to be a reasonable estimate of the impact of the income tax effects of the Act on ourconsolidated financial statements as of December 31, 2017, it should be considered provisional. We are continuing to gather additional information to moreprecisely compute our deferred tax assets balance in the U.S., as well as the income tax expense associated with the one-time mandatory tax. Any adjustmentsto these provisional amounts will be reported as a component of “Income tax expense” on the consolidated statements of income in the reporting period inwhich any such adjustments are determined, which will be no later than the fourth quarter of 2018, and are not expected to be significant.Due to the complexity of the new Global Intangible Low-Tax Income (GILTI) tax rules, we are continuing to evaluate this provision of the Act and theapplication of FASB’s Accounting Standards Codification 740 (ASC 740). Under U.S. GAAP, we are allowed to make an accounting policy choice of either(i) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (ii)factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). Our selection of an accounting policy with respect to thenew GILTI tax rules will depend, in part, on analyzing our global income to determine whether we expect to have future U.S. inclusions in taxable incomerelated to GILTI and, if so, what the impact is expected to be. Because whether we expect to have future U.S. inclusions in taxable income related to GILTIdepends on not only our current structure and estimated future results of global operations, but also our intent and ability to modify our structure and/or ourbusiness, we are not yet able to reasonably estimate the effect of this provision of the Tax Act. Therefore, we have not made any adjustments related topotential GILTI tax in our consolidated financial statements as of December 31,2017, and have not made a policy decision regarding whether to recorddeferred taxes on GILTI.Due to the complexity of the new Base Erosion Anti-Abuse Tax (BEAT) rules, we are continuing to evaluate this provision of the Act and the application ofASC 740. Under U.S. GAAP, because the BEAT provisions are designed to be an “incremental tax,” BEAT is treated as a current-period expense whenincurred (the period cost method). Therefore, we have not made any adjustments related to the potential BEAT in our consolidated financial statements.Components of income tax expense related to certain of our continuing operations conducted through separate taxable wholly owned corporate subsidiarieswere as follows: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)Current: U.S.$3,117 $2,280 $908Foreign6,335 6,329 9,820Foreign withholding tax479 3,833 1,926Total current9,931 12,442 12,654 Deferred: U.S.1,468 2,680 1,022Foreign(1,065) (1,122) (1,464)Foreign withholding tax(397) (2,027) 2,500Total deferred6 (469) 2,058 Total income tax expense$9,937 $11,973 $14,712112Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)The difference between income tax expense recorded in our consolidated statements of income and income taxes computed by applying the statutory federalincome tax rate (35% for all years presented) to income before income tax expense is due to the fact that the majority of our income is not subject to federalincome tax due to our status as a limited partnership. We record a tax provision related to the amount of undistributed earnings of our foreign subsidiariesexpected to be repatriated.The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows: December 31, 2017 2016 (Thousands of Dollars)Deferred income tax assets: Net operating losses$20,688 $31,539Employee benefits483 697Environmental and legal reserves185 148Allowance for bad debt1,982 2,697Other2,050 1,697Total deferred income tax assets25,388 36,778Less: Valuation allowance(11,251) (12,759)Net deferred income tax assets14,137 24,019 Deferred income tax liabilities: Property, plant and equipment(36,176) (43,788)Foreign withholding tax— (384)Total deferred income tax liabilities(36,176) (44,172) Net deferred income tax liability$(22,039) $(20,153) Reported on the consolidated balance sheets as: Deferred income tax asset$233 $2,051Deferred income tax liability(22,272) (22,204)Net deferred income tax liability$(22,039) $(20,153) As of December 31, 2017, our U.S. and foreign corporate operations have net operating loss carryforwards for tax purposes totaling $79.9 million and $13.1million, respectively, which are subject to various limitations on use and expire in years 2025 through 2036 for U.S. losses and in years 2018 through 2026for foreign losses.As of December 31, 2017 and 2016, we recorded a valuation allowance of $11.3 million and $12.8 million, respectively, related to our deferred tax assets. Weestimate the amount of valuation allowance based upon our expectations of taxable income in the various jurisdictions in which we operate and the periodover which we can utilize those future deductions. The valuation allowance reflects uncertainties related to our ability to utilize certain net operating losscarryforwards before they expire. In 2017, there was a $1.9 million decrease in the valuation allowance for the U.S. net operating loss and a $0.4 millionincrease in the foreign net operating loss valuation allowance due to changes in our estimates of the amount of those loss carryforwards that will be realized,based upon future taxable income.The realization of net deferred income tax assets recorded as of December 31, 2017 is dependent upon our ability to generate future taxable income in theUnited States. We believe it is more likely than not that the net deferred income tax assets as of December 31, 2017 will be realized, based on expected futuretaxable income.113Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)25. SEGMENT INFORMATIONOur reportable business segments consist of pipeline, storage and fuels marketing. Our segments represent strategic business units that offer different servicesand products. We evaluate the performance of each segment based on its respective operating income, before general and administrative expenses and certainnon-segmental depreciation and amortization expense. General and administrative expenses are not allocated to the operating segments since those expensesrelate primarily to the overall management at the entity level. Our principal operations include the transportation of petroleum products and anhydrousammonia, the terminalling and storage of petroleum products and the marketing of petroleum products. Intersegment revenues result from storage agreementswith wholly owned subsidiaries of NuStar Energy at rates consistent with the rates charged to third parties for storage.Results of operations for the reportable segments were as follows: Year Ended December 31, 20172016 2015 (Thousands of Dollars)Revenues: Pipeline$516,288 $485,650 $508,522Storage: Third parties604,847 589,098 599,302Intersegment12,106 20,944 25,606Total storage616,953 610,042 624,908Fuels marketing692,884 681,934 976,216Consolidation and intersegment eliminations(12,106) (20,944) (25,606)Total revenues$1,814,019 $1,756,682 $2,084,040 Depreciation and amortization expense: Pipeline$128,061 $89,554 $84,951Storage127,473 118,663 116,768Total segment depreciation and amortization expense255,534 208,217 201,719Other depreciation and amortization expense8,698 8,519 8,491Total depreciation and amortization expense$264,232 $216,736 $210,210 Operating income: Pipeline$231,795 $248,238 $270,349Storage219,439 214,801 217,818Fuels marketing5,983 3,406 13,507Consolidation and intersegment eliminations(1) — 42Total segment operating income457,216 466,445 501,716General and administrative expenses112,240 98,817 102,521Other depreciation and amortization expense8,698 8,519 8,491Total operating income$336,278 $359,109 $390,704 114Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Revenues by geographic area are shown in the table below: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)United States$1,406,626 $1,352,936 $1,599,088Netherlands322,251 313,395 386,282Other85,142 90,351 98,670Consolidated revenues$1,814,019 $1,756,682 $2,084,040For the years ended December 31, 2017, 2016 and 2015, Valero Energy Corporation accounted for approximately 17%, or $300.0 million, 18%, or $310.0million, and 16%, or $331.7 million, of our consolidated revenues, respectively. These revenues were included in all of our reportable business segments. Noother single customer accounted for 10% or more of our consolidated revenues.Total amounts of property, plant and equipment, net by geographic area were as follows: December 31, 2017 2016 (Thousands of Dollars)United States$3,519,965 $3,086,337Netherlands572,817 469,061Other208,151 166,885Consolidated long-lived assets$4,300,933 $3,722,283Total assets by reportable segment were as follows: December 31, 2017 2016 (Thousands of Dollars)Pipeline$3,492,417 $2,024,633Storage2,735,563 2,522,586Fuels marketing118,746 168,347Total segment assets6,346,726 4,715,566Other partnership assets188,507 314,979Total consolidated assets$6,535,233 $5,030,545Capital expenditures, including acquisitions and investments in other noncurrent assets, by reportable segment were as follows: Year Ended December 31, 2017 2016 2015 (Thousands of Dollars)Pipeline$1,596,311 $88,373 $175,657Storage244,398 206,641 285,258Other partnership assets5,648 5,001 9,957Total capital expenditures$1,846,357 $300,015 $470,872 115Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTSNuStar Energy has no operations, and its assets consist mainly of its 100% indirectly owned subsidiaries, NuStar Logistics and NuPOP. The senior andsubordinated notes issued by NuStar Logistics are fully and unconditionally guaranteed by NuStar Energy and NuPOP. As a result, the following condensedconsolidating financial statements are presented as an alternative to providing separate financial statements for NuStar Logistics and NuPOP. Condensed Consolidating Balance SheetsDecember 31, 2017(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedAssets Cash and cash equivalents$885 $29 $— $23,378 $— $24,292Receivables, net— 280 — 176,495 — 176,775Inventories— 1,686 8,611 16,560 — 26,857Other current assets61 11,412 4,191 6,844 — 22,508Intercompany receivable— 3,112,164 — — (3,112,164) —Total current assets946 3,125,571 12,802 223,277 (3,112,164) 250,432Property, plant and equipment, net— 1,893,720 591,070 1,816,143 — 4,300,933Intangible assets, net— 58,530 — 725,949 — 784,479Goodwill— 149,453 170,652 777,370 — 1,097,475Investment in wholly ownedsubsidiaries2,891,371 24,162 1,301,717 790,882 (5,008,132) —Deferred income tax asset— — — 233 — 233Other long-term assets, net303 65,684 27,493 8,201 — 101,681Total assets$2,892,620 $5,317,120 $2,103,734 $4,342,055 $(8,120,296) $6,535,233Liabilities and Partners’ Equity Current portion of long-term debt$— $349,990 $— $— $— $349,990Payables4,078 27,642 13,160 101,052 — 145,932Short-term debt— 35,000 — — — 35,000Accrued interest payable— 40,402 — 47 — 40,449Accrued liabilities1,105 17,628 9,450 33,395 — 61,578Taxes other than income tax125 7,110 3,794 3,356 — 14,385Income tax payable— 732 4 3,436 — 4,172Intercompany payable322,296 — 1,277,691 1,512,177 (3,112,164) —Total current liabilities327,604 478,504 1,304,099 1,653,463 (3,112,164) 651,506Long-term debt, less current portion— 3,201,220 — 61,849 — 3,263,069Deferred income tax liability— 1,262 12 20,998 — 22,272Other long-term liabilities— 58,806 8,861 50,630 — 118,297Total partners’ equity2,565,016 1,577,328 790,762 2,555,115 (5,008,132) 2,480,089Total liabilities andpartners’ equity$2,892,620 $5,317,120 $2,103,734 $4,342,055 $(8,120,296) $6,535,233116Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Condensed Consolidating Balance SheetsDecember 31, 2016(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedAssets Cash and cash equivalents$870 $5 $— $35,067 $— $35,942Receivables, net— 3,040 — 167,570 — 170,610Inventories— 2,216 2,005 33,724 — 37,945Other current assets61 120,350 1,829 10,446 — 132,686Intercompany receivable— 1,308,415 — 57,785 (1,366,200) —Total current assets931 1,434,026 3,834 304,592 (1,366,200) 377,183Property, plant and equipment, net— 1,935,172 589,139 1,197,972 — 3,722,283Intangible assets, net— 71,033 — 56,050 — 127,083Goodwill— 149,453 170,652 376,532 — 696,637Investment in wholly ownedsubsidiaries1,964,736 34,778 1,221,717 874,649 (4,095,880) —Deferred income tax asset— — — 2,051 — 2,051Other long-term assets, net1,255 63,586 28,587 11,880 — 105,308Total assets$1,966,922 $3,688,048 $2,013,929 $2,823,726 $(5,462,080) $5,030,545Liabilities and Partners’ Equity Payables$2,436 $24,272 $7,124 $84,854 $— $118,686Short-term debt— 54,000 — — — 54,000Accrued interest payable— 34,008 — 22 — 34,030Accrued liabilities1,070 7,118 10,766 41,531 — 60,485Taxes other than income tax125 6,854 3,253 5,453 — 15,685Income tax payable— 1,326 5 5,179 — 6,510Intercompany payable257,497 — 1,108,703 — (1,366,200) —Total current liabilities261,128 127,578 1,129,851 137,039 (1,366,200) 289,396Long-term debt— 2,956,338 — 58,026 — 3,014,364Deferred income tax liability— 1,862 13 20,329 — 22,204Other long-term liabilities— 34,358 9,436 49,170 — 92,964Total partners’ equity1,705,794 567,912 874,629 2,559,162 (4,095,880) 1,611,617Total liabilities andpartners’ equity$1,966,922 $3,688,048 $2,013,929 $2,823,726 $(5,462,080) $5,030,545 117Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Condensed Consolidating Statements of Income (Loss)For the Year Ended December 31, 2017(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedRevenues$— $496,454 $221,125 $1,097,458 $(1,018) $1,814,019Costs and expenses1,868 317,871 146,243 1,012,777 (1,018) 1,477,741Operating (loss) income(1,868) 178,583 74,882 84,681 — 336,278Equity in earnings (loss)of subsidiaries149,775 (10,616) 89,405 158,700 (387,264) —Interest income (expense), net57 (176,897) (5,587) 9,344 — (173,083)Other income (expense), net— 145 3 (5,442) — (5,294)Income (loss) before income tax(benefit) expense147,964 (8,785) 158,703 247,283 (387,264) 157,901Income tax (benefit) expense— (820) 2 10,755 — 9,937Net income (loss)$147,964 $(7,965) $158,701 $236,528 $(387,264) $147,964 Condensed Consolidating Statements of Income (Loss)For the Year Ended December 31, 2016(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedRevenues$— $511,650 $224,966 $1,021,804 $(1,738) $1,756,682Costs and expenses1,806 302,099 150,384 945,022 (1,738) 1,397,573Operating (loss) income(1,806) 209,551 74,582 76,782 — 359,109Equity in earnings (loss)of subsidiaries151,794 (13,769) 82,202 156,036 (376,263) —Interest (expense) income, net— (139,827) (744) 2,221 — (138,350)Other income (expense), net18 (58,264) (26) (511) — (58,783)Income (loss) before incometax expense (benefit)150,006 (2,309) 156,014 234,528 (376,263) 161,976Income tax expense (benefit)3 1,607 (23) 10,386 — 11,973Net income (loss)$150,003 $(3,916) $156,037 $224,142 $(376,263) $150,003118Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Condensed Consolidating Statements of IncomeFor the Year Ended December 31, 2015(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedRevenues$— $547,959 $215,469 $1,322,675 $(2,063) $2,084,040Costs and expenses1,717 293,708 140,081 1,259,935 (2,105) 1,693,336Operating (loss) income(1,717) 254,251 75,388 62,740 42 390,704Equity in earnings (loss)of subsidiaries308,437 (7,257) 120,768 197,760 (619,708) —Interest (expense) income, net— (137,847) 1,611 4,368 — (131,868)Other income, net— 1,179 5 60,638 — 61,822Income from continuingoperations before incometax (benefit) expense306,720 110,326 197,772 325,506 (619,666) 320,658Income tax (benefit) expense— (392) 23 15,081 — 14,712Income from continuingoperations306,720 110,718 197,749 310,425 (619,666) 305,946Income from discontinuedoperations, net of tax— — — 774 — 774Net income$306,720 $110,718 $197,749 $311,199 $(619,666) $306,720119Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Condensed Consolidating Statements of Comprehensive Income (Loss)For the Year Ended December 31, 2017(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedNet income (loss)$147,964 $(7,965) $158,701 $236,528 $(387,264) $147,964 Other comprehensive income (loss): Foreign currency translationadjustment— — — 17,466 — 17,466Net loss on pension and otherpostretirement benefit adjustments, netof tax benefit— — — (6,170) — (6,170)Net loss on cash flow hedges— (2,046) — — — (2,046)Total other comprehensive(loss) income— (2,046) — 11,296 — 9,250Comprehensive income (loss)$147,964 $(10,011) $158,701 $247,824 $(387,264) $157,214Condensed Consolidating Statements of Comprehensive IncomeFor the Year Ended December 31, 2016(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedNet income (loss)$150,003 $(3,916) $156,037 $224,142 $(376,263) $150,003 Other comprehensive income (loss): Foreign currency translationadjustment— — — (8,243) — (8,243)Net loss on pension and otherpostretirement benefit adjustments, netof tax benefits— — — (2,850) — (2,850)Net gain on cash flow hedges— 5,710 — — — 5,710Total other comprehensiveincome (loss)— 5,710 — (11,093) — (5,383)Comprehensive income$150,003 $1,794 $156,037 $213,049 $(376,263) $144,620120Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Condensed Consolidating Statements of Comprehensive IncomeFor the Year Ended December 31, 2015(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedNet income$306,720 $110,718 $197,749 $311,199 $(619,666) $306,720 Other comprehensive income (loss): Foreign currency translationadjustment— — — (31,987) — (31,987)Net gain on cash flow hedges— 11,105 — — — 11,105Total other comprehensiveincome (loss)— 11,105 — (31,987) — (20,882)Comprehensive income$306,720 $121,823 $197,749 $279,212 $(619,666) $285,838121Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Condensed Consolidating Statements of Cash FlowsFor the Year Ended December 31, 2017(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedNet cash provided by operatingactivities$483,481 $152,101 $102,405 $405,950 $(737,138) $406,799Cash flows from investing activities: Capital expenditures— (47,600) (35,041) (301,997) — (384,638)Change in accounts payablerelated to capital expenditures— (1,988) 5,964 32,927 — 36,903Acquisitions— — — (1,461,719) — (1,461,719)Proceeds from Axeon term loan— 110,000 — — — 110,000Proceeds from insurance recoveries— — — 977 — 977Proceeds from sale or dispositionof assets— 1,955 18 63 — 2,036Investment in subsidiaries(1,262,000) — — (126) 1,262,126 —Net cash (used in) provided by investingactivities(1,262,000) 62,367 (29,059) (1,729,875) 1,262,126 (1,696,441)Cash flows from financing activities: Debt borrowings— 2,969,400 — 90,700 — 3,060,100Debt repayments— (2,400,739) — (86,800) — (2,487,539)Issuance of preferred units, net of issuancecosts538,560 — — — — 538,560Issuance of common units, net ofissuance costs643,878 — — — — 643,878General partner contribution13,737 — — — — 13,737Distributions to preferred unitholders(38,833) (19,417) (19,416) (19,418) 58,251 (38,833)Distributions to common unitholders and general partner(446,306) (223,153) (223,153) (223,176) 669,482 (446,306)Contributions from(distributions to) affiliates— 1,262,000 — (9,279) (1,252,721) —Net intercompany activity73,206 (1,801,218) 169,223 1,558,789 — —Other, net(5,708) (1,317) — (300) — (7,325)Net cash provided by (used in)financing activities778,534 (214,444) (73,346) 1,310,516 (524,988) 1,276,272Effect of foreign exchange ratechanges on cash— — — 1,720 — 1,720Net increase (decrease) in cash and cashequivalents15 24 — (11,689) — (11,650)Cash and cash equivalents as of thebeginning of the period870 5 — 35,067 — 35,942Cash and cash equivalents as of theend of the period$885 $29 $— $23,378 $— $24,292122Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Condensed Consolidating Statements of Cash FlowsFor the Year Ended December 31, 2016(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedNet cash provided by operatingactivities$391,773 $167,900 $211,816 $359,283 $(694,011) $436,761Cash flows from investing activities: Capital expenditures— (64,334) (52,637) (87,387) — (204,358)Change in accounts payablerelated to capital expenditures— (10,076) (285) (702) — (11,063)Acquisitions— (95,657) — — — (95,657)Investment in subsidiaries— — (212,900) — 212,900 —Net cash used in investing activities— (170,067) (265,822) (88,089) 212,900 (311,078)Cash flows from financing activities: Debt borrowings— 1,365,529 — 41,200 — 1,406,729Debt repayments— (1,419,852) — (36,300) — (1,456,152)Issuance of preferred units, net of issuance costs218,400 — — — — 218,400Issuance of common units, net of issuance costs27,710 — — — — 27,710General partner contribution680 — — — — 680Distributions to common unitholders and general partner(392,962) (196,481) (196,481) (196,501) 589,463 (392,962)Contributions from affiliates— — — 108,352 (108,352) —Net intercompany activity(241,131) 255,326 250,487 (264,682) — —Other, net(4,485) (2,354) — (8,890) — (15,729)Net cash (used in) provided by financingactivities(391,788) 2,168 54,006 (356,821) 481,111 (211,324)Effect of foreign exchange ratechanges on cash— — — 2,721 — 2,721Net (decrease) increase in cash andcash equivalents(15) 1 — (82,906) — (82,920)Cash and cash equivalents as of thebeginning of the period885 4 — 117,973 — 118,862Cash and cash equivalents as of theend of the period$870 $5 $— $35,067 $— $35,942123Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)Condensed Consolidating Statements of Cash FlowsFor the Year Ended December 31, 2015(Thousands of Dollars) NuStarEnergy NuStarLogistics NuPOP Non-GuarantorSubsidiaries Eliminations ConsolidatedNet cash provided by operatingactivities$389,967 $237,780 $119,928 $365,588 $(588,326) $524,937Cash flows from investing activities: Capital expenditures— (201,388) (39,533) (83,887) — (324,808)Change in accounts payablerelated to capital expenditures— (4,950) 33 1,761 — (3,156)Acquisitions— — — (142,500) — (142,500)Proceeds from insurance recoveries— — — 4,867 — 4,867Proceeds from sale or dispositionof assets— 10,320 22 6,790 — 17,132Investment in other long-term assets— — — (3,564) — (3,564)Net cash used in investing activities— (196,018) (39,478) (216,533) — (452,029)Cash flows from financing activities: Debt borrowings— 1,589,131 — 94,500 — 1,683,631Debt repayments— (1,275,910) — (41,000) — (1,316,910)Distributions to common unitholders and general partner(392,204) (196,102) (196,102) (196,122) 588,326 (392,204)Net intercompany activity2,199 (155,278) 115,652 37,427 — —Other, net— (3,605) — (141) — (3,746)Net cash used in financing activities(390,005) (41,764) (80,450) (105,336) 588,326 (29,229)Effect of foreign exchange ratechanges on cash— — — (12,729) — (12,729)Net (decrease) increase in cash andcash equivalents(38) (2) — 30,990 — 30,950Cash and cash equivalents as of thebeginning of the period923 6 — 86,983 — 87,912Cash and cash equivalents as of theend of the period$885 $4 $— $117,973 $— $118,862124Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)27. QUARTERLY FINANCIAL DATA (UNAUDITED)The following table summarizes quarterly financial data for the years ended December 31, 2017 and 2016: FirstQuarter SecondQuarter ThirdQuarter FourthQuarter Total (Thousands of Dollars, Except Per Unit Data)2017: Revenues$487,430 $435,488 $440,566 $450,535 $1,814,019Operating income$97,139 $73,404 $91,717 $74,018 $336,278Net income$57,940 $26,250 $38,592 $25,182 $147,964Basic and diluted net income per common unit$0.49 $0.05 $0.15 $— $0.64Cash distributions per unit applicable to common limitedpartners$1.095 $1.095 $1.095 $1.095 $4.380 2016: Revenues$405,703 $437,804 $441,418 $471,757 $1,756,682Operating income$94,565 $91,217 $87,954 $85,373 $359,109Net income (loss)$57,401 $52,517 $51,141 $(11,056) $150,003Basic and diluted net income (loss) per common unit$0.57 $0.52 $0.49 $(0.31) $1.27Cash distributions per unit applicable to common limitedpartners$1.095 $1.095 $1.095 $1.095 $4.380The quarterly financial data in the table above includes the impact of a $58.7 million non-cash impairment charge on the Axeon Term Loan in the fourthquarter of 2016.28. SUBSEQUENT EVENTSOn February 7, 2018, NuStar Energy, Riverwalk Logistics, L.P., NuStar GP, LLC, Marshall Merger Sub LLC, a wholly owned subsidiary of NuStar Energy(Merger Sub), Riverwalk Holdings, LLC and NuStar GP Holdings entered into an Agreement and Plan of Merger (the Merger Agreement) pursuant to whichMerger Sub will merge with and into NuStar GP Holdings with NuStar GP Holdings being the surviving entity (the Merger), such that NuStar Energy will bethe sole member of NuStar GP Holdings following the Merger. Pursuant to the Merger Agreement and at the effective time of the Merger, NuStar Energy’spartnership agreement will be amended and restated to, among other things, (i) cancel the incentive distribution rights held by our general partner, (ii)convert the 2% general partner interest in NuStar Energy held by our general partner into a non-economic management interest and (iii) provide the holdersof our common units with voting rights in the election of the members of the board of directors of NuStar GP, LLC at an annual meeting, beginning in 2019.At the effective time of the Merger, each outstanding NuStar GP Holdings common unit, other than those held by NuStar GP Holdings or its subsidiaries, willbe converted into the right to receive 0.55 of a NuStar Energy common unit. All NuStar GP Holdings common units, when converted, will cease to beoutstanding and will automatically be cancelled and no longer exist. No fractional NuStar Energy common units will be issued in the Merger; instead, eachholder of NuStar GP Holdings’ common units otherwise entitled to receive a fractional NuStar Energy common unit will receive cash in lieu thereof.Furthermore, the 10,214,626 NuStar Energy common units currently owned by NuStar GP Holdings will be cancelled and will cease to exist.At the effective time of the Merger, each outstanding award of NuStar GP Holdings restricted units will be converted, on the same terms and conditions aswere applicable to the awards immediately prior to the Merger, into an award of NuStar Energy restricted units. The number of NuStar Energy restricted unitssubject to the converted awards will be determined as provided in the Merger Agreement. Each of our executive officers and directors has agreed andacknowledged that the Merger will not be deemed to trigger a “change of control” as defined under any NuStar Energy or NuStar GP Holdings plan or award,and has waived any rights to vesting, payment or other benefit thereunder that would arise upon a “change of control,” to which he or she might otherwisehave been entitled.The Merger Agreement contains customary representations and warranties and covenants by each of the parties. Completion of the Merger is conditionedupon, among other things: (i) approval of the Merger Agreement by the affirmative vote of holders of125Table of ContentsNUSTAR ENERGY L.P. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)a Unit Majority, as defined in the Second Amended and Restated Limited Liability Company Agreement of NuStar GP Holdings, as amended; (ii) theeffectiveness of a registration statement on Form S-4 with respect to the issuance by NuStar Energy of its common units in connection with the Merger;(iii) the absence of certain legal injunctions or impediments prohibiting the transactions; (iv) the receipt of certain tax opinions from a nationally recognizedtax counsel; and (v) the approval for the listing of NuStar Energy’s common units to be issued in the Merger on the New York Stock Exchange.NuStar Energy entered into a Support Agreement, dated as of February 7, 2018 (the Support Agreement), with Merger Sub, WLG Holdings, LLC, a Texaslimited liability company controlled by Mr. Greehey (WLG Holdings), Mr. Greehey (together, WLG Holdings and Mr. Greehey are referred to as the GreeheyUnitholders), and, for limited purposes, NuStar GP Holdings, pursuant to which the Greehey Unitholders have agreed to vote in favor of the approval andadoption of the Merger Agreement, the approval of the Merger and any other action required in furtherance thereof submitted for the vote or written consentof NuStar GP Holdings unitholders. The Greehey Unitholders collectively own approximately 21% of the outstanding NuStar GP Holdings units. TheSupport Agreement will terminate (i) at the effective time of the Merger, (ii) upon the termination of the Merger Agreement as provided therein, or (iii) at suchtime as NuStar Energy and the Greehey Unitholders agree in writing to terminate the Support Agreement.After the Merger, the NuStar GP, LLC board of directors is expected to consist of nine members, initially composed of the six members of the NuStar GP, LLCboard of directors and the three independent directors of the board of directors of NuStar GP Holdings.Additionally, on February 8, 2018, we announced that our management anticipates recommending to the board of directors of NuStar GP, LLC, and the boardof directors expects to adopt, a reset of our quarterly distribution per common unit to $0.60 ($2.40 on an annualized basis), starting with the first-quarterdistribution payable in May 2018.126Table of ContentsITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone. ITEM 9A.CONTROLS AND PROCEDURESDISCLOSURE CONTROLS AND PROCEDURESOur management has evaluated, with the participation of the principal executive officer and principal financial officer of NuStar GP, LLC, the effectiveness ofour disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)) as of the end of theperiod covered by this report, and has concluded that our disclosure controls and procedures were effective as of December 31, 2017.INTERNAL CONTROL OVER FINANCIAL REPORTING(a)Management’s Report on Internal Control over Financial Reporting.Management’s report on NuStar Energy L.P.’s internal control over financial reporting required by Item 9A. appears in Item 8. of this Form 10-K, and isincorporated herein by reference.(b)Attestation Report of the Registered Public Accounting Firm.The report of KPMG LLP on NuStar Energy L.P.’s internal control over financial reporting appears in Item 8. of this Form 10-K, and is incorporated herein byreference.(c)Changes in Internal Control over Financial Reporting.There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or isreasonably likely to materially affect, our internal control over financial reporting. ITEM 9B.OTHER INFORMATIONNone.127Table of ContentsPART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEDIRECTORS AND EXECUTIVE OFFICERS OF NUSTAR GP, LLCWe do not have directors or officers. The directors and officers of NuStar GP, LLC, the general partner of our general partner, Riverwalk Logistics, L.P.,perform all of our management functions. NuStar GP Holdings, the sole member of NuStar GP, LLC, selects the directors of NuStar GP, LLC (the Board)annually. Officers of NuStar GP, LLC are appointed annually by its directors.As described below in Item 13, on February 7, 2018, NuStar Energy, Riverwalk Logistics, L.P., NuStar GP, LLC, Marshall Merger Sub LLC, a wholly ownedsubsidiary of NuStar Energy (Merger Sub), Riverwalk Holdings, LLC and NuStar GP Holdings entered into an Agreement and Plan of Merger (the MergerAgreement) pursuant to which Merger Sub will merge with and into NuStar GP Holdings with NuStar GP Holdings being the surviving entity (the Merger),such that NuStar Energy will be the sole member of NuStar GP Holdings following the Merger. Pursuant to the Merger Agreement and at the effective time ofthe Merger, NuStar Energy’s partnership agreement will be amended and restated to, among other things, provide the holders of NuStar Energy common unitswith voting rights in the election of the members of the Board of NuStar GP, LLC at an annual meeting, beginning in 2019. After the Merger, the NuStar GP,LLC Board is expected to consist of nine members, initially composed of the six members of the NuStar GP, LLC Board and the three independent directorsof the board of directors of NuStar GP Holdings, LLC. The Merger is subject to the satisfaction or waiver of certain conditions, including approval of theMerger Agreement by NuStar GP Holdings unitholders. Please refer to Item 13 for further discussion of the Merger.Set forth below is certain information concerning the directors and executive officers of NuStar GP, LLC, effective as of February 20, 2018. Name Age Position Held with NuStar GP, LLCWilliam E. Greehey 81 Chairman of the BoardBradley C. Barron 52 President, Chief Executive Officer and DirectorJ. Dan Bates 73 DirectorDan J. Hill 77 DirectorRobert J. Munch 66 DirectorW. Grady Rosier 69 DirectorMary Rose Brown 61 Executive Vice President and Chief Administrative OfficerThomas R. Shoaf 59 Executive Vice President and Chief Financial OfficerJorge A. del Alamo 48 Senior Vice President and ControllerDaniel S. Oliver 51 Senior Vice President-Marketing and Business DevelopmentAmy L. Perry 49 Senior Vice President, General Counsel-Corporate & Commercial Law and CorporateSecretaryKaren M. Thompson 50 Senior Vice President and General Counsel-Litigation, Regulatory & EnvironmentalMichael Truby 58 Senior Vice President-OperationsAs a limited partnership, we are not required by the NYSE rules to have a nominating committee. However, in 2013, the Board created aNominating/Governance & Conflicts Committee to identify candidates for membership on the Board. The members of the Nominating/Governance &Conflicts Committee are Mr. Rosier (Chairman), Mr. Bates, Mr. Hill and Mr. Munch. In accordance with our Corporate Governance Guidelines, individualsare considered for membership on the Board based on their character, judgment, integrity, diversity, age, skills (including financial literacy), independenceand experience in the context of the overall needs of the Board. Our directors are also selected based on their knowledge about our industry and theirrespective experience leading or advising large companies. We require that our directors have the ability to work collegially, exercise good judgment andthink critically. The Nominating/Governance & Conflicts Committee strives to find the best possible candidates to represent the interests of NuStar Energyand its unitholders. As part of its annual self-assessment process, the Nominating/Governance & Conflicts Committee evaluates the mix of independent andnon-independent directors, the selection and functions of the presiding director and whether the Board has the appropriate range of talents, expertise andbackgrounds.128Table of ContentsThe Board is led by its Chairman, Mr. Greehey. Although the Board believes that separating the roles of Chairman and Chief Executive Officer is appropriatein the current circumstances, our Corporate Governance Guidelines do not establish this approach as a policy. The Board also has appointed Mr. Hill as itspresiding director to serve as a point of contact for unitholders wishing to communicate with the Board and to lead executive sessions of the non-management directors.Mr. Greehey became Chairman of the Board in January 2002. He also has been the Chairman of the board of directors of NuStar GP Holdings since March2006. Mr. Greehey served as Chairman of the board of directors of Valero Energy Corporation (Valero Energy) from 1979 through January 2007. Mr. Greeheywas Chief Executive Officer of Valero Energy from 1979 through December 2005, and President of Valero Energy from 1998 until January 2003.Mr. Barron became President, Chief Executive Officer and a director of NuStar GP, LLC and NuStar GP Holdings in January 2014. He served as ExecutiveVice President and General Counsel of NuStar GP, LLC and NuStar GP Holdings from February 2012 until his promotion in January 2014. From April 2007to February 2012, he served as Senior Vice President and General Counsel of NuStar GP, LLC and NuStar GP Holdings. Mr. Barron also served as Secretary ofNuStar GP, LLC and NuStar GP Holdings from April 2007 to February 2009. He served as Vice President, General Counsel and Secretary of NuStar GP, LLCfrom January 2006 until April 2007 and as Vice President, General Counsel and Secretary of NuStar GP Holdings from March 2006 until his promotion inApril 2007. He has been with NuStar GP, LLC since July 2003 and, prior to that, was with Valero Energy from January 2001 to July 2003.Mr. Bates became a director of NuStar GP, LLC in April 2006. He served as President and CEO of the Southwest Research Institute from 1997 until October2014 and continues to serve as a director and as President Emeritus of the Southwest Research Institute. Mr. Bates also serves as a director of SignatureScience L.L.C., Broadway Bank and Broadway Bankshares, Inc. He served as Chairman or Vice Chairman of the board of directors of the Federal ReserveBank of Dallas’ San Antonio Branch from January 2005 through December 2009.Mr. Hill became a director of NuStar GP, LLC in July 2004. From February 2001 through May 2004, he served as a consultant to El Paso Corporation. Priorto that, he served as President and CEO of Coastal Refining and Marketing Company. In 1978, Mr. Hill was named as Senior Vice President of the CoastalCorporation and President of Coastal States Crude Gathering. In 1971, he began managing Coastal’s NGL business. Previously, Mr. Hill worked for Amocoand Mobil.Mr. Munch became a director of NuStar GP, LLC in January 2016. He served as General Manager and Head of Corporate & Investment Banking of MizuhoBank, Ltd. from 2006 to 2013 and as Deputy General Manager, Origination, of Mizuho Bank, Ltd. from 2005 to 2006. Prior to his service with Mizuho BankLtd., Mr. Munch also served in several senior management positions with Canadian Imperial Bank of Commerce and CIBC World Markets from 1980 to 2001and Fidelity Union Bancorporation (now Wells Fargo) from 1973 to 1980.Mr. Rosier became a director of NuStar GP, LLC in March 2013. He has been the President and Chief Executive Officer of McLane Company, Inc., a leadingsupply chain services company and subsidiary of Berkshire Hathaway, Inc., since February 1995. Mr. Rosier has been with McLane Company, Inc. since1984, serving in various senior management positions prior to his current position. Mr. Rosier also has served as a director of NVR, Inc. since December 2008.He was formerly a director of Tandy Brands Accessories, Inc. from February 2006 to October 2011, serving as the lead director from October 2009 to October2010.Ms. Brown became Executive Vice President and Chief Administrative Officer of NuStar GP, LLC and NuStar GP Holdings in April 2013. She served asExecutive Vice President - Administration of NuStar GP, LLC and NuStar GP Holdings from February 2012 until her promotion in April 2013. Ms. Brownserved as Senior Vice President - Administration of NuStar GP, LLC from April 2008 through February 2012. She served as Senior Vice President - CorporateCommunications of NuStar GP, LLC from April 2007 through April 2008. Prior to her service to NuStar GP, LLC, Ms. Brown served as Senior Vice President -Corporate Communications for Valero Energy from September 1997 to April 2007.Mr. Shoaf became Executive Vice President and Chief Financial Officer of NuStar GP, LLC and NuStar GP Holdings in January 2014. He served as SeniorVice President and Controller of NuStar GP, LLC and NuStar GP Holdings from February 2012 until his promotion in January 2014. Mr. Shoaf served as VicePresident and Controller of NuStar GP, LLC from July 2005 to February 2012 and Vice President and Controller of NuStar GP Holdings from March 2006until February 2012. He served as Vice President - Structured Finance for Valero Corporate Services Company, a subsidiary of Valero Energy, from 2001 untiljoining NuStar GP, LLC.129Table of ContentsMr. del Alamo became Senior Vice President and Controller of NuStar GP, LLC and NuStar GP Holdings in July 2014. Prior thereto, he served as VicePresident and Controller of NuStar GP, LLC and NuStar GP Holdings since January 2014. He served as Vice President and Assistant Controller of NuStar GP,LLC from July 2010 until his promotion in January 2014. From April 2008 to July 2010 he served as Assistant Controller of NuStar GP, LLC. Prior to hisservice at NuStar GP, LLC, Mr. del Alamo served as Director-Sarbanes Oxley Compliance for Valero Energy.Mr. Oliver became Senior Vice President - Marketing and Business Development of NuStar GP, LLC and NuStar GP Holdings in May 2014. Prior thereto, heserved as Senior Vice President - Business and Corporate Development of NuStar GP, LLC and NuStar GP Holdings since March 2011. He served as SeniorVice President - Marketing and Business Development of NuStar GP, LLC and NuStar GP Holdings from May 2010 to March 2011 and as Vice President -Marketing and Business Development of NuStar GP, LLC from October 2008 until May 2010 and of NuStar GP Holdings from December 2009 until May2010. Prior to that, Mr. Oliver served as Vice President for NuStar Marketing LLC. Previously, Mr. Oliver served as Vice President - Product Supply &Distribution for Valero Energy from May 1997 to July 2007.Ms. Perry became Senior Vice President, General Counsel-Corporate & Commercial Law and Corporate Secretary of NuStar GP, LLC and NuStar GPHoldings in January 2014. She served as Vice President, Assistant General Counsel and Corporate Secretary of NuStar GP, LLC and as Corporate Secretary ofNuStar GP Holdings from February 2010 until her promotion in January 2014. From June 2005 to February 2010 she served as Assistant General Counsel andAssistant Secretary of NuStar GP, LLC and, from March 2006 to February 2010, Assistant Secretary of NuStar GP Holdings. Prior to her service at NuStar GP,LLC, Ms. Perry served as Counsel to Valero Energy.Ms. Thompson became Senior Vice President, General Counsel-Litigation, Regulatory & Environmental of NuStar GP, LLC and NuStar GP Holdings inJanuary 2014. She served as Vice President, Assistant General Counsel and Assistant Secretary of NuStar GP, LLC from February 2010 until her promotion inJanuary 2014. From May 2007 to February 2010 she served as Assistant General Counsel and Assistant Secretary of NuStar GP, LLC. Prior to her service atNuStar GP, LLC, Ms. Thompson served as Managing Counsel to Valero Energy.Mr. Truby became Senior Vice President - Operations of NuStar GP, LLC in February 2013 and of NuStar GP Holdings in November 2015. Prior thereto, heserved as Vice President - Pipeline Operations of NuStar GP, LLC since April 2012 and as Vice President - Health, Safety and Environmental of NuStar GP,LLC from January 2012 until April 2012. Previously he served as Vice President and General Manager of NuStar GP, LLC’s former San Antonio Refineryfrom May 2011 until January 2012 and led NuStar GP, LLC’s East Region from November 2009 until May 2011.SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESection 16(a) of the Exchange Act requires directors, executive officers and persons who beneficially own more than 10% of NuStar Energy’s equitysecurities to file certain reports with the Securities and Exchange Commission (SEC) concerning their beneficial ownership of NuStar Energy’s equitysecurities. We believe that our directors, executive officers and greater than 10% unitholders have filed all Section 16(a) reports by the applicable deadlineswith respect to the year ended December 31, 2017.CODE OF ETHICS OF SENIOR FINANCIAL OFFICERSNuStar GP, LLC has adopted a Code of Ethics for Senior Financial Officers that applies to NuStar GP, LLC’s principal executive officer, principal financialofficer and controller. A copy of the code is available on NuStar Energy’s website at www.nustarenergy.com. This code charges the senior financial officerswith responsibilities regarding honest and ethical conduct, the preparation and quality of the disclosures in documents and reports we file with or submit tothe SEC, compliance with applicable laws, rules and regulations, adherence to the code and reporting of violations of the code. We also have a Code ofBusiness Conduct and Ethics that applies to all of our employees and directors.130Table of ContentsCORPORATE GOVERNANCEAUDIT COMMITTEEThe Audit Committee reviews and reports to the Board on various auditing and accounting matters, including the quality, objectivity and performance ofNuStar Energy’s internal and external accountants and auditors, the adequacy of its financial controls and the reliability of financial information reported tothe public. The Audit Committee also monitors NuStar Energy’s compliance with environmental laws and regulations. The Board has adopted a writtencharter for the Audit Committee, a copy of which is available on NuStar Energy’s website at www.nustarenergy.com. The members of the Audit Committeeare Mr. Bates (Chairman), Mr. Hill, Mr. Munch and Mr. Rosier. The Board has determined that Mr. Bates is an “audit committee financial expert” (as definedby the SEC), and that each member of the Audit Committee is “independent” as that term is used in the NYSE Listing Standards and described below in Item13. The Audit Committee met eight times during 2017. For further information, see the Audit Committee Report below.AUDIT COMMITTEE REPORTManagement of NuStar GP, LLC is responsible for NuStar Energy’s internal controls and the financial reporting process. KPMG LLP (KPMG), NuStarEnergy’s independent registered public accounting firm for the year ended December 31, 2017, is responsible for performing an independent audit of NuStarEnergy’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and generallyaccepted auditing standards, and an audit of NuStar Energy’s internal control over financial reporting in accordance with the standards of the PCAOB, andissuing a report thereon. The Audit Committee monitors and oversees these processes and approves the selection and appointment of NuStar Energy’sindependent registered public accounting firm and recommends the ratification of such selection and appointment to the Board.The Audit Committee has reviewed and discussed NuStar Energy’s audited consolidated financial statements with management and KPMG. The AuditCommittee has discussed with KPMG the matters required to be discussed by Auditing Standard 1301, “Communications with Audit Committees,” issued bythe PCAOB. The Audit Committee has received written disclosures and the letter from KPMG required by applicable requirements of the PCAOB concerningindependence and has discussed with KPMG its independence.Based on the foregoing review and discussions and such other matters the Audit Committee deemed relevant and appropriate, the Audit Committeerecommended to the Board that the audited consolidated financial statements of NuStar Energy be included in NuStar Energy’s Annual Report on Form 10-Kfor the year ended December 31, 2017.Members of the Audit Committee:J. Dan Bates (Chairman)Dan J. HillRobert J. MunchW. Grady RosierRISK OVERSIGHTAlthough it is the job of management to assess and manage our risk, the Board of Directors and its Audit Committee (each where applicable) discuss theguidelines and policies that govern the process by which risk assessment and management is undertaken and evaluate reports from various functions with themanagement team on risk assessment and management. The Board interfaces regularly with management and receives periodic reports that include updateson operational, financial, legal and risk management matters. The Audit Committee assists the Board in oversight of the integrity of NuStar Energy’sfinancial statements and NuStar Energy’s compliance with legal and regulatory requirements, including those related to the health, safety and environmentalperformance of our company. The Audit Committee also reviews and assesses the performance of NuStar Energy’s internal audit function and its independentauditors. The Board receives regular reports from the Audit Committee. For a description of our oversight and evaluation of compensation risk, see“Evaluation of Compensation Risk” in Item 11 below.131Table of ContentsITEM 11. EXECUTIVE COMPENSATIONCOMPENSATION COMMITTEEThe Compensation Committee reviews and reports to the Board on matters related to compensation strategies, policies and programs, including certainpersonnel policies and policy controls, management development, management succession and benefit programs. The Compensation Committee alsoconducts periodic reviews of director compensation and makes recommendations to the Board regarding director compensation. The CompensationCommittee also approves and administers NuStar Energy’s equity compensation plans and incentive bonus plan. The Board has adopted a written charter forthe Compensation Committee, a copy of which is available on NuStar Energy’s website at www.nustarenergy.com. The members of the CompensationCommittee are Mr. Hill (Chairman), Mr. Bates, Mr. Munch and Mr. Rosier, none of whom is a current or former employee or officer of NuStar GP, LLC andeach of whom has been determined by the Board to be “independent,” as described below in Item 13. The Compensation Committee met four times during2017.COMPENSATION COMMITTEE REPORTThe Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review and discussionand such other matters the Compensation Committee deemed relevant and appropriate, the Compensation Committee recommended to the Board that theCompensation Discussion and Analysis be included in this Annual Report on Form 10-K.Members of the Compensation Committee:Dan J. Hill (Chairman)J. Dan BatesRobert J. MunchW. Grady Rosier COMPENSATION DISCUSSION AND ANALYSISEXECUTIVE COMPENSATION PHILOSOPHYOur philosophy for compensating our named executive officers (NEOs) is based on the belief that a significant portion of executive compensation should beincentive-based and determined by both the performance of NuStar Energy and the executive’s individual performance objectives. Our executivecompensation programs are designed to accomplish the following long-term objectives:•increase value to unitholders, while practicing good corporate governance;•support our business strategy and business plan by clearly communicating what is expected of executives with respect to goals and results;•provide the Compensation Committee with the flexibility to respond to the continually changing environment in which NuStar Energy operates;•align executive incentive compensation with NuStar Energy’s short- and long-term performance results; and•provide market-competitive compensation and benefits to enable us to recruit, retain and motivate the executive talent necessary to producesustainable growth for our unitholders.Compensation for our NEOs primarily consists of base salary, an annual incentive bonus and long-term, equity-based incentives, which we refer to as “TotalDirect Compensation.” Our NEOs participate in the same group benefit programs available to our salaried employees in the United States, and each NEO’sincentive bonus is awarded in accordance with the same bonus plan and metric that we use for each of our other employees. In addition, as discussed under“Post-Employment Benefits” below, our NEOs may participate in certain non-qualified, retirement-related programs. Our NEOs do not have employment orseverance agreements, other than the change of control severance agreements described under “Potential Payments Upon Termination or Change of Control”in this Item 11. The Compensation Committee targets base salary for our NEOs, as well as annual incentive bonus and long-term incentive opportunities(expressed, in each case, as a percentage of base salary), with reference to prevailing practices of our peer companies and information from survey sources. Indetermining total compensation, as well as each component thereof, we consider the unique responsibilities of each individual’s position, as well as his or herexperience and performance, together with the market information.132Table of ContentsOur NEOs for the year ended December 31, 2017 were:•Bradley C. Barron, President and Chief Executive Officer (CEO);•Thomas R. Shoaf, Executive Vice President and Chief Financial Officer;•Mary Rose Brown, Executive Vice President and Chief Administrative Officer;•Daniel S. Oliver, Senior Vice President-Marketing and Business Development; and•Michael Truby, Senior Vice President-Operations.ADMINISTRATION OF EXECUTIVE COMPENSATION PROGRAMSOur executive compensation programs are administered by our Board’s Compensation Committee. The Compensation Committee is composed ofindependent directors who are not participants in our executive compensation programs. Policies adopted by the Compensation Committee are implementedby our Human Resources department.The Compensation Committee considers market trends in compensation, including the practices of identified competitors, and the alignment of thecompensation program with NuStar Energy’s strategy. Specifically, for our NEOs, the Compensation Committee:•establishes and approves target compensation levels for each NEO;•approves company performance measures and goals;•determines the mix between cash and equity compensation, short-term and long-term incentives and benefits;•verifies the achievement of previously established performance goals; and•approves the resulting cash or equity awards to our NEOs.In making determinations about Total Direct Compensation for our NEOs, the Compensation Committee takes into account a number of factors, including:•the competitive market for talent;•compensation paid at peer companies;•industry-wide trends;•NuStar Energy’s performance;•the particular NEO’s role, responsibilities, experience and performance; and•retention.The Compensation Committee also considers other equitable factors such as the role, contribution and performance of an individual relative to his or herpeers at the company. The Compensation Committee does not assign specific weight to these factors, but rather makes a subjective judgment taking all ofthese factors into account.During 2017, the Compensation Committee retained Energy Partners Pay Advisors (EPPA) as its independent compensation consultant for expertise andguidance with respect to executive compensation matters. In its role as advisor to the Compensation Committee, EPPA was retained directly by theCompensation Committee, which has the authority to select, retain and/or terminate its relationship with a consulting firm. The Compensation Committeedetermined that there are no conflicts of interest between the company, the Compensation Committee and EPPA because: EPPA provides no other services toNuStar Energy; EPPA has policies in place to prevent a conflict of interest, including a policy that no employee of EPPA may own NuStar Energy units; andthere is no business or personal relationship between EPPA’s consultant and any of NuStar Energy’s officers or directors.Selection of Compensation Comparative DataTo establish compensation for each of the NEOs, the Compensation Committee consults with management and EPPA and considers compensation providedby certain peer companies when evaluating competitive levels of compensation. The competitive data regarding the peer companies is derived from theirrespective publicly filed annual proxy statements or Annual Reports on Form 10-K.133Table of ContentsFollowing the sale of our remaining 50% interest in the asphalt business during 2014, the Compensation Committee consulted with management and theCompensation Committee’s independent compensation consultant at the time, reevaluated our peer group and removed the independent refining companiesthat were previously included in our peer group (the 2014 Compensation Comparative Group). Since that time, several of the companies in the peer grouphave merged, consolidated or otherwise no longer publicly disclose comprehensive executive compensation information. Due to the changes in themidstream and logistics industry since 2014, the Compensation Committee consulted with management and EPPA and updated our peer group again in 2017to: (1) remove entities that have been acquired or otherwise no longer publicly disclose comprehensive executive compensation information; (2) removesponsored master limited partnerships (MLPs) for which the executives’ primary responsibility relates to the sponsor’s operations rather than the operations ofthe MLP; (3) add other comparable midstream and/or logistics entities; and (4) recognize the scope of responsibility of executive teams that manage twopublic companies, similar to NuStar Energy and NuStar GP Holdings (the Current Compensation Comparative Group).The tables below list: (1) the companies in the 2014 Compensation Comparative Group after giving effect to all merger or consolidation transactions thatclosed prior to December 31, 2017 (with the relevant transactions described in the footnote); and (2) the companies in the Current CompensationComparative Group.2014 Compensation Comparative GroupCompany (1)Ticker1. Andeavor Logistics LP (previously known as Tesoro Logistics LP)ANDX2. Arc Logistics Partners LPARCX3. Boardwalk Pipeline Partners, LPBWP4. Buckeye Partners, L.P.BPL5. Enable Midstream Partners, LPENBL6. Enbridge Energy Partners, L.P.EEP7. Energy Transfer Partners, L.P.ETP8. EnLink Midstream Partners, LPENLK9. Enterprise Products Partners L.P.EPD10. Genesis Energy, L.P.GEL11. Holly Energy Partners, L.P.HEP12. Magellan Midstream Partners, L.P.MMP13. MPLX LPMPLX14. Phillips 66 Partners LPPSXP15. Plains All American Pipeline, L.P.PAA16. Valero Energy Partners LPVLP(1) The following companies have been removed from the 2014 Compensation Comparative Group originally established in July 2014 as a result of thetransactions described in this footnote: Access Midstream Partners, L.P. merged with Williams Partners L.P. in February 2015; Atlas Pipeline Partners,L.P. was acquired by Targa Resources Partners LP in February 2015; Kinder Morgan Energy Partners, L.P. was acquired by Kinder Morgan, Inc. inNovember 2014; MarkWest Energy Partners, L.P. was acquired by MPLX LP in December 2015; Regency Energy Partners LP was acquired by EnergyTransfer Partners, L.P. in April 2015; Targa Resources Partners LP was acquired by Targa Resources Corp. in February 2016; Energy Transfer Partners,L.P. merged with Sunoco Logistics Partners L.P. in April 2017; and Western Refining Logistics, LP was acquired by Andeavor Logistics LP in October2017.134Table of ContentsCurrent Compensation Comparative GroupCompanyTicker1. Boardwalk Pipeline Partners, LPBWP2. Buckeye Partners, L.P.BPL3. Calumet Specialty Products Partners, L.P.CLMT4. Enable Midstream Partners, LPENBL5. Enbridge Energy Partners, L.P./Enbridge Energy Management, L.L.C.EEP/EEQ6. Energy Transfer Partners, L.P. /Energy Transfer Equity, L.P. (1)ETP/ETE7. EnLink Midstream Partners, LP/EnLink Midstream, LLCENLK/ENLC8. Enterprise Products Partners L.P.EPD9. Genesis Energy, L.P.GEL10. Holly Energy Partners, L.P.HEP11. Magellan Midstream Partners, L.P.MMP12. MPLX LPMPLX13. ONEOK, Inc. (includes operations of ONEOK Partners, L.P.)OKE14. SemGroup CorporationSEMG15. Sunoco Logistics Partners L.P. (1)SXL16. Targa Resources Corp. (includes operations of Targa Resources Partners LP)TRGP(1)Although Energy Transfer Partners, L.P. and Sunoco Logistics Partners L.P. merged in April 2017, both entities are listed as separate peer companies inthe Current Compensation Comparative Group because their executive compensation for the year ended December 31, 2016 was publicly disclosedseparately and considered along with the compensation of the other peer companies as part of the evaluation of our 2017 compensation.At the Compensation Committee’s request, EPPA also reviews survey data reported on a position-by-position basis to obtain additional informationregarding compensation of comparable positions. The survey data consists of general industry data for specific executive positions reported in publishedexecutive compensation surveys. We refer to the competitive survey data, together with the 2014 Compensation Comparative Group data or the CurrentCompensation Comparative Group data, as applicable, as the “Compensation Comparative Data.”Process and Timing of Compensation DecisionsThe Compensation Committee reviews and approves all compensation of the NEOs. The CEO develops recommendations for the compensation of the otherNEOs in consultation with our Human Resources department and with EPPA. In making these recommendations, the CEO considers the CompensationComparative Data and evaluates the individual performance of each NEO and their respective contributions to NuStar Energy. The recommendations are thenreviewed by the Compensation Committee, which may accept the recommendations or may make adjustments to the recommended compensation based onthe Compensation Committee’s assessment of the individual’s performance and contributions to NuStar Energy.As required by the Compensation Committee’s charter, the CEO’s compensation is reviewed and approved by the Compensation Committee based on theCompensation Comparative Data and the Compensation Committee’s independent evaluation of the CEO’s contributions to NuStar Energy’s performance.Each July, the Compensation Committee reviews each NEO’s Total Direct Compensation, including base salary and the target levels of annual incentive andlong-term incentive compensation. The review includes a comparison with competitive market data provided by EPPA (as described above), an evaluation ofthe Total Direct Compensation of the NEOs from an internal equity perspective and a review of reports on the compensation history of each NEO. Based onthese reviews and evaluations, the Compensation Committee establishes annual salary rates for each NEO for the upcoming 12-month period and sets targetlevels of annual incentive and long-term incentive compensation. Although the target levels are established in July, the long-term incentives are reviewedagain at the time of grant, typically in the fourth quarter for restricted units and in the first quarter for performance units. The Compensation Committee alsomay review salaries or grant long-term incentive awards at other times during the year because of new appointments, promotions or other extraordinarycircumstances.135Table of ContentsThe following table summarizes the typical timing of some of our significant compensation events.EventTiming- Establish financial performance objectives for the current year’s annual incentive bonus- Evaluate achievement of the bonus metric for the prior year- Review prior year financial performance for performance units- Grant performance units for the current yearFirst quarter- Review NEO base salaries and targets for annual incentive bonus and long-term incentive grants for the current yearThird quarter- Grant restricted units to employees, including the NEOs- Grant restricted units to non-employee directors pursuant to the director compensation program- Set meeting dates for action by the Compensation Committee for the upcoming yearFourth quarterAdditional information regarding the timing of the 2017 long-term incentive grants is discussed below under “Restricted Units” and “Performance Units.”ELEMENTS OF EXECUTIVE COMPENSATIONCompensation for our NEOs primarily consists of the following elements, which we refer to as Total Direct Compensation: ElementFormPurposeFixedBase SalaryCash- Foundation of the executive compensation program- Provides a fixed level of competitive pay- Reflects the individual’s primary duties and responsibilities- Foundation for incentive opportunities and benefit levelsAt-RiskAnnual Incentive BonusCash- Focus NEOs on improving performanceAt-RiskLong-Term Equity-Based Incentives:Units- Directly tie NEO financial reward opportunities with the rewards tounitholders, as measured by long-term unit price performance andpayment of distributions- Restricted Units- Time-vesting award focused on retention and increasing ownershiplevels- Performance Units- Performance-vesting award focused on attainment of objectiveperformance measureWe also offer group medical and other insurance benefits to provide our employees (including our NEOs) affordable coverage at group rates, as well aspension benefits that reward continued service and a thrift plan that provides a tax-advantaged savings opportunity.Relative Size of Primary Elements of CompensationIn setting compensation, the Compensation Committee considers the aggregate amount of compensation payable to each NEO and the form of thecompensation. The Compensation Committee seeks to achieve the appropriate balance between salary, cash rewards earned for the achievement of companyand personal objectives, and long-term incentives that align the interests of our NEOs with those of our unitholders. The size of each element is based oncompetitive market practices, as well as company and individual performance.As illustrated by the chart below, the level of at-risk incentive compensation typically increases in relation to an NEO’s responsibilities, with the level ofincentive compensation for more senior executive officers being a greater percentage of Total Direct Compensation than for less senior executives. TheCompensation Committee believes that tying a significant portion of an NEO’s incentive compensation to NuStar Energy’s performance more closely alignsthe NEO’s interests with those of our unitholders.136Table of ContentsBecause we place such a large percentage of our Total Direct Compensation at risk in the form of variable pay (i.e., annual and long-term incentives), theCompensation Committee does not adjust current compensation based upon realized gains or losses from prior incentive awards. For example, we will notreduce the size of a target long-term incentive grant in a particular year solely because NuStar Energy’s unit price performed well during the immediatelypreceding years. We believe that adopting a policy of making such adjustments would penalize management’s current compensation for NuStar Energy’sprior success.Individual Performance and Personal ObjectivesThe Compensation Committee evaluates our NEOs’ individual performance and personal objectives with input from our CEO. Our CEO’s performance isevaluated by the Compensation Committee in consultation with other members of the Board.Assessment of individual performance may include objective criteria, but is a largely subjective process. The criteria used to measure an individual’sperformance may include use of quantitative criteria (e.g., execution of projects within budget, improving an operating unit’s profitability, or timelycompletion of an acquisition or divestiture), as well as more qualitative factors, such as the NEO’s ability to lead, communicate and successfully adhere toNuStar Energy’s core values (i.e., environmental and workplace safety, integrity, work commitment, effective communication and teamwork). There are nospecific weights given to any of these various elements of individual performance.The Compensation Committee uses its evaluation of individual performance to supplement the objective compensation criteria and adjust an NEO’srecommended compensation. For example, although an individual’s indicated bonus may be calculated to be $100,000 based on NuStar Energy’sperformance, the individual’s performance evaluation might result in a reduction or increase in that amount.Base SalariesThe Compensation Committee reviews the base salaries for our NEOs annually based on recommendations by our CEO, with input from EPPA and ourHuman Resources department. Our CEO’s base salary is reviewed and approved by the Compensation Committee based on its review of recommendations byEPPA, our Chairman and our Human Resources department.The competitiveness of base salaries for each NEO’s position is determined by an evaluation of the Compensation Comparative Data described above. Basesalaries may be adjusted to achieve what is determined to be a reasonably competitive level or to reflect promotions, the assignment of additionalresponsibilities, individual performance or the performance of NuStar Energy.137Table of ContentsFollowing a detailed analysis performed in July 2014 by the Compensation Committee’s independent compensation consultant at the time, for 2015 and2016 base salaries the Compensation Committee considered, among other factors, the Consumer Price Index, the average base salary increase anticipated bynationwide compensation surveys, the increases required by NuStar Energy’s union contracts and the anticipated increases by other local companies andraised the base salaries of each of the NEOs effective on each of July 1, 2015 and July 1, 2016 to remain competitive.During July 2017, EPPA performed a comprehensive review of our NEOs’ Total Direct Compensation. After consultation with EPPA, the Chairman (in thecase of the CEO’s base salary) and the CEO (in the case of the base salaries for each other NEO), the Compensation Committee raised the base salaries of eachof the NEOs effective July 1, 2017 to remain competitive. The July 1, 2017 increases and the December 31, 2017 base salaries for each of the NEOs arepresented in the table below.NameAnnualized Base Salary atDecember 31, 2017 ($)July 1, 2017 Increase to Prior AnnualizedSalary ($)Barron592,250 17,250 Shoaf360,200 10,500 Brown388,000 11,300 Oliver328,000 9,700 Truby305,000 24,400 Annual Incentive BonusOur NEOs participate in the same annual incentive program in which all of our domestic employees participate. Under our annual bonus plan, participantscan earn annual incentive bonuses based on the following three factors:•The individual’s position, which is used to determine a targeted percentage of annual base salary that may be awarded as incentive bonus. Generally,the target amount for the NEOs is set following the analysis of market practices in the Compensation Comparative Group with reference to themedian bonus target available to comparable executives in those companies;•NuStar Energy’s attainment of specific quantitative financial goals, which are established by the Compensation Committee during the first quarter ofthe year; and•A discretionary evaluation by the Compensation Committee of both NuStar Energy’s performance and, in the case of the NEOs, the individual’sperformance.In July 2015, after consultation with the Compensation Committee’s independent compensation consultant at the time and the Chairman, the CompensationCommittee raised the annual incentive bonus target for Mr. Barron from 90% to 100%. The Compensation Committee did not make any changes to theannual incentive bonus target for Mr. Barron during 2016 or for any of the other NEOs serving as such during 2015 or 2016. In July 2017, following EPPA’scomprehensive review of our NEOs’ Total Direct Compensation, the Compensation Committee raised the annual incentive bonus target for Mr. Truby from50% to 55% and retained the existing annual incentive bonus targets for all other NEOs. The following table shows each NEO’s annual incentive bonustarget for the fiscal year ended December 31, 2017 (expressed as a percent of base salary paid).NameAnnual Incentive Bonus Target(% of base salary)Barron100Shoaf60Brown60Oliver55Truby55Determination of Annual Incentive Target OpportunitiesAs illustrated in the table above, each NEO has an annual incentive opportunity generally based on a stated percentage of his or her salary paid that year. Thetarget amount is awarded for achieving a 100% score on our stated financial goal under the annual bonus plan. For example, in a year with a 100% score, anNEO paid $200,000 with a target annual incentive opportunity equal to 60% of his base salary paid would be eligible to receive a bonus of $120,000 basedon those financial goals.138Table of ContentsOnce the financial goals have been reviewed and measured, the Compensation Committee has the authority to exercise its discretion in evaluating NuStarEnergy’s performance. In exercising this discretionary judgment, the Compensation Committee considers such relevant performance factors as growth,attainment of strategic objectives, acquisitions and divestitures, safety and environmental compliance, as well as other considerations. This discretionaryjudgment may result in an increase or decrease to the aggregate earned award for all employees that is based upon the attainment of NuStar Energy’s financialgoals.The CEO develops individual incentive bonus recommendations for the other NEOs based upon the methodology described above. In addition, both theCEO and the Compensation Committee may make adjustments to the recommended incentive bonus amounts based upon an assessment of an individual’sperformance and contributions to NuStar Energy. The CEO and the Compensation Committee also review and discuss each NEO’s bonus on a case-by-casebasis, considering such factors as teamwork, leadership, individual accomplishments and initiative, and may adjust the bonus awarded to a specific NEO toreflect these factors.The bonus target for the CEO is decided solely by the Compensation Committee, and the Compensation Committee may make discretionary adjustments tothe calculated level of bonus for the CEO based upon its independent evaluation of the CEO’s performance and contributions.Company Performance ObjectivesAs in prior years, our annual incentive bonus for 2017 was designed to focus our NEOs on improving NuStar Energy’s distributable cash flow (DCF). In theMLP investment community, DCF is widely regarded as a significant indicator of operating performance. As such, the Compensation Committee believes themeasure appropriately aligns our management’s interest with our unitholders’ interest.For 2017, the Compensation Committee determined that a bonus pool for all employees would be established based on DCF such that employees wouldreceive a 100% bonus for 2017 if NuStar Energy achieved a target distribution coverage ratio (DCR) of 1.01 times. After achieving a 100% bonus,incremental DCF earned would be shared between the bonus pool and NuStar Energy until employees achieve a 200% bonus. If DCR for 2017 is below 1.00times, the bonus pool would be reduced dollar-for-dollar until a 1.00 times DCR is achieved or the pool is reduced to $0. The Compensation Committee hasdiscretion to raise or lower the incentive opportunity resulting from this calculation by 25%. In addition, the budgeted DCF may be adjusted during the yearin order to account for acquisitions or other significant changes not anticipated at the time the target was determined.DCF and DCR are non-GAAP measures of performance. We derive DCF from our financial statements by adjusting our net income for depreciation andamortization expense, unrealized gains and losses arising from certain derivative contracts and other non-cash items, including non-cash gains or losses orimpairment charges. We further adjust our earnings by (1) subtracting our aggregate annual reliability capital expenditures, (2) adding non-cash unit-basedcompensation expenses for awards that we intend to satisfy with the issuance of units upon vesting and (3) adding or subtracting, as applicable, certain cashreceipts and disbursements not included in net income. DCR is determined by dividing DCF applicable to common limited partners by the distributionsapplicable to common limited partners.Determination of AwardsOur executive officers, including our NEOs, did not receive cash bonuses for 2017. For the 2017 annual incentive bonus determination, the CompensationCommittee reviewed NuStar Energy’s DCF against the established target of attaining a DCR of 1.01 times and considered NuStar Energy’s overallperformance and the performance of each NEO. Based solely on our 2017 DCR results, our NEOs were not eligible to receive a bonus award for 2017 underthe annual incentive bonus plan. The Compensation Committee recognized NuStar Energy’s significant accomplishments during 2017, including thesuccessful acquisition of the Permian Crude System and NuStar Energy’s achievement of its best safety record in the history of the company, with only oneemployee recordable injury and zero lost-time injuries. The Compensation Committee also considered the strain on the business and the MLP sectorgenerally from continued low crude oil prices and the further negative impact on NuStar Energy of several unexpected items, such as losses at seven facilitiesimpacted by five hurricanes, losses resulting from unplanned turnarounds and downtime at customers’ refineries, a decline in results at our St. Eustatiusterminal from under-utilization by an important customer there due to deteriorating conditions in Venezuela and the expense of an unanticipated reliabilityproject on our Ammonia Pipeline.After considering our 2017 DCR results and these additional factors, upon the recommendation of executive management (other than with respect to theCEO) and our Chairman (with respect to the CEO), the Compensation Committee decided not to award cash bonuses under the annual incentive bonus planfor any of our executive officers, including our NEOs, for 2017.139Table of ContentsLong-Term Incentive AwardsWe provide unit-based, long-term incentive compensation for employees, including our NEOs, and for our non-employee directors through our 2000 Long-Term Incentive Plan (as amended and restated from time to time, the 2000 LTIP). The 2000 LTIP provides for unit awards and a variety of unit-based awards,including unit options, restricted units and performance units. Long-term incentive awards vest over a period determined by the Compensation Committee,with performance units vesting upon the achievement of an objective performance goal.Under the design of our long-term incentive awards, a target long-term incentive award opportunity expressed as a percentage of base salary is established foreach plan participant, including each NEO. This percentage reflects the fair value of the awards to be granted.The Compensation Committee did not make any changes to the individual long-term incentive target percentages for our NEOs serving as such during 2015or 2016. In July 2017, following EPPA’s comprehensive review of our NEOs’ Total Direct Compensation, the Compensation Committee raised the long-termincentive targets for Mr. Barron from 200% to 250%, for Mr. Shoaf and Ms. Brown from 150% to 180% and for Mr. Truby from 100% to 125%, and retainedthe existing target for Mr. Oliver. The following table shows each NEO’s long-term incentive target for 2017 (expressed as a percent of base salary).NameLong-Term Incentive Target(% of base salary)Barron250Shoaf180Brown180Oliver125Truby125The Compensation Committee allocates a percentage of long-term incentive award value to performance-based awards and a percentage to awards that focuson retention and increasing ownership levels of executive officers (including our NEOs). Since the fourth quarter of 2011, the target levels of long-termincentive award value have been allocated in the following manner:•35% performance units; and•65% restricted units.The Compensation Committee reviews and approves long-term incentive grants for each of the NEOs. The CEO develops individual grant recommendationsfor the other NEOs based upon the methodology described above, but both the CEO and the Compensation Committee may make adjustments to therecommended grants based upon an assessment of an individual’s performance and contributions to NuStar Energy. Grants to the CEO are decided solely bythe Compensation Committee following the methodology described above, and the Compensation Committee may make discretionary adjustments to thecalculated level of long-term incentives for the CEO based upon its independent evaluation of the CEO’s performance and contributions.Restricted UnitsRestricted units comprise approximately 65% of each NEO’s total NuStar Energy long-term incentive target. The Compensation Committee expects to grantrestricted units on an annual basis. In 2017, the NEOs’ long-term incentive targets included approximately 70% NuStar Energy restricted units to be grantedby the Compensation Committee under the 2000 LTIP and 30% NuStar GP Holdings phantom units (which we refer to as “restricted units” in Part III of thisAnnual Report on Form 10-K) to be granted by NuStar GP Holdings’ compensation committee under its long-term incentive plan. In both cases, no units areissued at the time of grant and the awards represent the right to receive common units upon vesting. The awards are calculated from an assumed unit valuebased on the average closing price of the common units for the first 10 business days of the month prior to the committee meeting at which the awards are tobe approved. The restricted units all vest over five years in equal increments on the anniversary of the grant date, and common unit distribution equivalentsare paid in cash quarterly for all unvested NuStar Energy and NuStar GP Holdings restricted units. Restricted units of NuStar GP Holdings were introducedinto the compensation program in 2008 to reflect the fact that the performance of NuStar GP Holdings is directly tied to the performance of NuStar Energysince NuStar GP Holdings’ sole asset is its interest in NuStar Energy. As described under “Accounting Treatment” below, effective March 1, 2016, NuStar GPHoldings retains the expense associated with the NuStar GP Holdings restricted unit awards.140Table of ContentsThe annual grants of NuStar GP Holdings restricted units, as well as the annual grants of NuStar Energy restricted units, were approved in a joint meeting ofthe Compensation Committee and the compensation committee of NuStar GP Holdings’ board of directors on October 18, 2017. The committees determinedthat the grants would be made as soon as administratively practicable and no earlier than the third business day following our third quarter earnings release.Due to the time required to award and implement the grants, the 2017 annual grants were not effective until November 16, 2017. The following table setsforth the restricted units granted to each of our NEOs in 2017.Name Restricted Units Granted in 2017NuStar EnergyNuStar GP HoldingsBarron16,66013,315Shoaf7,2955,830Brown7,8606,280Oliver4,6153,690Truby4,2903,430For more information regarding the 2017 restricted unit grants, see the table entitled “Grants of Plan-Based Awards During the Year Ended December 31,2017.”Performance UnitsPerformance units comprise approximately 35% of each NEO’s total NuStar Energy long-term incentive target and typically have been awarded in the firstquarter of each year. The number of performance units awarded is determined by multiplying the annual base salary rate by the NEO’s long-term incentivetarget percentage, and then multiplying that product by 35%. That product is divided by the assumed value of an individual unit, which is the product of(x) the average common unit price for the period of December 15 through December 31 (using the daily closing prices) and (y) a factor reflecting the risk thatthe award might be forfeited.Performance units are earned only upon NuStar Energy’s achievement of an objective performance measure for the performance period. The CompensationCommittee believes this type of incentive award strengthens the tie between each NEO’s pay and our financial performance.Since 2014, the target performance measure for performance unit awards has been NuStar Energy achieving a specific DCR, after taking into account theaggregate expense of the performance units. As described above, the Compensation Committee believes that distribution coverage appropriately aligns ourNEOs’ interest with our unitholders’ interest.Performance units are awarded pursuant to the 2000 LTIP, with each award subject to vesting in three annual increments (or tranches), based upon our DCRduring the one-year performance periods that end on December 31 of each year following the date of grant, as illustrated in the table below.Annual Performance Target2015Target=DCR 1.01 :12016Target=DCR 1.03 :12017Target=DCR 1.01 :12015 Award Tranche Eligible to Vest1st2nd3rd2016 Award Tranche Eligible to VestN/A1st2nd2017 Award Tranche Eligible to VestN/AN/A1stPerformance Achieved for One-Year Performance Period1.11 : 11.07 : 10.63 : 1Percent of Eligible Units Vested for One-Year Performance Period200%150%0%If the DCR falls between the benchmarks established by the Compensation Committee for the performance period, the percentage vesting with respect toperformance during that period will be determined through straight-line interpolation. The Compensation Committee retains the full discretion to vest up to200% of performance units available for vesting, regardless of the DCR that NuStar Energy attains for the applicable performance period. As illustrated in thetable above, performance units did not vest with respect to 2017 performance and vested at the 150% and 200% levels with respect to 2016 and 2015performance, respectively. Additional information is provided below regarding the performance targets established by the Compensation Committee and theperformance attained by NuStar Energy for each of the 2015, 2016 and 2017 performance periods.141Table of Contents•2015 Performance Period. The target measure established by the Compensation Committee on January 29, 2015 for performance unit vesting withrespect to 2015 performance was NuStar Energy achieving a DCR of 1.01:1, with all units eligible for vesting as follows based on the DCR for 2015:LevelDCR% Performance Units EarnedBelow ThresholdBelow 1.00 : 10%Threshold1.00 : 190%Target1.01 : 1100%Exceeds Target1.05 : 1150%Maximum1.10 : 1200%On January 28, 2016, the Compensation Committee determined that NuStar Energy achieved a DCR of 1.11:1 for 2015 and, in accordance with theaward terms, the performance units available to vest under the applicable tranche for each of the 2014 awards and 2015 awards with respect to 2015performance vested at 200%.•2016 Performance Period. The target measure established by the Compensation Committee on February 24, 2016 for performance unit vesting withrespect to 2016 performance was NuStar Energy achieving a DCR of 1.03:1, with all units eligible for vesting as follows based on the DCR for 2016:LevelDCR% Performance Units EarnedBelow ThresholdBelow 1.00 : 10%Threshold1.00 : 190%Target1.03 : 1100%Exceeds Target1.07 : 1150%Maximum1.12 : 1200%On January 26, 2017, the Compensation Committee determined that NuStar Energy achieved a DCR of 1.07:1 for 2016 and, in accordance with theaward terms, the performance units available to vest under the applicable tranche for each of the 2014 awards, 2015 awards and 2016 awards withrespect to 2016 performance vested at 150%.•2017 Performance Period. On February 23, 2017, the Compensation Committee awarded the target number of performance units set forth below toour NEOs:Name Performance Units Awarded in 2017Barron11,000Shoaf4,776Brown5,145Oliver3,624Truby2,556The target measure established by the Compensation Committee on February 23, 2017 for performance unit vesting with respect to 2017performance was NuStar Energy achieving a DCR of 1.01:1, with all units eligible for vesting as follows based on the DCR for 2017:LevelDCR% Performance Units EarnedBelow ThresholdBelow 1.00 : 10%Threshold1.00 : 190%Target1.01 : 1100%Exceeds Target1.05 : 1150%Maximum1.10 : 1200%On January 25, 2018, the Compensation Committee determined that NuStar Energy achieved a DCR of 0.63:1 for 2017 and, in accordance with theaward terms, the performance units available to vest under the applicable tranche for each of the 2015 awards, 2016 awards and 2017 awards withrespect to 2017 performance did not vest. See the table entitled “Grants of Plan-Based Awards During the Year Ended December 31, 2017” for theperformance units that did not vest with respect to the 2017 performance period.142Table of ContentsPerquisites and Other BenefitsPerquisitesWe provide only minimal perquisites to our NEOs. Each of our NEOs received federal income tax preparation services and personal liability insurance in2017. For more information on perquisites, see the Summary Compensation Table and its footnotes.Other BenefitsWe provide other benefits, including medical, life, dental and disability insurance in line with competitive market practices. Our NEOs are eligible for thesame benefit plans provided to our other employees, including our pension plans, 401(k) thrift plan (the Thrift Plan), and insurance and supplemental planschosen and paid for by employees who desire additional coverage. Our NEOs and other employees whose compensation exceeds certain limits are eligible toparticipate in non-qualified excess benefit programs whereby those individuals can choose to make larger contributions than allowed under the qualifiedplan rules and receive correspondingly higher benefits. These plans are described below under “Post-Employment Benefits.”Post-Employment BenefitsPension PlansFor a discussion of our Pension Plan, as well as the Excess Pension Plan, please see the narrative description accompanying the table entitled “PensionBenefits for the Year Ended December 31, 2017.”Nonqualified Deferred Compensation Plan (Excess Thrift Plan)The Excess Thrift Plan provides unfunded benefits to those employees whose annual additions under the Thrift Plan are subject to the limitations under §415of the Internal Revenue Code of 1986, as amended (the Code), and/or who are constrained from making maximum contributions under the Thrift Plan by§401(a)(17) of the Code, which limits the amount of an employee’s annual compensation that may be taken into account under that plan. The Excess ThriftPlan is comprised of two separate components, consisting of (1) an “excess benefit plan” as defined under §3(36) of The Employee Retirement IncomeSecurity Act of 1974, as amended (ERISA), and (2) a plan that is maintained primarily for the purpose of providing deferred compensation for a select groupof management or highly compensated employees. Each component of the Excess Thrift Plan consists of a separate plan for purposes of Title I of ERISA. Tothe extent a participant’s annual total compensation exceeds the compensation limits for the calendar year under §401(a)(17) of the Code ($270,000 for2017) or a participant’s annual additions under the Thrift Plan are limited by the maximum annual additions permitted under §415 of the Code ($54,000 for2017), the participant’s Excess Thrift Plan account is credited with that number of hypothetical NuStar Energy units that could have been purchased with thedifference between:•The total company matching contributions that would have been credited to the participant’s account under the Thrift Plan had the participant’scontributions not been limited pursuant to §401(a)(17) and/or §415; and•The actual company matching contributions credited to such participant’s account.Each of our NEOs participated in the Excess Thrift Plan in 2017.Change of Control Severance ArrangementsWe initially entered into change of control severance agreements with each of our NEOs in, or prior to, 2007. The change of control severance agreements areintended to ensure the continued availability of these executives in the event of certain transactions culminating in a “change of control” as defined in theagreements. The change of control severance agreements have three-year terms and are automatically extended for one year upon each anniversary unless wegive notice not to extend. If a “change of control” (as defined in the agreements) occurs during the term of an agreement, then the agreement becomesoperative for a fixed three-year period. The agreements provide generally that the NEO’s terms and conditions of employment (including position, location,compensation and benefits) will not be adversely changed during the three-year period after a change of control.The agreements contain tiers of compensation and benefits based on each NEO’s position. Each tier corresponds to a certain “severance multiple” used tocalculate cash severance and other benefits to be provided under the agreements. Compensation and benefits under the agreements are triggered upon theoccurrence of any of the following in connection with a change of control:143Table of Contents•termination of employment by the employer other than for “cause” (as defined in the agreements), death or disability;•termination by the NEO for “good reason” (as defined in the agreements);•termination by the NEO other than for “good reason;” and•termination of employment because of death or disability.These triggers were designed to ensure the continued availability of these executives following a change of control, and to compensate them at appropriatelevels if their employment is unfairly or prematurely terminated during the applicable term following a change of control.The following table sets forth the severance multiple applicable to each NEO, based on his or her current officer position.NameApplicable Officer PositionSeverance MultipleBarronChief Executive Officer3ShoafExecutive Vice President2.5BrownExecutive Vice President2.5OliverSenior Vice President2TrubySenior Vice President2When determining the amounts and benefits payable under the agreements, the Compensation Committee sought to secure compensation that is competitivein our market in order to recruit and retain executive officer talent. Consideration was given to the principal economic terms found in written employmentand change of control agreements of other publicly traded companies. For more information regarding payments and benefits that may be provided under ourchange of control severance arrangements, see our disclosures below under the caption “Potential Payments upon Termination or Change of Control.”Each of our NEOs has agreed and acknowledged that the Merger will not be deemed to trigger a “change of control” as defined under any NuStar Energy orNuStar GP Holdings plan or award, and has waived any rights to vesting, payment or other benefit thereunder that would arise upon a “change of control,” towhich he or she might otherwise have been entitled.Employment AgreementsNone of the NEOs have employment agreements, other than the change of control severance agreements described above. As a result, in the event of atermination, retirement, death or disability that is not related to a change of control, an NEO will only receive the compensation or benefits to which he or shewould be entitled under the terms of the defined contribution, defined benefit, medical or long-term incentive plans, as applicable.IMPACT OF ACCOUNTING AND TAX TREATMENTSAccounting TreatmentServices AgreementAs described in Item 13 below, on March 1, 2016, NuStar GP, LLC transferred and assigned to NuStar Services Co, a wholly owned subsidiary of ours,employment of all of NuStar GP, LLC’s employees. Our executive officers continue to serve as officers of NuStar GP Holdings and NuStar GP, LLC, and alsoserve as officers of NuStar Services Co and other NuStar Energy subsidiaries. Our NEOs serve as employees of both NuStar GP, LLC and NuStar Services Co.In connection with the transfer and assignment, we amended and restated the Services Agreement such that, beginning March 1, 2016, NuStar GP Holdingsand NuStar Energy receive all management and administrative services from NuStar Services Co. NuStar Energy reimburses NuStar Services Co for allservices provided to NuStar Energy, including payroll and benefit costs, as well as NuStar Energy unit-based compensation costs. NuStar GP Holdings paysNuStar Services Co an administrative services fee, subject to certain adjustments, but no longer pays 1.0% of our domestic bonus and unit compensationexpenses. Instead, NuStar GP Holdings retains the expense associated with any NuStar GP Holdings common unit awards or other compensation that itprovides to its officers and directors.144Table of ContentsUnit-Based CompensationIn connection with the employee transfer on March 1, 2016, we assumed all outstanding awards under the 2000 LTIP. Our financial statements include theexpense for awards of NuStar Energy restricted units and performance units. The transfer of the outstanding awards qualified as a plan modification.Therefore, we measured the fair value of then-outstanding awards to domestic employees (including our NEOs) based on the common unit price on thetransfer date. Restricted units awarded to international employees are liability-classified awards that are cash-settled and measured at fair value based on thecommon unit price at each reporting period.NuStar Energy Restricted Units. Our restricted unit awards are considered “phantom” units, as they represent the right to receive our common units uponvesting. We account for restricted units expected to result in the issuance of our common units upon vesting as equity-classified awards. The restricted unitsgranted to our domestic employees (including our NEOs) generally vest over five years and the restricted units granted to non-employee directors generallyvest over three years. We record compensation expense ratably over the vesting period based on the fair value of the units at the grant date (for domesticemployees, including our NEOs) or the fair value of the units measured at each reporting period (for non-employee directors) using the market price of ourcommon units on the applicable date. Common unit distribution equivalents paid with respect to outstanding, unvested equity-classified restricted unitsreduce equity, similar to cash distributions to unitholders.NuStar Energy Performance Units. Performance units are equity-classified awards that vest in three increments (tranches) and represent the right to receive ourcommon units, based upon our achievement of the performance measure set by the Compensation Committee during the one-year performance periods thatend on December 31 of each year following the grant date. Under applicable accounting standards, a tranche of performance units is not considered “granted”until the Compensation Committee has set the performance measure for that specific tranche of the award. Therefore, performance units are measured at thegrant date fair value once the performance measure is established for a specific tranche. In addition, since the performance units granted do not receivecommon unit distribution equivalents, the estimated fair value of these awards does not include the per unit distributions expected to be paid to unitholdersduring the vesting period. We record compensation expense ratably for each vesting tranche over its one-year service period if it is probable that the specifiedperformance measure will be achieved. Additionally, changes in the actual or estimated outcomes that affect the quantity of performance units expected to beconverted are recognized as a cumulative adjustment.NuStar GP Holdings, LLC Restricted Units. NuStar GP Holdings’ restricted units are “phantom” units, as they represent the right to receive NuStar GPHoldings’ common units upon vesting. As described above, pursuant to the amended and restated services agreement, NuStar GP Holdings retains theexpense associated with NuStar GP Holdings restricted unit awards. NuStar GP Holdings accounts for restricted units that it awards under its long-termincentive plan to its directors and employees (including our NEOs) at fair value. NuStar GP Holdings uses the market price at the grant date as the fair valueof its restricted units. Awards of NuStar GP Holdings’ restricted units to its employees vest over five years, and NuStar GP Holdings recognizes the resultingcompensation expense ratably over the vesting period.Tax TreatmentWe are a limited partnership and not a corporation for U.S. federal income tax purposes. Therefore, we are not subject to the executive compensationdeduction limitations under Section 162(m) of the Code.COMPENSATION-RELATED POLICIESUnit Ownership GuidelinesWe believe that ownership of NuStar Energy units aligns the interests of our directors and executives with those of NuStar Energy’s unitholders. We havelong emphasized and reinforced the importance of unit ownership among our executives and directors.During 2006, the Compensation Committee worked with its independent compensation consultant to formalize unit ownership and retention guidelines forour directors and officers to ensure continuation of our successful track record in aligning the interests of our directors and officers with those of ourunitholders through unit ownership. During 2015, at the request of the Board and its committees, management undertook a review of the unit ownership andretention guidelines. Management discussed the results of its review with the Compensation Committee’s independent compensation consultant at the time,which agreed with management’s conclusions. The Compensation Committee and the Nominating/Governance and Conflicts Committee of NuStar GP,LLC’s Board, as well as the board of directors of NuStar GP Holdings, have approved the updated unit ownership and retention guidelines described below.145Table of ContentsNon-Employee Director Unit Ownership GuidelinesNon-employee directors are expected to acquire and hold during their service as a Board member NuStar Energy units and/or NuStar GP Holdings units withan aggregate value of at least two times their annual cash retainer. Directors have five years from their initial election to the Board to meet the target unitownership guidelines, and they are expected to continuously own sufficient units to meet the guidelines, once attained. As of December 31, 2017, each of ourdirectors exceeded the ownership levels set forth in the unit ownership guidelines.Officer Unit Ownership GuidelinesUnit ownership guidelines for the officers set forth below are as follows:OfficerValue of NuStar Energy Units and/orNuStar GP Holdings Units OwnedCEO/President4.0x base salary EVP serving on CEO’s officer committee3.0x base salary SVP serving on CEO’s officer committee2.0x base salary VP serving on CEO’s officer committee1.0x base salary The officers subject to the unit ownership and retention guidelines, including each of our NEOs, are expected to meet the applicable guidelines within fiveyears of becoming subject to the guidelines and continuously own sufficient units to meet the guidelines, once attained. As of December 31, 2017, each ofour NEOs exceeded the ownership levels set forth in the unit ownership guidelines.Unit OwnershipFor purposes of satisfying the unit ownership guidelines, the following units are considered owned:•units owned directly;•units owned indirectly through possession of the right to sell, transfer and/or vote such units; and•unvested restricted or phantom units granted under our long-term incentive plan or NuStar GP Holdings’ long-term incentive plan.Unexercised unit options and unvested performance units are not considered owned for purposes of satisfying the unit ownership guidelines.Prohibition on Insider Trading and Speculation in NuStar Energy or NuStar GP Holdings UnitsWe have established policies prohibiting our officers, directors and employees from purchasing or selling either NuStar Energy or NuStar GP Holdingssecurities while in possession of material, nonpublic information or otherwise using such information for their personal benefit or in any manner that wouldviolate applicable laws and regulations. Our directors, officers and certain other employees are prohibited from trading in either NuStar Energy or NuStar GPHoldings securities for the period beginning on the last business day of each calendar quarter through the first business day following our disclosure of ourquarterly or annual financial results. In addition, our policies prohibit our officers, directors and employees from speculating in either NuStar Energy orNuStar GP Holdings units, such as by short selling (profiting if the market price of our units decreases), buying or selling publicly traded options (includingwriting covered calls), hedging or any other type of derivative arrangement that has a similar economic effect. Our directors, officers and certain otheremployees also are required to obtain consent from the CEO (or, in the case of the CEO, from the Chair of the applicable company’s Audit Committee) beforethey enter into margin loans or other financing arrangements that may lead to the ownership or other rights to their NuStar Energy or NuStar GP Holdingssecurities being transferred to a third party.146Table of ContentsEVALUATION OF COMPENSATION RISKThe Compensation Committee has focused on aligning our compensation policies with the long-term interests of NuStar Energy and avoiding short-termrewards for management decisions that could pose long-term risks to NuStar Energy. As described above in “Compensation Discussion and Analysis,” theprimary elements of our compensation program are base salary, annual incentive bonus and long-term incentives. We believe that our compensation programappropriately balances cash with equity-based compensation and fixed compensation with short- and long-term incentives such that no single pay elementwould motivate unnecessary risk taking.NuStar Energy’s compensation program is structured so that base salaries provide a fixed level of competitive pay that reflects the individual’s primary dutiesand responsibilities, and a considerable amount of our management’s compensation is tied to NuStar Energy’s long-term fiscal health. Bonuses, includingexecutive bonuses, are determined with reference to a well-defined performance measure selected by the Compensation Committee and applicable to allemployees, as well as the Compensation Committee’s review of each individual executive’s performance. Historically, our long-term incentives have takenthe form of performance units and restricted units that typically vest over three- and five-year periods, respectively, which we believe serves to align ouremployees’ interests with the long-term goals of NuStar Energy. No business group or unit is compensated differently than any other, regardless ofprofitability. There also is a maximum number of performance units that may be earned, based on the performance of NuStar Energy relative to a performancemeasure selected by the Compensation Committee. As such, we believe that our compensation policies encourage employees to operate our business in afundamentally sound manner, align our executives’ interests with those of our unitholders and do not create incentives to take risks that are reasonably likelyto have a material adverse effect on NuStar Energy.COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONThere are no compensation committee interlocks. The members of our Compensation Committee are Mr. Hill (Chairman), Mr. Bates, Mr. Munch andMr. Rosier. None of the members of our Compensation Committee have served as an officer or employee of ours. Furthermore, except for compensationarrangements disclosed in this Annual Report on Form 10-K, NuStar Energy has not participated in any contracts, loans, fees or awards, nor does it havefinancial interests, direct or indirect, with any Compensation Committee member. In addition, none of NuStar Energy’s management or Board members areaware of any means, directly or indirectly, by which a Compensation Committee member could receive a material benefit from NuStar Energy.147Table of ContentsCOMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORSThe following pages of this Item 11 provide information required by the SEC regarding compensation paid to or earned by our NEOs and the members of ourBoard for the periods indicated. We have used captions and headings in the tables provided below in accordance with the SEC regulations requiring thesedisclosures. The footnotes to these tables provide important information to explain the values presented in the tables, and are an important part of ourdisclosures.SUMMARY COMPENSATION TABLEThe following table provides a summary of compensation paid for the years ended December 31, 2017, December 31, 2016 and December 31, 2015 to ourChief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers serving during 2017. For each NEO, thetable shows amounts earned for services rendered to us in all capacities in which the NEO served during the periods presented for that NEO. Mr. Oliver andMr. Truby were not considered “executive officers” for SEC reporting purposes prior to 2017 and, accordingly, their compensation is reported only withrespect to 2017.Name and PrincipalPositionYearSalary ($)UnitAwards($)(1)Non-EquityIncentivePlanCompensation($)(2)Change in Pension Valueand NonqualifiedDeferred CompensationEarnings($)(3)All OtherCompensation($)(4)Total ($)Bradley C. Barron President andChief Executive Officer2017583,625 1,233,907 — 218,342 54,897 2,090,771 2016557,500 1,039,456 700,000 184,931 35,698 2,517,585 2015515,000 1,077,860 800,000 47,061 35,677 2,475,598 Thomas R. Shoaf Executive VicePresident and Chief FinancialOfficer2017354,950 554,372 — 171,513 28,387 1,109,222 2016344,600 479,970 260,000 124,479 22,924 1,231,973 2015334,550 515,023 311,000 47,692 21,729 1,229,994 Mary Rose BrownExecutive Vice President andChief Administrative Officer2017382,350 597,187 — 188,315 60,689 1,228,541 2016371,200 516,952 280,000 142,437 24,520 1,335,109 2015360,350 554,552 335,000 173,968 23,836 1,447,706 Daniel S. OliverSenior Vice President-Marketingand Business Development2017323,150 382,223 — 142,129 29,973 877,475 Michael TrubySenior Vice President-Operations2017293,800 310,868 — 112,573 23,259 740,500 (1)The amounts reported represent the aggregate grant date fair value of grants of NuStar Energy restricted units, NuStar Energy performance units andNuStar GP Holdings restricted units. Under a services agreement in effect prior to March 1, 2016, we reimbursed NuStar GP, LLC for 99% of thecompensation expense associated with NuStar Energy awards. On March 1, 2016, NuStar GP, LLC transferred and assigned to NuStar Services Co, awholly owned subsidiary of ours, employment of all of NuStar GP, LLC’s employees and we assumed all outstanding NuStar Energy awards. OurNEOs are employees of both NuStar Services Co and NuStar GP, LLC. NuStar GP Holdings retains the expense associated with the NuStar GPHoldings restricted unit awards.Restricted UnitsThe grant date fair value for restricted units presented in the table above was determined by multiplying the number of NuStar Energy restrictedunits or NuStar GP Holdings restricted units that were granted by the NYSE closing unit price of NuStar Energy common units or NuStar GPHoldings common units, as applicable, on the date of grant.Performance UnitsFor the 2015 row in the Summary Compensation Table, the grant date fair value of the NuStar Energy performance units was determined bymultiplying the target number of performance units that were granted by the NYSE closing unit price of NuStar Energy common units on the date ofgrant.148Table of ContentsOn March 1, 2016, in connection with the employee transfer, we assumed all outstanding NuStar Energy awards, and performance unit awards arenow equity-classified awards. The transfer qualified as a plan modification, and we measured the fair value of then-outstanding awards based on ourcommon unit price on the transfer date. Under applicable accounting standards, a tranche of performance units is not considered “granted” until theCompensation Committee has set the performance measure for that specific tranche of the award. Therefore, performance units are measured at thegrant date fair value once the performance measure is established for a specific tranche (or, for 2016, the transfer date).Beginning with the 2016 period, the grant date fair value presented in the Summary Compensation Table includes the fair value of each tranche ofperformance units for which the Compensation Committee established a performance measure during that year. Accordingly, as illustrated in thetable below:•the amount reported for 2016 includes the one tranche of each of the 2014, 2015 and 2016 performance unit awards subject to vestingbased on the performance criteria established by the Compensation Committee on February 24, 2016 with respect to 2016 performance; and•the amount reported for 2017 includes the one tranche of each of the 2015, 2016 and 2017 performance unit awards subject to vestingbased on the performance criteria established by the Compensation Committee on February 23, 2017 with respect to 2017 performance.AwardTranche Considered “Granted”In 2017 with respect to 2017 PerformanceMeasureIn 2016 with respect to 2016 PerformanceMeasure2014 Performance Unit AwardN/A3rd2015 Performance Unit Award3rd2nd2016 Performance Unit Award2nd1st2017 Performance Unit Award1stN/AFor 2017 and 2016, the grant date fair value of the NuStar Energy performance units was determined by multiplying the probable number ofperformance units for all tranches eligible to vest with respect to 2017 and 2016 performance (as illustrated in the table above), respectively, by theNYSE closing unit price of NuStar Energy common units on the grant date (or, for 2016, the transfer date as described above), reduced by the perunit value of distributions not paid on performance units prior to vesting.If the maximum number of NuStar Energy performance units had been used to determine the grant date fair value of performance units for the 2017and 2016 periods presented, the grant date fair value for performance units for the 2017 and 2016 periods presented in the Summary CompensationTable for each of our NEOs would have been as set forth in the table below:NameGrant Date Fair Value Based on Maximum Number of Performance Units2017 ($)2016 ($)Barron1,077,444618,393Shoaf499,944305,958Brown538,471329,513Oliver379,247N/ATruby263,667N/APlease see the “Long-Term Incentive Awards” section and the “Accounting Treatment” section of “Compensation Discussion and Analysis” abovein this Item 11 and Note 23 of the Notes to Consolidated Financial Statements in Item 8 for additional information regarding the vesting schedulesand the assumptions made in the valuation.149Table of Contents(2)Our NEOs did not receive cash annual incentive bonus amounts for 2017. The amounts reported as “non-equity incentive plan compensation” for2016 and 2015 reflect the cash annual incentive bonus amounts paid to our NEOs pursuant to the annual bonus plan with respect to performance forthose years. Any bonus amounts are paid in February of each year with respect to performance during the immediately preceding year. Bonuses aredetermined taking into consideration NuStar Energy’s performance in the applicable year, each individual NEO’s target and each NEO’sperformance, as described above under “Compensation Discussion and Analysis-Elements of Executive Compensation-Annual Incentive Bonus.”For an explanation of the amount of salary and bonus in proportion to total compensation, see “Compensation Discussion and Analysis-Elements ofExecutive Compensation-Relative Size of Primary Elements of Compensation.”(3)The amounts reported reflect the amounts attributable to the aggregate change in the actuarial present value of each NEO’s accumulated benefitunder our defined benefit and actuarial pension plans, including supplemental plans (but excluding tax-qualified defined contribution plans andnonqualified defined contribution plans). None of the NEOs received any above-market or preferential earnings on compensation that is deferred ona basis that is not tax-qualified during the periods presented.(4)The amounts reported in this column for 2017 consist of the following for each NEO: NameCompanyContributionto ThriftPlan ($)CompanyContributionto ExcessThrift Plan ($)TaxPreparation ($)PersonalLiabilityInsurance ($)ExecutiveHealth Exams($)(a)TOTAL ($)Barron16,200 36,316 850 1,531—54,897Shoaf16,200 7,226 850 1,5312,58028,387Brown13,185 42,543 850 1,5312,58060,689Oliver16,200 11,392 850 1,531—29,973Truby16,200 4,678 850 1,531—23,259(a)The amount reported is the difference between the value of the respective NEO’s health exams and the value of NuStar Energy’s all-employeewellness assessments.150Table of ContentsPAY RATIOAs required by SEC regulations, we are providing the following information regarding the ratio of the annual total compensation of our President and ChiefExecutive Officer, Mr. Barron, to the median of the annual total compensation of our employees for our last completed fiscal year.For 2017:•the median of the annual total compensation of all of our employees (other than our President and Chief Executive Officer) was $88,610; and•the annual total compensation of our President and Chief Executive Officer, as reported in the Summary Compensation Table above, was$2,090,771.Accordingly, for 2017, the ratio of the annual total compensation of our President and Chief Executive Officer to the annual total compensation of ourmedian employee was 24 to 1.To determine our median employee, we identified each individual employed by us on October 1, 2017 (our Determination Date), and, for each individualemployed by us on the Determination Date, we examined each of the following elements of compensation (which we refer to as the Total ComparableCompensation) that we paid those employees during the period from October 1, 2016 through September 30, 2017 (the Compensation Review Period):•salary, wages and any overtime paid during the Compensation Review Period;•any bonus awards paid during the Compensation Review Period; and•the grant date fair value of any restricted units awarded during the Compensation Review Period.As of our Determination Date, we had approximately 1,690 employees located in five countries. We selected our Determination Date and our CompensationReview Period to provide sufficient time for us to gather the necessary information from multiple countries and to enable us to make the identification of themedian employee in a reasonably efficient and economical manner. After identifying the median employee based on Total Comparable Compensation, wecalculated the annual total compensation for the median employee for 2017 using the same methodology we use to calculate the annual total compensationfor our NEOs for 2017, as set forth in the Summary Compensation Table above. We did not make any assumptions, adjustments or estimates to identify themedian employee, to determine the Total Comparable Compensation for each employee or to determine the annual total compensation for the medianemployee.151Table of ContentsGRANTS OF PLAN-BASED AWARDSDURING THE YEAR ENDED DECEMBER 31, 2017The following table provides information regarding grants of plan-based awards to the NEOs during 2017.NameGrant DateDate ofApproval byCompensationCommittee ofEquity-BasedAwardsEstimated Future Payouts Under Non-EquityIncentive Plan AwardsEstimated Future Payouts UnderEquityIncentive Plan AwardsAll OtherUnitAwards:Number ofUnits (#)Grant DateFair Value ofUnitAwards ($)Threshold ($)Target($)Maximum($)Threshold (#)Target(#)Maximum(#)BarronN/A(1) N/AN/A583,6251,167,250———— — 2/23/2017(2) 2/23/2017———9,66510,73921,478— 538,722 11/16/2017(3) 10/18/2017——————16,66016,660486,805 11/16/2017(4) 10/18/2017——————13,315 208,380 ShoafN/A(1) N/AN/A212,970425,940———— — 2/23/2017(2) 2/23/2017———4,4854,9839,966—249,972 11/16/2017(3) 10/18/2017——————7,295213,160 11/16/2017(4) 10/18/2017——————5,83091,240 BrownN/A(1) N/AN/A229,410458,820———— — 2/23/2017(2) 2/23/2017———4,8305,36710,734—269,236 11/16/2017(3) 10/18/2017——————7,860229,669 11/16/2017(4) 10/18/2017——————6,28098,282 OliverN/A(1) N/AN/A177,733355,465———— — 2/23/2017(2) 2/23/2017———3,4023,7807,560— 189,624 11/16/2017(3) 10/18/2017——————4,615 134,850 11/16/2017(4) 10/18/2017——————3,690 57,749 TrubyN/A(1) N/AN/A161,590323,180———— — 2/23/2017(2) 2/23/2017———2,3652,6285,256— 131,834 11/16/2017(3) 10/18/2017——————4,290 125,354 11/16/2017(4) 10/18/2017——————3,430 53,680 (1)The amounts reported represent the target and maximum amounts that would potentially have been payable in cash to the NEOs as annual incentivebonus awards under the annual bonus plan with respect to 2017 performance. The annual incentive bonus awards with respect to 2017 performancedid not include a threshold amount that would potentially be payable to the NEOs. As reflected in the “Non-Equity Incentive Plan Compensation”column of the Summary Compensation Table and as described above under “Compensation Discussion and Analysis-Elements of ExecutiveCompensation-Annual Incentive Bonus,” the target level of performance with respect to 2017 was not met, and, upon the recommendation ofexecutive management, the Compensation Committee did not award our executives, including our NEOs, annual incentive bonus award paymentswith respect to 2017 performance.(2)Performance units were awarded by the Compensation Committee on February 23, 2017 pursuant to the 2000 LTIP. Performance units vest in threeannual increments (tranches), based upon our achievement of the performance measure set by the Compensation Committee during the one-yearperformance periods that end on December 31 of each year following the date of grant. Under applicable accounting standards, a tranche ofperformance units is not considered “granted” until the Compensation Committee has set the performance measure for that specific tranche of theaward. Therefore, performance units are measured at the grant date fair value once the performance measure is established for a specific tranche. Inaddition, since the performance units granted do not receive common unit distribution equivalents, the estimated fair value of these awards does notinclude the per unit distributions expected to be paid to unitholders during the vesting period.152Table of ContentsThe estimated future payouts and the grant date fair value presented in the table above with respect to performance units includes each tranche ofperformance units for which the Compensation Committee established a performance measure during 2017. For 2017, the amounts presented includethe one tranche of each of the 2015, 2016 and 2017 performance unit awards that was subject to vesting based on the performance criteriaestablished by the Compensation Committee on February 23, 2017 with respect to 2017 performance, as illustrated in the table below:AwardTranche Considered “Granted” in 2017 With Respectto 2017 Performance Measure2015 Performance Unit Award3rd2016 Performance Unit Award2nd2017 Performance Unit Award1stOn January 25, 2018, the Compensation Committee determined that, based on the performance level attained for the performance period endedDecember 31, 2017, the performance units reported in the table above did not vest. See “Compensation Discussion and Analysis-Elements ofExecutive Compensation-Long Term Incentive Awards-Performance Units” for a description of the performance measure and the performance levelattained with respect to the 2017 performance period. See “Compensation Discussion and Analysis-Impact of Accounting and Tax Treatments-Accounting Treatment” and footnote (1) to the Summary Compensation Table above in this Item 11 for information regarding the assumptions madein valuation.(3)Restricted units of NuStar Energy were approved by the Compensation Committee on October 18, 2017, and the grant date for these NuStar Energyrestricted units was set at that time for the date that was as soon as administratively practicable after the meeting and no earlier than the thirdbusiness day following our third quarter earnings release. The NuStar Energy restricted units were awarded pursuant to the 2000 LTIP and vest 1/5annually over five years beginning on the first anniversary of the grant date. All grantees receiving NuStar Energy restricted units are entitled toreceive an amount in cash equal to the product of (a) the number of restricted units granted to the grantee that remain outstanding and unvested as ofthe record date for such quarter and (b) the quarterly distribution declared by the Board for such quarter with respect to NuStar Energy’s commonunits. See “Compensation Discussion and Analysis-Impact of Accounting and Tax Treatments-Accounting Treatment” and footnote (1) to theSummary Compensation Table above in this Item 11 for information regarding the assumptions made in valuation.(4)Restricted units of NuStar GP Holdings were approved by the compensation committee of NuStar GP Holdings on October 18, 2017, and the grantdate for these NuStar GP Holdings restricted units was set at that time for the date that was as soon as administratively practicable after the meetingand no earlier than the third business day following NuStar GP Holdings’ third quarter earnings release. The NuStar GP Holdings restricted unitswere awarded pursuant to the NuStar GP Holdings Long-Term Incentive Plan, as amended and restated as of April 1, 2007, and vest 1/5 annuallyover five years beginning on the first anniversary of the grant date. All grantees receiving NuStar GP Holdings restricted units are entitled to receivean amount in cash equal to the product of (a) the number of restricted units granted to the grantee that remain outstanding and unvested as of therecord date for such quarter and (b) the quarterly distribution declared by the NuStar GP Holdings Board for such quarter with respect to NuStar GPHoldings’ common units. See “Compensation Discussion and Analysis-Impact of Accounting and Tax Treatments-Accounting Treatment” andfootnote (1) to the Summary Compensation Table above in this Item 11 for information regarding the assumptions made in valuation.At the effective time of the Merger, each outstanding award of NuStar GP Holdings restricted units will be converted, on the same terms andconditions as were applicable to the awards immediately prior to the Merger, into an award of NuStar Energy restricted units. The number of NuStarEnergy restricted units subject to the converted awards will be determined as provided in the Merger Agreement.153Table of ContentsOUTSTANDING EQUITY AWARDSAT DECEMBER 31, 2017The following table provides information regarding our NEOs’ unvested restricted units and the target amount of our NEOs’ unvested performance units as ofDecember 31, 2017. The value of NuStar Energy restricted units, NuStar Energy performance units and NuStar GP Holdings restricted units reported belowwas determined by multiplying (1) the number of units reflected in the table by (2) $29.95 (the closing price of NuStar Energy common units on December29, 2017, the last trading day of the year) or $15.70 (the closing price of NuStar GP Holdings common units on December 29, 2017, the last trading day of theyear), as applicable.At the effective time of the Merger, each outstanding award of NuStar GP Holdings restricted units will be converted, on the same terms and conditions aswere applicable to the awards immediately prior to the Merger, into an award of NuStar Energy restricted units. The number of NuStar Energy restricted unitssubject to the converted awards will be determined as provided in the Merger Agreement. Each of our NEOs has agreed and acknowledged that the Mergerwill not be deemed to trigger a “change of control” as defined under any NuStar Energy or NuStar GP Holdings plan or award, and has waived any rights tovesting, payment or other benefit thereunder that would arise upon a “change of control,” to which he or she might otherwise have been entitled. NameUnit AwardsType of AwardNumber of UnitsThat Have NotVested (#)MarketValue ofUnits ThatHave NotVested ($)EquityIncentivePlan Awards:Number ofUnearned Unitsor Other RightsThat Have NotVested (#)EquityIncentivePlan Awards: Marketor Payout Value ofUnearned Units orOther Rights ThatHave Not Vested ($)BarronNuStar Energy Performance Unit(1)——22,480673,276NuStar EnergyRestricted Unit (2)35,2721,056,396——NuStar GP Holdings RestrictedUnit (3)27,505431,829——ShoafNuStar Energy Performance Unit(4)——10,245306,838NuStar EnergyRestricted Unit (5)16,102482,255——NuStar GP Holdings RestrictedUnit (6)12,551197,051——BrownNuStar Energy Performance Unit(7)——11,035330,498NuStar EnergyRestricted Unit (8)17,607527,330——NuStar GP Holdings RestrictedUnit (9)13,709215,231——OliverNuStar Energy Performance Unit(10)——7,772232,771NuStar EnergyRestricted Unit (11)11,479343,796——NuStar GP Holdings RestrictedUnit (12)8,924140,107——TrubyNuStar Energy Performance Unit(13)——5,444163,048NuStar EnergyRestricted Unit (14)9,650289,018——NuStar GP Holdings RestrictedUnit (15)6,25998,266——154Table of Contents(1)Mr. Barron’s target number of NuStar Energy performance units consist of: 2,666 units awarded January 29, 2015; 8,814 units awarded February 24,2016; and 11,000 units awarded February 23, 2017.The performance units awarded in 2015, 2016 and 2017 are eligible to vest in three annual increments and are payable in NuStar Energy’s commonunits. Upon vesting, the performance units are converted into a number of NuStar Energy common units based upon NuStar Energy’s performanceduring the one-year performance periods that end on December 31 of each year following the date of grant against an objective performance measureestablished by the Compensation Committee.On January 25, 2018, the Compensation Committee determined that, based on the performance level attained for the performance period endedDecember 31, 2017, the performance units available to vest under the 2015 awards, 2016 awards and 2017 awards with respect to 2017 performancedid not vest. See the table entitled “Grants of Plan-Based Awards During the Year Ended December 31, 2017” for the performance units that did notvest with respect to the 2017 performance period. See “Compensation Discussion and Analysis-Elements of Executive Compensation-Long TermIncentive Awards-Performance Units” for a description of the performance measure and the performance level attained with respect to the 2017performance period.If the maximum level of performance (200%) had been assumed for all of the target unvested performance units reported in the table, the number ofperformance units outstanding and the market value thereof as of December 31, 2017 would have been twice the amounts reflected in the table.(2)Mr. Barron’s restricted NuStar Energy units consist of: 950 restricted units granted December 16, 2013; 2,862 restricted units granted December 19,2014; 6,000 restricted units granted November 16, 2015; 8,800 restricted units granted November 16, 2016; and 16,660 restricted units grantedNovember 16, 2017. All of Mr. Barron’s NuStar Energy restricted units vest in 1/5 increments over five years, beginning on the first anniversary ofthe date of grant.(3)Mr. Barron’s restricted NuStar GP Holdings units consist of: 688 restricted units granted December 16, 2013; 1,922 restricted units grantedDecember 19, 2014; 4,380 restricted units granted November 16, 2015; 7,200 restricted units granted November 16, 2016; and 13,315 restrictedunits granted November 16, 2017. All of Mr. Barron’s NuStar GP Holdings restricted units vest in 1/5 increments over five years, beginning on thefirst anniversary of the date of grant.(4)Mr. Shoaf’s target number of NuStar Energy performance units consist of: 1,313 units awarded January 29, 2015; 4,156 units awarded February 24,2016; and 4,776 units awarded February 23, 2017. The performance units vest in accordance with the description in footnote (1) above.(5)Mr. Shoaf’s restricted NuStar Energy units consist of: 637 restricted units granted December 16, 2013; 1,444 restricted units granted December 19,2014; 2,790 restricted units granted November 16, 2015; 3,936 restricted units granted November 16, 2016; and 7,295 restricted units grantedNovember 16, 2017. All of Mr. Shoaf’s NuStar Energy restricted units vest in 1/5 increments over five years, beginning on the first anniversary of thedate of grant.(6)Mr. Shoaf’s restricted NuStar GP Holdings units consist of: 461 restricted units granted December 16, 2013; 970 restricted units granted December19, 2014; 2,058 restricted units granted November 16, 2015; 3,232 restricted units granted November 16, 2016; and 5,830 restricted units grantedNovember 16, 2017. All of Mr. Shoaf’s NuStar GP Holdings restricted units vest in 1/5 increments over five years, beginning on the first anniversaryof the date of grant.(7)Ms. Brown’s target number of NuStar Energy performance units consist of: 1,414 units awarded January 29, 2015; 4,476 units awarded February 24,2016; and 5,145 units awarded February 23, 2017. The performance units vest in accordance with the description in footnote (1) above.(8)Ms. Brown’s restricted NuStar Energy units consist of: 950 restricted units granted December 16, 2013; 1,554 restricted units granted December 19,2014; 3,003 restricted units granted November 16, 2015; 4,240 restricted units granted November 16, 2016; and 7,860 restricted units grantedNovember 16, 2017. All of Ms. Brown’s NuStar Energy restricted units vest in 1/5 increments over five years, beginning on the first anniversary ofthe date of grant.(9)Ms. Brown’s restricted NuStar GP Holdings units consist of: 688 restricted units granted December 16, 2013; 1,044 restricted units grantedDecember 19, 2014; 2,217 restricted units granted November 16, 2015; 3,480 restricted units granted November 16, 2016; and 6,280 restricted unitsgranted November 16, 2017. All of Ms. Brown’s NuStar GP Holdings restricted units vest in 1/5 increments over five years, beginning on the firstanniversary of the date of grant.155Table of Contents(10)Mr. Oliver’s target number of NuStar Energy performance units consist of: 996 units awarded January 29, 2015; 3,152 units awarded February 24,2016; and 3,624 units awarded February 23, 2017. The performance units vest in accordance with the description in footnote (1) above.(11)Mr. Oliver’s restricted NuStar Energy units consist of: 671 restricted units granted December 16, 2013; 1,094 restricted units granted December 19,2014; 2,115 restricted units granted November 16, 2015; 2,984 restricted units granted November 16, 2016; and 4,615 restricted units grantedNovember 16, 2017. All of Mr. Oliver’s NuStar Energy restricted units vest in 1/5 increments over five years, beginning on the first anniversary ofthe date of grant.(12)Mr. Oliver’s restricted NuStar GP Holdings units consist of: 486 restricted units granted December 16, 2013; 736 restricted units granted December19, 2014; 1,560 restricted units granted November 16, 2015; 2,452 restricted units granted November 16, 2016; and 3,690 restricted units grantedNovember 16, 2017. All of Mr. Oliver’s NuStar GP Holdings restricted units vest in 1/5 increments over five years, beginning on the first anniversaryof the date of grant.(13)Mr. Truby’s target number of NuStar Energy performance units consist of: 664 units awarded July 23, 2015; 2,224 units awarded February 24, 2016;and 2,556 units awarded February 23, 2017. The performance units vest in accordance with the description in footnote (1) above.(14)Mr. Truby’s restricted NuStar Energy units consist of: 747 restricted units granted December 16, 2013; 1,018 restricted units granted December 19,2014; 1,491 restricted units granted November 16, 2015; 2,104 restricted units granted November 16, 2016; and 4,290 restricted units grantedNovember 16, 2017. All of Mr. Truby’s NuStar Energy restricted units vest in 1/5 increments over five years, beginning on the first anniversary ofthe date of grant.(15)Mr. Truby’s restricted NuStar GP Holdings units consist of: 1,101 restricted units granted November 16, 2015; 1,728 restricted units grantedNovember 16, 2016; and 3,430 restricted units granted November 16, 2017. All of Mr. Truby’s NuStar GP Holdings restricted units vest in 1/5increments over five years, beginning on the first anniversary of the date of grant.OPTION EXERCISES AND UNITS VESTEDDURING THE YEAR ENDED DECEMBER 31, 2017The following table provides information regarding the vesting of restricted units and performance units held by our NEOs during 2017. None of our NEOshad outstanding unit option awards during 2017. Unit AwardsNameNumber of UnitsAcquired on Vesting (#)Value Realizedon Vesting ($)(1)Barron27,269(2)1,106,122Shoaf13,734(3)553,181Brown15,654(4)616,374Oliver10,988(5)430,859Truby6,074(6)237,937(1)The value realized on vesting of NuStar Energy restricted units and performance units was calculated by multiplying the closing price of NuStarEnergy common units on the NYSE on the date of vesting by the number of NuStar Energy units vested. The value realized on vesting of NuStar GPHoldings restricted units was calculated by multiplying the closing price of NuStar GP Holdings common units on the NYSE on the date of vestingby the number of NuStar GP Holdings units vested. In the case of the December 16, 2017 vesting date, which was not a trading day, the valuerealized was calculated using the NuStar Energy or NuStar GP Holdings closing price, as applicable, on the preceding trading day. The closingprices on the applicable dates are as follows:156Table of ContentsClosing Prices for 2017 VestingsDateNuStar Energy Closing Price ($)January 26, 201755.31November 16, 201729.22December 15, 201730.54December 19, 201730.18DateNuStar GP Holdings Closing Price ($)November 16, 201715.65December 15, 201715.05December 19, 201714.50(2)Mr. Barron's restricted NuStar Energy units vested in 2017 as follows: 4,200 units on November 16, 2017; 950 units on December 16, 2017; and2,121 units on December 19, 2017. Mr. Barron's restricted NuStar GP Holdings units vested in 2017 as follows: 3,260 units on November 16, 2017;688 units on December 16, 2017; and 1,439 units on December 19, 2017. On January 26, 2017, 14,611 of Mr. Barron’s NuStar Energy performanceunits vested.(3)Mr. Shoaf’s restricted NuStar Energy units vested in 2017 as follows: 1,914 units on November 16, 2017; 637 units on December 16, 2017; and1,190 units on December 19, 2017. Mr. Shoaf’s restricted NuStar GP Holdings units vested in 2017 as follows: 1,494 units on November 16, 2017;461 units on December 16, 2017; and 809 units on December 19, 2017. On January 26, 2017, 7,229 of Mr. Shoaf’s NuStar Energy performance unitsvested.(4)Ms. Brown’s restricted NuStar Energy units vested in 2017 as follows: 2,061 units on November 16, 2017; 950 units on December 16, 2017; and1,523 units on December 19, 2017. Ms. Brown’s restricted NuStar GP Holdings units vested in 2017 as follows: 1,609 units on November 16, 2017;688 units on December 16, 2017; and 1,038 units on December 19, 2017. On January 26, 2017, 7,785 of Ms. Brown’s NuStar Energy performanceunits vested.(5)Mr. Oliver’s restricted NuStar Energy units vested in 2017 as follows: 1,451 units on November 16, 2017; 671 units on December 16, 2017; and1,114 units on December 19, 2017. Mr. Oliver’s restricted NuStar GP Holdings units vested in 2017 as follows: 1,133 units on November 16, 2017;486 units on December 16, 2017; and 733 units on December 19, 2017. On January 26, 2017, 5,400 of Mr. Oliver’s NuStar Energy performance unitsvested.(6)Mr. Truby’s restricted NuStar Energy units vested in 2017 as follows: 1,023 units on November 16, 2017; 747 units on December 16, 2017; and 841units on December 19, 2017. On November 16, 2017, 799 of Mr. Truby’s restricted NuStar GP Holdings units vested. On January 26, 2017, 2,664 ofMr. Truby’s NuStar Energy performance units vested.157Table of ContentsPOST-EMPLOYMENT COMPENSATIONPENSION BENEFITSFOR THE YEAR ENDED DECEMBER 31, 2017We maintain a noncontributory defined benefit pension plan (the Pension Plan) in which most of our employees are eligible to participate and under whichcontributions by individual participants are neither required nor permitted. We also maintain a noncontributory, non-qualified excess pension plan (theExcess Pension Plan), which provides supplemental pension benefits to certain highly compensated employees. The Excess Pension Plan provides eligibleemployees with additional retirement savings opportunities that cannot be achieved with tax-qualified plans due to the Code’s limits on (1) annualcompensation that can be taken into account under qualified plans or (2) annual benefits that can be provided under qualified plans.The following table provides information regarding the accumulated benefits of our NEOs under our pension plans during the year ended December 31,2017.NamePlan NameNumber of YearsCredited ServicePresent Value ofAccumulatedBenefit ($)(1)Payments During LastFiscal Year ($)BarronPension Plan(2) 366,056 — Excess Pension Plan(2) 610,215 — ShoafPension Plan(2) 483,611 — Excess Pension Plan(2) 482,321 — BrownPension Plan(2) 484,661 — Excess Pension Plan(2) 611,118 — OliverPension Plan(2) 336,416 — Excess Pension Plan(2) 376,814 — TrubyPension Plan(2) 465,657 — Excess Pension Plan(2) 132,458 — (1)The present values stated in the table above were calculated using the same interest rates and mortality tables we use for our financial reporting. Thepresent values as of December 31, 2017 were determined using plan-specific discount rates (3.73% for the Pension Plan and 3.42% for the ExcessPension Plan) and the plans’ earliest unreduced retirement age (age 62). The present values reflect post-retirement mortality rates based on theRP2006 generational mortality table projected using scale MP2016. No decrements were included for pre-retirement termination, mortality ordisability. Where applicable, lump sums were determined based on a 3.23% interest rate and the mortality table prescribed by the IRS in Rev. Ruling2007-67 and updated by IRS Notices 2008-85 and 2013-49 for distributions in the years 2009-2017.(2)As of December 31, 2013, the final average pay formula used in the Pension Plan and the Excess Pension Plan, which was based on years of serviceand compensation during service, was frozen. Benefits for service after December 31, 2013 accrue under a cash balance formula described below.The number of years of credited service under the final average pay formula and the cash balance formula for each of our NEOs under the PensionPlan and the Excess Pension Plan are set forth below.158Table of ContentsNamePlan NameNumber of YearsCredited Service - Final Average PayFormula (Frozen as ofDecember 31, 2013)Number of YearsCredited Service - Cash BalanceFormulaBarronPension Plan7.5 17.0Excess Pension Plan13.0 17.0ShoafPension Plan7.5 32.5Excess Pension Plan28.5 32.5BrownPension Plan6.7 20.3Excess Pension Plan6.7 20.3OliverPension Plan6.8 20.7Excess Pension Plan6.8 20.7TrubyPension Plan7.5 25.0Excess Pension Plan7.5 25.0Pension PlanThe Pension Plan is a qualified, non-contributory defined benefit pension plan that became effective as of July 1, 2006. The Pension Plan coverssubstantially all of our employees and generally provides retirement income calculated under a cash balance formula (CBF), which is comprised ofcontribution credits based on age and years of vesting service and interest credits. Employees become fully vested in their CBF benefits upon attaining threeyears of vesting service. Prior to January 1, 2014, eligible employees were covered under either the CBF or a defined benefit final average pay formula (FAP)based on years of service and compensation during their period of service, and employees became fully vested in their benefits upon attaining five years ofservice under the FAP and upon attaining three years of service under the CBF. The Pension Plan was amended to freeze the FAP benefit at December 31,2013 and, on or after January 1, 2014, all employees are covered under the CBF.An eligible employee’s benefits under the Pension Plan will be equal to:•1.6% of the employee’s average monthly compensation multiplied by the employee’s years of credited service for service through December 31,2013 for the FAP benefit plus•the employee’s CBF account balance.An employee may start receiving his or her benefits under the Pension Plan at any time following his or her separation of service, but must begin receivingbenefits by April 1 of the year after the employee attains age 70½. Mr. Shoaf, Ms. Brown and Mr. Truby have attained the Early Retirement Age, which isdefined in the Pension Plan as age 55. If an employee with a FAP benefit begins receiving benefits after the Early Retirement Age and before age 62, the FAPbenefit amount will be reduced by 4% for each full year between the benefit start date and age 62. If an employee with a FAP benefit begins receivingbenefits before the Early Retirement Age, the amount of the FAP benefit will be the actuarial equivalent of the lump sum that otherwise would have beenpayable on the date the employee starts benefits. The CBF benefit amount under the Pension Plan is based on the CBF account balance and, therefore, is notreduced based on the age at which the employee begins receiving benefits.Excess Pension PlanThe Excess Pension Plan, which became effective July 1, 2006, provides benefits to our eligible employees whose pension benefits under the Pension Planand the Valero Energy Pension Plan, where applicable, are subject to limitations under the Code. The Excess Pension Plan is an excess benefit plan ascontemplated under ERISA for those benefits provided in excess of the maximum amount allowable under Section 415 of the Code. Benefits provided as aresult of other statutory limitations are limited to a select group of management or highly compensated employees. The Excess Pension Plan is not intendedto constitute either a qualified plan under the Code or a funded plan subject to ERISA. For our employees who were eligible to receive a benefit under theValero Energy Excess Pension Plan (the Predecessor Excess Pension Plan) as of July 1, 2006, the Excess Pension Plan assumed the liabilities of thePredecessor Excess Pension Plan and will provide a single, nonqualified defined benefit to eligible employees for their pre-July 1, 2006 benefit accrualsunder the Predecessor Excess Pension Plan and their post-July 1, 2006 benefit accruals under the Excess Pension Plan.159Table of ContentsAn eligible employee’s monthly pension under the Excess Pension Plan will be equal to:•1.6% of the employee’s average monthly compensation multiplied by the employee’s years of credited service for service through December 31,2013, plus•the employee’s CBF benefits, in each case without regard to the limitations imposed by the Code, less•the employee’s Pension Plan benefit.All of our NEOs participated in the Excess Pension Plan during 2017.NONQUALIFIED DEFERRED COMPENSATIONFOR THE YEAR ENDED DECEMBER 31, 2017The following table provides information regarding our contributions and the contributions by each of our NEOs under our non-qualified definedcontribution plan, the Excess Thrift Plan, during the year ended December 31, 2017. The table also presents each NEO’s withdrawals, earnings and year-endbalances in such plan. Please see the description of our Excess Thrift Plan above in “Compensation Discussion and Analysis-Elements of ExecutiveCompensation-Post-Employment Benefits.”NameExecutiveContributionsin 2017 ($)(1)RegistrantContributions in2017 ($)(2)AggregateEarnings/(Losses) in 2017 ($)(3)AggregateWithdrawals/Distributions ($)AggregateBalance atDecember 31,2017 ($)(4)Barron— 36,316 (37,400) — 83,402 Shoaf— 7,226 (5,798) — 15,482 Brown— 42,543 (36,590) — 75,737 Oliver— 11,392 (6,711) — 15,728 Truby— 4,678 (1,349) — 3,637 (1)The NEOs made no contributions during 2017.(2)Amounts reported represent our contributions to our Excess Thrift Plan. All of the amounts included in this column are included within the amountsreported as “All Other Compensation” for 2017 in the Summary Compensation Table.(3)Amounts reported reflect the losses for each NEO’s respective account in our Excess Thrift Plan.(4)Amounts include the aggregate balance at year end, if any, of each NEO’s respective account in our Excess Thrift Plan and include registrantcontributions that were previously reported as compensation to each of the NEOs in the “All Other Compensation” column in the SummaryCompensation Table for 2017 and previous years, as applicable.160Table of ContentsPOTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROLSEC regulations require us to disclose potential payments to an NEO in connection with his or her termination or a change of control of NuStar Energy, otherthan those amounts disclosed under the headings “Pension Benefits For The Year Ended December 31, 2017” and “Nonqualified Deferred Compensation ForThe Year Ended December 31, 2017” above in this Item 11 or amounts pursuant to arrangements that do not discriminate in favor of executive officers andare generally available to salaried employees. The following narrative and table provide the required disclosures.None of our NEOs have employment agreements, other than the change of control severance agreements described below. As a result, in the event of atermination, retirement, death or disability that does not occur in connection with a change of control, an NEO will only receive the compensation or benefitsto which he or she would already be entitled under the terms of, as applicable, the defined contribution, defined benefit, medical or long-term incentive plans.Therefore, these scenarios are not presented in the table below.Each of our NEOs has entered into a change of control severance agreement with NuStar Energy and our wholly owned subsidiary, NuStar Services Co. Theseagreements seek to ensure the continued availability of these executives in the event of a “change of control” (described below). The agreements contain tiersof compensation and benefits based on each NEO’s position. Each tier corresponds to a certain “severance multiple” used to calculate cash severance andother benefits to be provided under the agreements. The following table sets forth the severance multiple applicable to each NEO, based on his or her currentofficer position.NameApplicable Officer PositionSeverance MultipleBarronChief Executive Officer3ShoafExecutive Vice President2.5BrownExecutive Vice President2.5OliverSenior Vice President2TrubySenior Vice President2If a change of control occurs, the agreements become operative for a fixed three-year period. The agreements provide generally that the NEO’s terms ofemployment will not be adversely changed during the three-year period after a change of control. In addition, any outstanding unit options held by the NEOwill automatically vest, restrictions applicable to any outstanding restricted units held by the NEO will lapse and any unvested performance units held by theNEO will fully vest and become payable at 200% of target. The NEOs also are entitled to receive a payment in an amount sufficient to make the NEO wholefor any excise tax on excess parachute payments imposed under Section 4999 of the Code, as set forth in the table below. Each agreement subjects the NEOto obligations of confidentiality, both during the term and after termination, for secret and confidential information that the NEO acquired during his or heremployment relating to NuStar Energy, NuStar Services Co and affiliated companies.For purposes of these agreements, a “change of control” means any of the following (subject to additional particulars as stated in the agreements):•the acquisition by an individual, entity or group of beneficial ownership of 40% of NuStar GP Holdings’ voting interests;•the failure of NuStar GP Holdings to control NuStar GP, LLC, NuStar Energy’s general partner, Riverwalk Logistics, L.P., or all of the generalpartner interests of NuStar Energy;•Riverwalk Logistics, L.P. ceases to be NuStar Energy’s general partner or Riverwalk Logistics, L.P. is no longer controlled by either NuStar GP,LLC or one of its affiliated companies;•the acquisition of more than 50% of all voting interests of NuStar Energy then outstanding;•certain consolidations or mergers of NuStar GP Holdings;•certain consolidations or mergers of NuStar Energy;•the sale of all or substantially all of the assets of NuStar GP Holdings to anyone other than its affiliated companies;•the sale of all or substantially all of the assets of NuStar Energy to anyone other than its affiliated companies; or•a change in the composition of the NuStar GP Holdings board of directors so that fewer than a majority of those directors are “incumbentdirectors” as defined in the agreements.161Table of ContentsIn the agreements, “cause” is defined to mean, generally, the willful and continued failure of the NEO to perform substantially his or her duties, or the willfulengaging by the NEO in illegal or gross misconduct that is materially and demonstrably injurious to NuStar Energy, NuStar Services Co or any affiliatedcompany.“Good reason” is defined to mean, generally:•a diminution in the NEO’s position, authority, duties or responsibilities;•failure of the successor of NuStar Energy or NuStar Services Co to assume and perform under the agreement; and•relocation of the NEO or increased travel requirements.Except as otherwise noted, the values in the table below assume that a change of control occurred on December 31, 2017 and that the NEO’s employmentterminated on that date.Under the change of control severance agreements, if an NEO’s employment is terminated for “cause” following a change of control, the NEO will not receiveany additional benefits or compensation as a result of the termination and will only receive accrued salary or vacation pay that remained unpaid through thedate of termination and any other benefits that the NEO would already be entitled to receive, if any. Therefore, there is no presentation of termination for“cause” in the table below.Each of our NEOs has agreed and acknowledged that the Merger will not be deemed to trigger a “change of control” as defined under any NuStar Energy orNuStar GP Holdings plan or award, and has waived any rights to vesting, payment or other benefit thereunder that would arise upon a “change of control,” towhich he or she might otherwise have been entitled.162Table of ContentsExecutive Benefits andPayments(1)Termination ofEmployment by theEmployer Other Than for “Cause,” Deathor Disability, or bythe Executive for “Good Reason” ($)(2)Termination ofEmployment because of Death orDisability ($)(3)Termination by theExecutive Other Than for “Good Reason” ($)(4)ContinuedEmploymentFollowing Change of Control ($)(5)Salary (1) Barron 1,776,750 — — — Shoaf900,500 — — — Brown970,000 — — — Oliver656,000 — — — Truby610,000 — — — Bonus (1) Barron 3,200,000 800,000 800,000 800,000 Shoaf1,125,432 321,552 321,552 321,552 Brown1,212,005 346,287 346,287 346,287 Oliver784,761 261,587 261,587 261,587 Truby630,000 210,000 210,000 210,000 Pension and Excess PensionBenefits Barron 424,576 — — — Shoaf247,975 — — — Brown348,378 — — — Oliver142,462 — — — Truby137,743 — — — Contributions under DefinedContribution Plans Barron 157,547 — — — Shoaf58,564 — — — Brown139,321 — — — Oliver55,184 — — — Truby41,755 — — — Health and Welfare PlanBenefits (6) Barron 43,932 — — — Shoaf53,709 — — — Brown28,662 — — — Oliver42,209 — — — Truby27,566 — — — 163Table of ContentsExecutive Benefits andPayments(1)Termination ofEmployment by theEmployer Other Than for “Cause,” Deathor Disability, or bythe Executive for “Good Reason” ($)(2)Termination ofEmployment because of Death orDisability ($)(3)Termination by theExecutive Other Than for “Good Reason” ($)(4)ContinuedEmploymentFollowing Change of Control ($)(5)Accelerated Vesting of UnitOptions Barron — — — — Shoaf — — — — Brown — — — — Oliver — — — — Truby — — — — Accelerated Vesting ofRestricted Units (7) Barron 1,488,225 1,488,225 1,488,225 1,488,225 Shoaf679,306 679,306 679,306 679,306 Brown742,561 742,561 742,561 742,561 Oliver483,903 483,903 483,903 483,903 Truby387,284 387,284 387,284 387,284 Accelerated Vesting ofPerformance Units (8) Barron 1,346,552 1,346,552 1,346,552 1,346,552 Shoaf613,676 613,676 613,676 613,676 Brown660,996 660,996 660,996 660,996 Oliver465,542 465,542 465,542 465,542 Truby326,096 326,096 326,096 326,096 280G Tax Gross-Up (9) Barron 3,312,255 — — — Shoaf1,350,583 — — — Brown1,388,646 — — — Oliver— — — — Truby777,507 — — — Totals Barron 11,749,837 3,634,777 3,634,777 3,634,777 Shoaf5,029,745 1,614,534 1,614,534 1,614,534 Brown5,490,569 1,749,844 1,749,844 1,749,844 Oliver2,630,061 1,211,032 1,211,032 1,211,032 Truby2,937,951 923,380 923,380 923,380 (1)Per SEC regulations, for purposes of this analysis we assumed each NEO’s compensation at the time of each triggering event to be as stated below.The listed salary is the NEO’s actual annualized rate of pay as of December 31, 2017. The listed bonus amount (referred to in these footnotes as theHighest Annual Bonus) represents the highest bonus earned by the executive with respect to any of the fiscal years 2014, 2015 and 2016 (the threefull fiscal years prior to the date of the assumed change of control) or the most recent fiscal year (2017):NameAnnual Salary ($)Highest Annual Bonus ($)Barron592,250 800,000 Shoaf360,200 321,552 Brown388,000 346,287 Oliver328,000 261,587 Truby305,000 210,000 (2)The change of control severance agreements provide that if the employer terminates the NEO’s employment (other than for “cause,” death or“disability,” as defined in the agreements) or if the NEO terminates his or her employment for “good reason,” as defined in the agreements, the NEOis generally entitled to receive the following:164Table of Contents(A) a lump sum cash payment equal to the sum of:(i)accrued and unpaid compensation through the date of termination, including a pro-rata annual bonus based on the Highest Annual Bonus;(ii)the NEO’s severance multiple multiplied by the sum of the NEO’s annual base salary plus the NEO’s Highest Annual Bonus;(iii)the amount of the excess of the actuarial present value of the pension benefits (qualified and nonqualified) the NEO would have received foran additional number of years of service equal to the NEO’s severance multiple over the actuarial present value of the NEO’s actual pensionbenefits; and(iv)the equivalent of employer contributions under the tax-qualified and supplemental defined contribution plans for the number of years equalto the NEO’s severance multiple;(B) continued welfare benefits for a number of years equal to the NEO’s severance multiple; and(C) vesting of all outstanding equity incentive awards on the date of the change of control, as described above.(3)If the NEO’s employment is terminated by reason of his or her death or disability, then his or her estate or beneficiaries will be entitled to receive alump sum cash payment equal to any accrued and unpaid salary and vacation pay plus a bonus equal to the Highest Annual Bonus earned by theNEO (prorated to the date of termination). In addition, in the case of disability, the NEO would be entitled to any disability and related benefits atleast as favorable as those provided by us under our plans and programs during the 120-days prior to the NEO’s termination of employment. Inaddition, all outstanding equity incentive awards will automatically vest on the date of the change of control, as described above.(4)If the NEO voluntarily terminates his or her employment other than for “good reason,” then he or she will be entitled to a lump sum cash paymentequal to any accrued and unpaid salary and vacation pay plus a bonus equal to the Highest Annual Bonus earned by the NEO (prorated to the date oftermination). In addition, all outstanding equity incentive awards will automatically vest on the date of the change of control, as described above.(5)The change of control severance agreements provide for a three-year term of employment following a change of control. The agreements generallyprovide that the NEO will continue to receive a salary and bonus at least as favorable as the highest salary received during the past 12 months andthe highest bonus received during the past three years and will continue to receive benefits on terms at least as favorable as in effect prior to thechange of control. Accordingly, no additional amounts are shown for salary, pension and excess pension benefits, contributions under definedcontribution plans and health and welfare plan benefits because those amounts would remain as in effect at the time of a change of control. Theamount shown as bonus reflects each NEO’s Highest Annual Bonus. In addition, all outstanding equity incentive awards will automatically vest onthe date of the change of control, as described above.(6)The NEO is entitled to coverage under the welfare benefit plans (e.g., health, dental, etc.) for a number of years following the date of termination equalto the NEO’s severance multiple.(7)The amounts stated in the table represent the gross value of previously unvested restricted units, derived by multiplying (x) the number of unitswhose restrictions lapsed because of the change of control, times (y) (as applicable) $29.95 (the closing price of NuStar Energy’s common units onthe NYSE on December 29, 2017, the last trading day of 2017) or $15.70 (the closing price of NuStar GP Holdings’ common units on the NYSE onDecember 29, 2017, the last trading day of 2017).(8)The amounts stated in the table represent the product of (x) the number of performance units whose vesting was accelerated because of the change ofcontrol, times (y) 200%, times (z) $29.95 (the closing price of NuStar Energy’s common units on the NYSE on December 29, 2017, the last tradingday of 2017).(9)If any payment or benefit is determined to be subject to an excise tax under Section 4999 of the Code, the impacted NEO is entitled to receive anadditional payment to adjust for the incremental tax cost of the payment or benefit. However, if it is determined that the NEO is entitled to receive anadditional payment to adjust for the incremental tax cost but the value of all payments to the NEO does not exceed 110% of 2.99 times the NEO’s“base amount” (as defined by Section 280G(b)(3) of the Code) (the Safe Harbor Amount), the additional payment will not be made and the amountpayable to the NEO will be reduced so that the aggregate value of all payments equals the Safe Harbor Amount.165Table of ContentsDIRECTOR COMPENSATIONFOR THE YEAR ENDED DECEMBER 31, 2017The following table provides a summary of compensation paid for the year ended December 31, 2017 to the directors who served on the Board during 2017.The table shows amounts earned by such persons for services rendered to NuStar GP, LLC in all capacities in which they served during 2017.NameFees Earned orPaid in Cash($)(1)Unit Awards($)(2)Non-EquityIncentive PlanCompensation ($)(3)Change in PensionValue andNonqualifiedDeferredCompensationEarnings ($)(3)All OtherCompensation ($)TOTAL ($)William E. Greehey141,167 119,977 N/AN/A—261,144 Bradley C. Barron(4) (4 ) (4 ) (4) (4 ) (4 ) J. Dan Bates106,667 94,994 N/AN/A—201,661 Dan J. Hill121,667 94,994 N/AN/A—216,661 Robert J. Munch90,667 94,994 N/AN/A—185,661 W. Grady Rosier97,167 94,994 N/AN/A—192,161 (1)The amounts disclosed in this column exclude reimbursement for expenses for transportation to and from Board meetings and lodging whileattending meetings.(2)The amounts reported for Messrs. Greehey, Bates, Hill and Rosier represent the grant date fair value for the November 16, 2017 grant of restrictedNuStar Energy units to them as non-employee directors for the fiscal year ended December 31, 2017 (4,106 restricted units for Mr. Greehey, asChairman, and 3,251 restricted units for each of Messrs. Bates, Hill, Munch and Rosier) based on the closing price of NuStar Energy’s common unitson the NYSE on November 16, 2017 ($29.22). Please see “Compensation Discussion and Analysis-Impact of Accounting and Tax Treatments-Accounting Treatment” above in this Item 11 and Note 23 of the Notes to Consolidated Financial Statements in Item 8 for information regarding theassumptions made in the valuation.As of December 31, 2017, each director listed in the table above held the following aggregate number of NuStar Energy restricted units. None of thedirectors had outstanding unit options as of December 31, 2017.NameAggregate # of Restricted UnitsGreehey6,336 Barron* Bates4,924 Hill4,924 Munch5,989 Rosier4,924 * Mr. Barron’s aggregate holdings are disclosed above in the Outstanding Equity Awards at December 31, 2017 table in thisItem 11.(3)Non-employee directors do not participate in these plans.(4)Mr. Barron was not compensated for his service as a director of NuStar GP, LLC. His compensation for his services as President and Chief ExecutiveOfficer is included above in the Summary Compensation Table.166Table of ContentsDirectors who are our employees receive no compensation (other than reimbursement of expenses) for serving as directors. The compensation structure for ournon-employee directors consists of the following components: (1) an annual cash retainer; (2) an annual restricted unit grant; (3) an additional cash paymentfor each meeting attended in-person and telephonically; (4) an additional annual cash retainer for each committee chair; (5) an additional annual retainer forthe Chairman of the Board, which includes both cash and restricted units; and (6) an additional annual cash retainer for the lead director.During 2017, the Compensation Committee engaged EPPA to review our non-employee directors’ compensation. Based on its review, EPPA recommended,and our Board and Compensation Committee approved effective July 27, 2017, increasing the annual cash retainer from $60,000 to $70,000 and increasingthe value of the annual equity award from $75,000 to $95,000, resulting in the compensation structure for our non-employee directors set forth in the tablebelow.Non-Employee Director Compensation ComponentAmountAnnual Cash Retainer ($)70,000Annual Restricted Unit Grant ($ value of restricted units)95,000Per Meeting Fees (in-person attendance) ($)1,500Per Meeting Fees (telephonic attendance) ($)500Annual Audit and Compensation Committee Chair Additional Retainers ($)15,000Annual Nominating, Governance and Conflicts Committee Chair Additional Retainer ($)10,000Annual Chairman of the Board Retainer ($25,000 value in restricted units/$50,000 cash)75,000Annual Lead Director Additional Retainer ($)15,000 As described above, we supplement the cash compensation paid to non-employee directors with an annual grant of restricted NuStar Energy units that vestsin equal annual installments over a three-year period. We believe this annual grant of restricted units increases the non-employee directors’ identificationwith the interests of NuStar Energy’s unitholders through ownership of NuStar Energy common units. Upon a non-employee director’s initial election to theBoard, the director will receive a grant of restricted units.In the event of a “change of control” as defined in the 2000 LTIP, all unvested restricted units previously granted immediately become vested. The 2000LTIP also contains anti-dilution provisions providing for an adjustment in the number of restricted units that have been granted to prevent dilution ofbenefits in the event there is a change in the capital structure of NuStar Energy that affects the NuStar Energy units. Each of our directors has agreed andacknowledged that the Merger will not be deemed to trigger a “change of control” as defined under any NuStar Energy or NuStar GP Holdings plan or award,and has waived any rights to vesting, payment or other benefit thereunder that would arise upon a “change of control,” to which he might otherwise havebeen entitled.167Table of ContentsITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDERMATTERSSECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORSThe following table sets forth information as of February 20, 2018 regarding: (1) NuStar Energy common units, 8.50% Series A Fixed-to-Floating RateCumulative Redeemable Perpetual Preferred Units (Series A Preferred Units) and 7.625% Series B Fixed-to-Floating Rate Cumulative Redeemable PerpetualPreferred Units (Series B Preferred Units); and (2) NuStar GP Holdings common units, in each case beneficially owned (or deemed beneficially owned) byeach director, each named executive officer and all of our directors and executive officers as a group. Unless otherwise indicated in the notes to the table,each of the named persons and members of the group has sole voting and investment power with respect to the units shown and none of the units shown arepledged as security. None of the named persons or members of the group beneficially owns (or is deemed to beneficially own) any NuStar Energy 9.00%Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units. NuStar Energy L.P. NuStar GP Holdings, LLC Common Units Series A Preferred Units Series B Preferred Units Common UnitsName ofBeneficial Owner (1) Number ofUnitsBeneficiallyOwned (2) Percentage ofUnits BeneficiallyOwned (2) Number ofUnitsBeneficiallyOwned (2) Percentage ofUnitsBeneficiallyOwned (2) Number ofUnitsBeneficiallyOwned (2) Percentage ofUnitsBeneficiallyOwned (2) Number ofUnitsBeneficiallyOwned (2) Percentage ofUnitsBeneficiallyOwned (2)William E. Greehey (3) 3,480,533 3.7% — * — * 9,178,320 21.4%Bradley C. Barron 53,640 * — * — * 31,540 *J. Dan Bates (4) 33,107 * — * — * — *Dan J. Hill (5) 28,149 * — * 8,000 * — *Robert J. Munch 2,406 * 1,000 * — * — *W. Grady Rosier (6) 35,035 * — * 12,000 * — *Mary Rose Brown 59,125 * — * — * 46,977 *Thomas R. Shoaf 25,137 * — * — * 12,022 *Daniel S. Oliver 30,628 * — * — * 12,920 *Michael Truby 16,633 * — * — * 1,028 * All directors and executiveofficers as a group (13people) (7) 3,797,807 4.1% 1,000 * 20,000 * 9,286,349 21.6% * Indicates that the percentage of beneficial ownership does not exceed 1% of the class.(1)The business address for all beneficial owners listed above is 19003 IH-10 West, San Antonio, Texas 78257.(2)As of February 20, 2018, 93,182,030 NuStar Energy common units, 9,060,000 NuStar Energy Series A Preferred Units, 15,400,000 NuStar EnergySeries B Preferred Units, 6,900,000 NuStar Energy Series C Preferred Units and 42,953,132 NuStar GP Holdings common units were outstanding.Beneficial ownership is calculated in accordance with Rule 13d-3 of the Exchange Act. Restricted units awarded under NuStar GP, LLC’s long-termincentive plan and phantom units (which we refer to as “restricted units” for purposes of Part III of this Annual Report on Form 10-K) awarded underNuStar GP Holdings’ long-term incentive plan are rights to receive NuStar Energy common units or NuStar GP Holdings common units, respectively,upon vesting and, as such, may not be disposed of or voted until vested. The restricted units do not vest within 60 days after February 20, 2018.Accordingly, the restricted units set forth in the table below are not included in the calculation of beneficial ownership pursuant to Rule 13d-3 andare not reflected in the table above. As described below in Item 13, on February 7, 2018, we, Riverwalk Logistics, L.P., NuStar GP, LLC, Merger Sub,Riverwalk Holdings, LLC and NuStar GP Holdings entered into the Merger Agreement pursuant to which Merger Sub will merge with and intoNuStar GP Holdings with NuStar GP Holdings being the surviving entity, such that we will be the sole member of NuStar GP Holdings following theMerger. At the effective time of the Merger, each NuStar GP Holdings common unit outstanding will be converted into the right to receive 0.55 of aNuStar Energy common unit and each award of NuStar GP Holdings restricted units will be converted into an award of NuStar Energy restrictedunits, in each case as provided in the Merger Agreement.168Table of Contents Restricted Units Not Reflected in Table AboveName NuStar Energy L.P. NuStar GP Holdings, LLCWilliam E. Greehey 6,336 10,558Bradley C. Barron 35,272 27,505J. Dan Bates 4,924 —Dan J. Hill 4,924 —Robert J. Munch 5,166 —W. Grady Rosier 4,924 —Mary Rose Brown 17,607 13,709Thomas R. Shoaf 16,102 12,551Daniel S. Oliver 11,479 8,924Michael Truby 9,650 6,259All directors and executive officers as a group (13 people) 140,897 97,670(3)The number of NuStar GP Holdings common units shown as beneficially owned by Mr. Greehey includes 385,889 common units owned indirectlyby Mr. Greehey through a limited liability company.(4)The number of NuStar Energy common units shown as beneficially owned by Mr. Bates includes 28,526 common units owned indirectly by Mr.Bates through a trust.(5)The number of NuStar Energy common units shown as beneficially owned by Mr. Hill includes 600 common units owned indirectly by Mr. Hillthrough his spouse.(6)The number of NuStar Energy common units shown as beneficially owned by Mr. Rosier includes an aggregate of 29,215 common units ownedindirectly by Mr. Rosier through two trusts.(7)The number of NuStar Energy common units shown as beneficially owned by all directors and executive officers as a group includes 28,526common units owned indirectly by Mr. Bates, 600 common units owned indirectly by Mr. Hill and 29,215 common units owned indirectly by Mr.Rosier, as described above. The number of NuStar GP Holdings common units shown as beneficially owned by all directors and executive officers asa group includes 385,889 common units owned indirectly by Mr. Greehey.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSThe following table sets forth information as of December 31, 2017 regarding each entity known to us to be the beneficial owner of more than 5% of NuStarEnergy’s outstanding common units, and is based solely upon reports filed by such entities with the SEC.Name and Address of Beneficial Owner Number of Common UnitsBeneficially Owned Percentage of Common Units BeneficiallyOwned(1)NuStar GP Holdings (2) 10,214,626 11.0%OppenheimerFunds, Inc. (3) 6,732,640 7.2%ALPS Advisors, Inc. (4) 6,571,734 7.1%(1)As of December 31, 2017, there were 93,176,683 NuStar Energy common units issued and outstanding.(2)As of December 31, 2017, NuStar GP Holdings owns these NuStar Energy common units through its wholly owned subsidiaries, NuStar GP, LLC andRiverwalk Holdings, LLC. NuStar GP Holdings controls voting and investment power over the common units through these wholly ownedsubsidiaries. NuStar GP Holdings’ business address is 19003 IH-10 West, San Antonio, Texas 78257.169Table of Contents(3)As reported on a Schedule 13G/A filed on February 6, 2018, OppenheimerFunds, Inc. (OFI) is an investment adviser that may be deemed tobeneficially own, and has shared voting and dispositive power with respect to, 6,732,640 common units. OFI’s business address is 225 LibertyStreet, New York, New York 10281.(4)As reported on a Schedule 13G/A filed on February 6, 2018, ALPS Advisors, Inc. (AAI) is an investment adviser that may be deemed to beneficiallyown, and has shared voting and dispositive power with respect to, 6,571,734 common units. The 6,571,734 common units that AAI may be deemedto beneficially own include 6,549,442 common units that Alerian MLP ETF (Alerian), an investment company, may be deemed to beneficially own.Alerian has shared voting and dispositive power with respect to the 6,549,442 common units. AAI disclaims beneficial ownership of the commonunits pursuant to Rule 13d-4 of the Securities Exchange Act of 1934. The business address of AAI and Alerian is 1290 Broadway, Suite 1100,Denver, Colorado 80203.EQUITY COMPENSATION PLAN INFORMATIONThe following table sets forth information as of December 31, 2017 about the equity compensation plan under which securities of NuStar Energy are issuable,which is described in further detail in Note 23 of the Notes to Consolidated Financial Statements in Item 8. “Financial Statements and Supplementary Data.”Plan categories Number of securities to be issued upon exercise ofoutstanding unit options,warrants and rights (#) Weighted-averageexercise price of outstandingunit options, warrantsand rights ($) (1) Number of securitiesremaining forfuture issuanceunder equitycompensation plans (#)Equity Compensation Plans approvedby security holders (2) 902,911 — 679,045Equity Compensation Plans notapproved by security holders — — —(1)No value is included in this column because there were no unit options outstanding as of December 31, 2017 and because restricted units andperformance units do not have an exercise price.(2)The information in this row relates to the 2000 LTIP. See the “Compensation Discussion and Analysis” section of Item 11 above for further detailsregarding the 2000 LTIP.170Table of ContentsITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCETRANSACTIONS WITH MANAGEMENT AND OTHERSIn January 2007, our Board adopted a written related person transaction policy that codifies our prior practice. For purposes of the policy, a related persontransaction is one that is not available to all employees generally or involves $10,000 or more when aggregated with similar transactions. The policy requiresthat any related person transaction between NuStar Energy or NuStar GP, LLC and: (1) any vice president, Section 16 officer, director or any other persondesignated for these purposes as an officer by the Board; (2) any unitholder owning greater than 5% of NuStar Energy, its controlled affiliates or NuStar GPHoldings; (3) any immediate family member of any officer or director; or (4) any entity owned or controlled by any of (1), (2) or (3) (or in which any of (1),(2) or (3) owns a 5% or greater ownership interest or controls such entity) must be approved by the disinterested members of the Board. In addition, the policyrequires that the officers and directors have an affirmative obligation to inform and provide updates to our Corporate Secretary regarding his or her immediatefamily members, as well as any entities in which he or she controls or owns 5% or more.Please see “Potential Payments upon Termination or Change of Control” in Item 11 for a discussion of our change of control severance agreements with theNEOs.On December 10, 2007, NuStar Logistics, L.P., our wholly owned subsidiary, entered into a non-exclusive Aircraft Time Sharing Agreement (the Time ShareAgreement) with William E. Greehey, Chairman of our Board. The Time Share Agreement provides that NuStar Logistics, L.P. will sublease the aircraft toMr. Greehey on an “as needed and as available” basis, and will provide a fully qualified flight crew for all of Mr. Greehey’s flights. Mr. Greehey will payNuStar Logistics, L.P. an amount equal to the maximum amount of expense reimbursement permitted in accordance with Section 91.501(d) of theAeronautics Regulations of the Federal Aviation Administration and the Department of Transportation, which expenses include and are limited to: fuel oil,lubricants and other additives; travel expenses of the crew, including food, lodging and ground transportation; hangar and tie down costs away from theaircraft’s base of operation; insurance obtained for the specific flight; landing fees, airport taxes and similar assessments; customs, foreign permit and similarfees directly related to the flight; in-flight food and beverages; passenger ground transportation; flight planning and weather contract services; and anadditional charge equal to 100% of the costs of the fuel oil, lubricants and other additives. The Time Share Agreement had an initial term of two years, andautomatically renews for one-year terms until terminated by either party. The Time Share Agreement was approved by the disinterested members of the Boardon December 5, 2007. The Time Share Agreement was amended as of September 4, 2009 to reflect the addition of another aircraft and as of August 18, 2017to reflect a change in the aircraft owner trustee.On April 24, 2008, the independent directors of NuStar GP, LLC approved the adoption of a Services Agreement, effective January 1, 2008, between NuStarGP, LLC and NuStar Energy (the Services Agreement). Pursuant to the Services Agreement, NuStar GP, LLC historically furnished all services necessary forthe conduct of the business of NuStar Energy, and NuStar Energy reimbursed NuStar GP, LLC for all payroll and related benefit costs, including pension andunit-based compensation costs, other than the expenses allocated to NuStar GP Holdings. The expenses allocated to NuStar GP Holdings under the ServicesAgreement equaled to $1.1 million (as adjusted), plus 1.0% of NuStar GP, LLC’s domestic employee bonus and unit compensation expense for the applicablefiscal year, subject to adjustment (1) by an annual amount equal to NuStar GP, LLC’s annual merit increase percentage for the most recently completedcontract year and (2) for changed levels of services due to expansion of operations through, among other things, expansion of operations, acquisitions or theconstruction of new businesses or assets. On March 1, 2016, NuStar GP, LLC transferred and assigned to NuStar Services Co, a wholly owned subsidiary ofNuStar Energy, employment of all of NuStar GP, LLC’s employees. Our executive officers continue to serve as officers of NuStar GP Holdings and NuStar GP,LLC, and also serve as officers of NuStar Services Co and other NuStar Energy subsidiaries. In connection with the transfer and assignment, we amended andrestated the Services Agreement (the Amended and Restated Services Agreement) such that, beginning March 1, 2016, NuStar GP Holdings and NuStarEnergy receive all management and administrative services from NuStar Services Co. NuStar Energy reimburses NuStar Services Co for all services providedto NuStar Energy, including payroll and benefit costs, as well as NuStar Energy unit-based compensation costs. NuStar GP Holdings pays NuStar Services Coan administrative services fee of $1.0 million per year, subject to adjustment (1) by an annual amount equal to NuStar Services Co’s annual merit increasepercentage for the most recently completed fiscal year and (2) for changed levels of services due to expansion of operations through acquisitions,construction of new businesses or assets or otherwise. For 2017 the administrative services fee was approximately $900,000. Beginning March 1, 2016,NuStar GP Holdings no longer pays 1.0% of our domestic bonus and unit compensation expenses. Instead, NuStar GP Holdings retains the expense associatedwith any NuStar GP Holdings common unit awards or other compensation that it provides to its officers.171Table of ContentsJohn D. Greehey, an employee, is the son of Mr. Greehey. As such, he is deemed to be a “related person” under Item 404(a) of the SEC’s Regulation S-K.Mr. J. Greehey is a Vice President of certain subsidiaries of NuStar Energy. In 2017, Mr. J. Greehey did not attend any Board or Committee meetings. Theaggregate value of compensation paid to Mr. J. Greehey in 2017 was less than $500,000. There were no material differences between the compensation paidto Mr. J. Greehey and the compensation paid to any other employees who hold analogous positions.RIGHTS OF NUSTAR GP HOLDINGSDue to its ownership of NuStar GP, LLC and Riverwalk Holdings, LLC, as of December 31, 2017, NuStar GP Holdings indirectly owned:•the general partner interest in NuStar Energy, through its indirect 100% ownership interest in Riverwalk Logistics, L.P.;•100% of the incentive distribution rights issued by us, which entitle NuStar GP Holdings to receive increasing percentages of the cash wedistribute; and•10,214,626 NuStar Energy common units.Certain of our officers also are officers of NuStar GP Holdings. Our Chairman, Mr. Greehey, also is the Chairman of Board and, as of December 31, 2017,beneficially owned approximately 21% of the common units of NuStar GP Holdings. NuStar GP Holdings appoints NuStar GP, LLC’s directors. NuStar GP,LLC’s board is responsible for overseeing NuStar GP, LLC’s role as the owner of the general partner of NuStar Energy. NuStar GP Holdings must also approvematters that have or would reasonably be expected to have a material effect on NuStar GP Holdings’ interests as one of our major unitholders.NuStar Energy’s partnership agreement requires that NuStar GP, LLC maintain a Conflicts Committee, composed entirely of independent directors, to reviewand resolve certain potential conflicts of interest between Riverwalk Logistics, L.P. and its affiliates, on the one hand, and NuStar Energy, on the other.MERGER AGREEMENTOn February 7, 2018, NuStar Energy, Riverwalk Logistics, L.P., NuStar GP, LLC, Merger Sub, Riverwalk Holdings, LLC and NuStar GP Holdings entered intothe Merger Agreement pursuant to which Merger Sub will merge with and into NuStar GP Holdings with NuStar GP Holdings being the surviving entity, suchthat NuStar Energy will be the sole member of NuStar GP Holdings following the Merger. Pursuant to the Merger Agreement and at the effective time of theMerger, NuStar Energy’s partnership agreement will be amended and restated to, among other things, (1) cancel the incentive distribution rights held by thegeneral partner, (2) convert the 2% general partner interest in NuStar Energy held by the general partner into a non-economic management interest and (3)provide the holders of NuStar Energy common units with voting rights in the election of the members of the Board of NuStar GP, LLC at an annual meeting,beginning in 2019.At the effective time of the Merger, each outstanding NuStar GP Holdings common unit, other than those held by NuStar GP Holdings or its subsidiaries, willbe converted into the right to receive 0.55 of a NuStar Energy common unit. All NuStar GP Holdings common units, when converted, will cease to beoutstanding and will automatically be cancelled and no longer exist. No fractional NuStar Energy common units will be issued in the Merger; instead, eachholder of NuStar GP Holdings’ common units otherwise entitled to receive a fractional NuStar Energy common unit will receive cash in lieu thereof.Furthermore, the 10,214,626 NuStar Energy common units currently owned by NuStar GP Holdings will be cancelled and will cease to exist.At the effective time of the Merger, each outstanding award of NuStar GP Holdings restricted units will be converted, on the same terms and conditions aswere applicable to the awards immediately prior to the Merger, into an award of NuStar Energy restricted units. The number of NuStar Energy restricted unitssubject to the converted awards will be determined as provided in the Merger Agreement. Each of our executive officers and directors has agreed andacknowledged that the Merger will not be deemed to trigger a “change of control” as defined under any NuStar Energy or NuStar GP Holdings plan or award,and has waived any rights to vesting, payment or other benefit thereunder that would arise upon a “change of control,” to which he or she might otherwisehave been entitled.The Merger Agreement contains customary representations and warranties and covenants by each of the parties. Completion of the Merger is conditionedupon, among other things: (1) approval of the Merger Agreement by the affirmative vote of holders of a Unit Majority, as defined in the Second Amended andRestated Limited Liability Company Agreement of NuStar GP Holdings, as amended; (2) the effectiveness of a registration statement on Form S-4 withrespect to the issuance by NuStar Energy of its common units in connection with the Merger; (3) the absence of certain legal injunctions or impedimentsprohibiting the transactions; (4) the receipt of certain tax opinions from a nationally recognized tax counsel; and (5) the approval for the listing on the NewYork Stock Exchange of NuStar Energy’s common units to be issued in the Merger.172Table of ContentsNuStar Energy entered into a Support Agreement, dated as of February 7, 2018 (the Support Agreement), with Merger Sub, WLG Holdings, LLC, a Texaslimited liability company controlled by Mr. Greehey (WLG Holdings), Mr. Greehey (together, WLG Holdings and Mr. Greehey are referred to as the GreeheyUnitholders), and, for limited purposes, NuStar GP Holdings, pursuant to which the Greehey Unitholders have agreed to vote in favor of the approval andadoption of the Merger Agreement, the approval of the Merger and any other action required in furtherance thereof submitted for the vote or written consentof NuStar GP Holdings unitholders. The Support Agreement will terminate (1) at the effective time of the Merger, (2) upon the termination of the MergerAgreement as provided therein, or (3) at such time as NuStar Energy and the Greehey Unitholders agree in writing to terminate the Support Agreement.After the Merger, the NuStar GP, LLC Board is expected to consist of nine members, initially composed of the six members of the NuStar GP, LLC Board andthe three independent directors of the board of directors of NuStar GP Holdings, LLC.DIRECTOR INDEPENDENCEOur business is managed under the direction of the Board of NuStar GP, LLC, the general partner of Riverwalk Logistics, L.P., the general partner of NuStarEnergy. The Board conducts its business through meetings of the Board and its committees. The Board has standing Audit, Compensation andNominating/Governance & Conflicts Committees. Each committee has a written charter. During 2017, the Board held ten meetings, the Audit Committeeheld eight meetings, the Compensation Committee held four meetings and the Nominating/Governance & Conflicts Committee held one meeting. Nomember of the Board attended less than 75% of the meetings of the Board and committees during the period in which he was a member during 2017.INDEPENDENT DIRECTORSThe Board has one member of management, Mr. Barron, President and Chief Executive Officer, and five non-management directors. As a limited partnership,NuStar Energy is not required to have a majority of independent directors. However, the Board has determined that four of five of its current non-managementdirectors meet the independence requirements of the NYSE listing standards as set forth in the NYSE Listed Company Manual. The independent directors are:Mr. Bates, Mr. Hill, Mr. Munch and Mr. Rosier.Mr. Greehey, Chairman of the Board, also serves as the Chairman of the NuStar GP Holdings board of directors and, as of December 31, 2017, beneficiallyowned approximately 21% of the common units of NuStar GP Holdings. Mr. Greehey is not an independent director under the NYSE’s listing standards.Mr. Barron has been President and Chief Executive Officer of NuStar GP, LLC since January 2014. Mr. Barron also serves as President and Chief ExecutiveOfficer of NuStar GP Holdings. As a member of management, Mr. Barron is not an independent director under the NYSE’s listing standards.The Audit, Compensation and Nominating/Governance & Conflicts Committees of the Board are each composed entirely of directors who meet theindependence requirements of the NYSE listing standards. Each member of the Audit Committee also meets the additional independence standards for AuditCommittee members set forth in the regulations of the SEC. For further information about the committees, see also Item 10 and Item 11 above.INDEPENDENCE DETERMINATIONSUnder the NYSE’s listing standards, no director qualifies as independent unless the Board affirmatively determines that the director has no materialrelationship with NuStar Energy. Based upon information requested annually from and provided by each director concerning their background, employmentand affiliations, including commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, the Board has determinedthat, other than being a director of NuStar GP, LLC, a unitholder of NuStar Energy and/or a unitholder of NuStar GP Holdings, each of the independentdirectors named above has either no relationship with NuStar Energy, either directly or as a partner, equityholder or officer of an organization that has arelationship with NuStar Energy, or has only immaterial relationships with NuStar Energy, and is therefore independent under the NYSE’s listing standards.As provided for under the NYSE listing standards, the Board has adopted categorical standards or guidelines to assist the Board in making its independencedeterminations with respect to each director. Under the NYSE listing standards, immaterial relationships that fall within the guidelines are not required to bedisclosed in this Annual Report on Form 10-K.173Table of ContentsA relationship falls within the guidelines adopted by the Board if it:•is not a relationship that would preclude a determination of independence under Section 303A.02(b) of the NYSE Listed Company Manual;•consists of charitable contributions by NuStar Energy to an organization where a director is an executive officer and does not exceed the greater of $1million or 2% of the organization’s gross revenue in any of the last three years;•consists of charitable contributions by NuStar Energy to any organization with which a director, or any member of a director’s immediate family, isaffiliated as an officer, director or trustee pursuant to a matching gift program of NuStar Energy and made on terms applicable to employees and directorsgenerally, or is in amounts that do not exceed $250,000 per year; and•is not required to be disclosed in this Annual Report on Form 10-K.Our Corporate Governance Guidelines contain the director qualification standards, including the guidelines listed above, and are available on NuStarEnergy’s website at www.nustarenergy.com (in the “Investors” section) or are available in print upon request to NuStar GP, LLC’s Corporate Secretary at theaddress indicated on the cover page of this Annual Report on Form 10-K or corporatesecretary@nustarenergy.com.PRESIDING DIRECTOR/MEETINGS OF NON-MANAGEMENT DIRECTORSThe Board has designated Mr. Hill to serve as the Presiding Director for meetings of the non-management Board members outside the presence ofmanagement.COMMUNICATIONS WITH THE BOARD, NON-MANAGEMENT DIRECTORS OR PRESIDING DIRECTORUnitholders and other interested parties may communicate with the Board, the non-management directors or the Presiding Director by sending a writtencommunication in an envelope addressed to “Board of Directors,” “Non-Management Directors,” or “Presiding Director” in care of NuStar GP, LLC’sCorporate Secretary at the address indicated on the cover page of this Annual Report on Form 10-K or corporatesecretary@nustarenergy.com.AVAILABILITY OF GOVERNANCE DOCUMENTSNuStar Energy has posted its Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers and theCharters of the Audit Committee, Compensation Committee and Nominating/Governance & Conflicts Committee on NuStar Energy’s website atwww.nustarenergy.com (in the “Investors” section). NuStar Energy’s governance documents are available in print to any unitholder of record who makes awritten request to NuStar Energy. Requests must be directed to NuStar GP, LLC’s Corporate Secretary at the address indicated on the cover page of thisAnnual Report on Form 10-K or corporatesecretary@nustarenergy.com.174Table of ContentsITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESKPMG FEESThe aggregate fees for professional services rendered to us by KPMG for the years ended December 31, 2017 and 2016 were:Category of Service 2017 2016Audit fees (1) $3,227,500 $2,633,321Audit-related fees (2) 3,000 —Tax fees — —All other fees — —Total $3,230,500 $2,633,321(1)Audit fees for 2017 and 2016 were for professional services rendered by KPMG in connection with the audits of our annual financial statements forthe years ended December 31, 2017 and 2016, respectively, included in our Annual Reports on Form 10-K, reviews of our interim financialstatements included in our Quarterly Reports on Form 10-Q, the audit of the effectiveness of our internal control over financial reporting as ofDecember 31, 2017 and 2016, respectively, and related services that are normally provided by the principal auditor (e.g., comfort letters andassistance with review of documents filed with the SEC).(2)Audit-related fees for 2017 were for assurance and related services rendered by KPMG that are reasonably related to the performance of the audit orreview of our financial statements and are not reported under “Audit fees.”AUDIT COMMITTEE PRE-APPROVAL POLICYThe Audit Committee has adopted a pre-approval policy to address the pre-approval of all services to be rendered to us by our independent auditor andensure that the provision of any non-audit services does not impair the auditor’s independence. None of the services (described above) for 2017 or 2016provided by KPMG were approved by the Audit Committee pursuant to the pre-approval waiver contained in paragraph (c)(7)(i)(C) of Rule 2-01 ofRegulation S-X.175Table of ContentsPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES(a) (1) Financial Statements. The following consolidated financial statements of NuStar Energy L.P. and its subsidiaries are included in Part II,Item 8 of this Form 10-K: Management’s Report on Internal Control over Financial ReportingReports of Independent Registered Public Accounting Firm (KPMG LLP)Consolidated Balance Sheets as of December 31, 2017 and 2016Consolidated Statements of Income for the Years Ended December 31, 2017, 2016 and 2015Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2017, 2016 and 2015Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015Consolidated Statements of Partners’ Equity for the Years Ended December 31, 2017, 2016 and 2015Notes to Consolidated Financial Statements (2) Financial Statement Schedules and Other Financial Information. No financial statement schedules are submitted because either they areinapplicable or because the required information is included in the consolidated financial statements or notes thereto. (3) Exhibits. The following are filed or furnished, as applicable, as part of this Form 10-K: ExhibitNumber Description Incorporated by Referenceto the Following Document 2.01 Membership Interest Purchase and Sale Agreement, dated April11, 2017, by and between NuStar Logistics, L.P., NuStar EnergyL.P. and FR Navigator Holdings LLC NuStar Energy L.P.’s Current Report on Form 8-K filed April 11,2017 (File No. 001-16417), Exhibit 2.1 2.02 Agreement and Plan of Merger, dated as of February 7, 2018, byand among NuStar Energy L.P., Riverwalk Logistics, L.P., NuStarGP, LLC, Marshall Merger Sub LLC, Riverwalk Holdings, LLCand NuStar GP Holdings, LLC NuStar Energy L.P.’s Current Report on Form 8-K filed February8, 2018 (File No. 001-16417), Exhibit 2.1 3.01 Amended and Restated Certificate of Limited Partnership ofShamrock Logistics, L.P., effective January 1, 2002 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2001 (File No. 001-16417), Exhibit 3.3 3.02 Amendment to Certificate of Limited Partnership of Valero L.P.,dated March 21, 2007 and effective April 1, 2007 NuStar Energy L.P.’s Current Report on Form 8-K filed March 27,2007 (File No. 001-16417), Exhibit 3.01 3.03 Sixth Amended and Restated Agreement of Limited Partnershipof NuStar Energy L.P., dated as of November 30, 2017 NuStar Energy L.P.’s Current Report on Form 8-K filedNovember 30, 2017 (File No. 001-16417), Exhibit 3.1 3.04 Amended and Restated Certificate of Limited Partnership ofShamrock Logistics Operations, L.P., dated as of January 7, 2002and effective January 8, 2002 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2001 (File No. 001-16417), Exhibit 3.8 3.05 Certificate of Amendment to Certificate of Limited Partnership ofValero Logistics Operations, L.P., dated March 21, 2007 andeffective April 1, 2007 NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended March 31, 2007 (File No. 001-16417), Exhibit 3.03 3.06 Certificate of Amendment to Certificate of Limited Partnership ofNuStar Logistics, L.P., dated and effective as of March 18, 2014 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2014 (File No. 001-16417), Exhibit 3.09 3.07 Second Amended and Restated Agreement of LimitedPartnership of Shamrock Logistics Operations, L.P., dated as ofApril 16, 2001 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2001 (File No. 001-16417), Exhibit 3.9 3.08 First Amendment to Second Amended and Restated Agreementof Limited Partnership of Shamrock Logistics Operations, L.P.,effective as of April 16, 2001 NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended June 30, 2001 (File No. 001-16417), Exhibit 4.1 176Table of ContentsExhibitNumber Description Incorporated by Referenceto the Following Document 3.09 Second Amendment to Second Amended and RestatedAgreement of Limited Partnership of Shamrock LogisticsOperations, L.P., dated as of January 7, 2002 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2001 (File No. 001-16417), Exhibit 3.10 3.10 Certificate of Limited Partnership of Riverwalk Logistics, L.P.,dated as of June 5, 2000 NuStar Energy L.P.’s Registration Statement on Form S-1 filedAugust 14, 2000 (File No. 333-43668), Exhibit 3.7 3.11 First Amended and Restated Limited Partnership Agreement ofRiverwalk Logistics, L.P., dated as of April 16, 2001 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2001 (File No. 001-16417), Exhibit 3.16 3.12 Certificate of Formation of Shamrock Logistics GP, LLC, datedas of December 7, 1999 NuStar Energy L.P.’s Registration Statement on Form S-1 filedAugust 14, 2000 (File No. 333-43668), Exhibit 3.9 3.13 Certificate of Amendment to Certificate of Formation ofShamrock Logistics GP, LLC, dated as of December 31, 2001 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2001 (File No. 001-16417), Exhibit 3.14 3.14 Certificate of Amendment to Certificate of Formation of ValeroGP, LLC, dated March 21, 2007 and effective April 1, 2007 NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended March 31, 2007 (File No. 001-16417), Exhibit 3.02 3.15 First Amended and Restated Limited Liability CompanyAgreement of Shamrock Logistics GP, LLC, dated as of June 5,2000 NuStar Energy L.P.’s Amendment No. 5 to RegistrationStatement on Form S-1 filed March 29, 2001 (File No. 333-43668), Exhibit 3.10 3.16 First Amendment to First Amended and Restated LimitedLiability Company Agreement of Shamrock Logistics GP, LLC,effective as of December 31, 2001 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2001 (File No. 001-16417), Exhibit 3.15 3.17 Second Amendment to First Amended and Restated LimitedLiability Company Agreement of Valero GP, LLC, effective as ofJune 1, 2006 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2014 (File No. 001-16417), Exhibit 3.20 3.18 Third Amendment to First Amended and Restated LimitedLiability Company Agreement of NuStar GP, LLC, dated as ofJuly 29, 2016 and effective as of March 21, 2007 NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended June 30, 2016 (File No. 001-16417), Exhibit 3.01 4.01 Indenture, dated as of July 15, 2002, among Valero LogisticsOperations, L.P., as Issuer, Valero L.P., as Guarantor, and TheBank of New York, as Trustee, relating to Senior Debt Securities NuStar Energy L.P.’s Current Report on Form 8-K filedJuly 15, 2002 (File No. 001-16417), Exhibit 4.1 4.02 Third Supplemental Indenture, dated as of July 1, 2005, toIndenture dated as of July 15, 2002, as amended andsupplemented, among Valero Logistics Operations, L.P., ValeroL.P., Kaneb Pipe Line Operating Partnership, L.P., and The Bankof New York Trust Company, N.A. NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended June 30, 2005 (File No. 001-16417), Exhibit 4.02 4.03 Instrument of Resignation, Appointment and Acceptance, datedMarch 31, 2008, among NuStar Logistics, L.P., NuStar EnergyL.P., Kaneb Pipeline Operating Partnership, L.P., The Bank ofNew York Trust Company N.A., and Wells Fargo Bank, NationalAssociation NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2008 (File No. 001-16417), Exhibit 4.05 177Table of ContentsExhibitNumber Description Incorporated by Referenceto the Following Document 4.04 Fourth Supplemental Indenture, dated as of April 4, 2008, toIndenture dated as of July 15, 2002, among NuStar Logistics,L.P., as Issuer, NuStar Energy L.P., as Guarantor, NuStar PipelineOperating Partnership L.P., as Affiliate Guarantor, and WellsFargo Bank, National Association, as Successor Trustee NuStar Energy L.P.’s Current Report on Form 8-K filed April 4,2008 (File No. 001-16417), Exhibit 4.2 4.05 Fifth Supplemental Indenture, dated as of August 12, 2010, toIndenture dated as of July 15, 2002, among NuStar Logistics,L.P., as Issuer, NuStar Energy L.P., as Guarantor, NuStar PipelineOperating Partnership L.P., as Affiliate Guarantor, and WellsFargo Bank, National Association, as Successor Trustee NuStar Energy L.P.’s Current Report on Form 8-K filed August16, 2010 (File No. 001-16417), Exhibit 4.3 4.06 Sixth Supplemental Indenture, dated as of February 2, 2012, toIndenture dated as of July 15, 2002, among NuStar Logistics,L.P., as Issuer, NuStar Energy L.P., as Guarantor, NuStar PipelineOperating Partnership L.P., as Affiliate Guarantor, and WellsFargo Bank, National Association, as Successor Trustee NuStar Energy L.P.’s Current Report on Form 8-K filed February7, 2012 (File No. 001-16417), Exhibit 4.3 4.07 Seventh Supplemental Indenture, dated as of August 19, 2013,among NuStar Logistics, L.P., as Issuer, NuStar Energy L.P., asGuarantor, NuStar Pipeline Operating Partnership L.P., asAffiliate Guarantor, and Wells Fargo Bank, National Association,as Successor Trustee NuStar Energy L.P.’s Current Report on Form 8-K filed August23, 2013 (File No. 001-16417), Exhibit 4.3 4.08 Eighth Supplemental Indenture, dated as of April 28, 2017,among NuStar Logistics, L.P., as Issuer, NuStar Energy L.P., asGuarantor, NuStar Pipeline Operating Partnership L.P., asAffiliate Guarantor, and Wells Fargo Bank, National Association,as Successor Trustee NuStar Energy L.P.’s Current Report on Form 8-K filed April 28,2017 (File No. 001-16417), Exhibit 4.4 4.09 Indenture, dated as of January 22, 2013, among NuStar Logistics,L.P., as Issuer, NuStar Energy L.P., as Guarantor, and Wells FargoBank, National Association, as Trustee, relating to SubordinatedDebt Securities NuStar Energy L.P.’s Current Report on Form 8-K filed January22, 2013 (File No. 001-16417), Exhibit 4.1 4.10 First Supplemental Indenture, dated as of January 22, 2013,among NuStar Logistics, L.P., as Issuer, NuStar Energy L.P., asParent Guarantor, NuStar Pipeline Operating Partnership L.P., asAffiliate Guarantor, and Wells Fargo Bank, National Association,as Trustee NuStar Energy L.P.’s Current Report on Form 8-K filed January22, 2013 (File No. 001-16417), Exhibit 4.2 10.01 Amended and Restated 5-Year Revolving Credit Agreement,dated as of October 29, 2014, among NuStar Logistics, L.P.,NuStar Energy L.P., the Lenders party thereto and JPMorganChase Bank, N.A., as Administrative Agent, SunTrust Bank andMizuho Bank, Ltd., as Co-Syndication Agents, Wells FargoBank, National Association and PNC Bank, NationalAssociation, as Co-Documentation Agents, and J.P. MorganSecurities LLC, SunTrust Robinson Humphrey, Inc., MizuhoBank, Ltd., Wells Fargo Securities, LLC and PNC CapitalMarkets LLC, as Joint Bookrunners and Joint Lead Arrangers NuStar Energy L.P.’s Current Report on Form 8-K filed October31, 2014 (File No. 001-16417), Exhibit 10.1 178Table of ContentsExhibitNumber Description Incorporated by Referenceto the Following Document 10.02 First Amendment to Amended and Restated 5-Year RevolvingCredit Agreement, dated as of March 19, 2015, among NuStarLogistics, L.P., NuStar Energy L.P., JPMorgan Chase Bank, N.A.,as Administrative Agent, and the Lenders party thereto NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended June 30, 2015 (File No. 001-16417), Exhibit 10.01 10.03 Second Amendment to Amended and Restated 5-Year RevolvingCredit Agreement, dated as of August 22, 2017, among NuStarLogistics, L.P., NuStar Energy L.P., JPMorgan Chase Bank, N.A.,as Administrative Agent, and the Lenders party thereto NuStar Energy L.P.’s Current Report on Form 8-K filed August22, 2017 (File No. 001-16417), Exhibit 10.01 10.04 Third Amendment to Amended and Restated 5-Year RevolvingCredit Agreement, dated as of November 22, 2017, among NuStarLogistics, L.P., NuStar Energy L.P., JPMorgan Chase Bank, N.A.,as Administrative Agent, and the Lenders party thereto NuStar Energy L.P.’s Current Report on Form 8-K filedNovember 22, 2017 (File No. 001-16417), Exhibit 10.01 10.05 Lease Agreement Between Parish of St. James, State of Louisianaand NuStar Logistics, L.P. dated as of July 1, 2010 NuStar Energy L.P.’s Current Report on Form 8-K filed July 21,2010 (File No. 001-16417), Exhibit 10.01 10.06 Letter of Credit Agreement dated June 5, 2012 among NuStarLogistics, L.P., NuStar Energy L.P., the Lenders party thereto andMizuho Corporate Bank, Ltd., as Issuing Bank andAdministrative Agent NuStar Energy L.P.’s Current Report on Form 8-K filed June 12,2012 (File No. 001-16417), Exhibit 10.01 10.07 First Amendment to Letter of Credit Agreement, dated as of June29, 2012, among NuStar Logistics, L.P., NuStar Energy L.P., theLenders party thereto and Mizuho Corporate Bank, Ltd., asIssuing Bank and Administrative Agent NuStar Energy L.P.’s Current Report on Form 8-K filed July 6,2012 (File No. 001-16417), Exhibit 10.2 10.08 Second Amendment to Letter of Credit Agreement, dated as ofJanuary 17, 2013, among NuStar Logistics, L.P., NuStar EnergyL.P., the Lenders party thereto and Mizuho Corporate Bank, Ltd.,as Issuing Bank and Administrative Agent NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2014 (File No. 001-16417), Exhibit 10.10 10.09 Third Amendment to Letter of Credit Agreement, dated as ofMarch 8, 2013, among NuStar Logistics, L.P., NuStar EnergyL.P., the Lenders party thereto and Mizuho Corporate Bank, Ltd.,as Issuing Bank and Administrative Agent NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2014 (File No. 001-16417), Exhibit 10.11 10.10 Fourth Amendment to Letter of Credit Agreement, dated as ofApril 19, 2013, among NuStar Logistics, L.P., NuStar EnergyL.P., the Lenders party thereto and Mizuho Corporate Bank, Ltd.,as Issuing Bank and Administrative Agent NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2014 (File No. 001-16417), Exhibit 10.12 10.11 Fifth Amendment to Letter of Credit Agreement, dated as of April23, 2014, among NuStar Logistics, L.P., NuStar Energy L.P., theLenders party thereto and Mizuho Bank, Ltd., as Issuing Bankand Administrative Agent NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2014 (File No. 001-16417), Exhibit 10.13 10.12 Sixth Amendment to Letter of Credit Agreement, dated as ofNovember 3, 2014, among NuStar Logistics, L.P., NuStar EnergyL.P., the Lenders party thereto and Mizuho Bank, Ltd., as IssuingBank and Administrative Agent NuStar Energy L.P.’s Current Report on Form 8-K filedNovember 6, 2014 (File No. 001-16417), Exhibit 10.1 179Table of ContentsExhibitNumber Description Incorporated by Referenceto the Following Document 10.13 Seventh Amendment to Letter of Credit Agreement, dated as ofApril 30, 2015, among NuStar Logistics, L.P., NuStar EnergyL.P., the Lenders party thereto and Mizuho Bank, Ltd., as IssuingBank and Administrative Agent NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended June 30, 2015 (File No. 001-16417), Exhibit 10.02 10.14 Eighth Amendment to Letter of Credit Agreement, dated as ofMay 6, 2016, among NuStar Logistics, L.P., NuStar Energy L.P.,the Lenders party thereto and Mizuho Bank, Ltd., as IssuingBank and Administrative Agent NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended June 30, 2016 (File No. 001-16417), Exhibit 10.01 10.15 Ninth Amendment to Letter of Credit Agreement, dated as ofApril 17, 2017, among NuStar Logistics, L.P., NuStar EnergyL.P., the Lenders party thereto and Mizuho Bank, Ltd., as IssuingBank and Administrative Agent NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended March 31, 2017 (File No. 001-16417), Exhibit 10.03 10.16 Lease Agreement between Parish of St. James, State of Louisianaand NuStar Logistics, L.P. dated as of December 1, 2010 NuStar Energy L.P.’s Current Report on Form 8-K filed December30, 2010 (File No. 001-16417), Exhibit 10.01 10.17 Letter of Credit Agreement dated as of September 3, 2014 amongNuStar Logistics, L.P., NuStar Energy L.P., the Lenders partythereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as IssuingBank and Administrative Agent NuStar Energy L.P.’s Current Report on Form 8-K filedSeptember 9, 2014 (File No. 001-16417), Exhibit 10.1 10.18 Amendment No. 1 to Letter of Credit Agreement and SubsidiaryGuaranty Agreement dated as of November 3, 2014 amongNuStar Logistics, L.P., NuStar Energy L.P., the Lenders partythereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as IssuingBank and Administrative Agent NuStar Energy L.P.’s Current Report on Form 8-K filedNovember 6, 2014 (File No. 001-16417), Exhibit 10.3 10.19 Maturity Extension Letter (Amendment No. 2) to Letter of CreditAgreement and Subsidiary Guaranty Agreement dated as ofAugust 19, 2015 among NuStar Logistics, L.P., NuStar EnergyL.P., the Lenders party thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Issuing Bank and Administrative Agent NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended September 30, 2015 (File No. 001-16417), Exhibit 10.01 10.20 Maturity Extension Letter (Amendment No. 3) to Letter of CreditAgreement and Subsidiary Guaranty Agreement dated as of July15, 2016 among NuStar Logistics, L.P., NuStar Energy L.P., theLenders party thereto and The Bank of Tokyo-Mitsubishi UFJ,Ltd., as Issuing Bank and Administrative Agent NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended June 30, 2016 (File No. 001-16417), Exhibit 10.02 10.21 Maturity Extension Letter (Amendment No. 4) to Letter of CreditAgreement and Subsidiary Guaranty Agreement dated as of July13, 2017 among NuStar Logistics, L.P., NuStar Energy L.P., theLenders party thereto and The Bank of Tokyo-Mitsubishi UFJ,Ltd., as Issuing Bank and Administrative Agent NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended June 30, 2017 (File No. 001-16417), Exhibit 10.02 10.22 Lease Agreement between Parish of St. James, State of Louisianaand NuStar Logistics, L.P. dated as of August 1, 2011 NuStar Energy L.P.’s Current Report on Form 8-K filed August10, 2011 (File No. 001-16417), Exhibit 10.01 180Table of ContentsExhibitNumber Description Incorporated by Referenceto the Following Document 10.23 Letter of Credit Agreement dated as of June 5, 2013 amongNuStar Logistics, L.P., NuStar Energy L.P., the Lenders partythereto and The Bank of Nova Scotia, as Issuing Bank andAdministrative Agent NuStar Energy L.P.’s Current Report on Form 8-K filed June 11,2013 (File No. 001-16417), Exhibit 10.01 10.24 Amendment No. 1 to Letter of Credit Agreement and SubsidiaryGuaranty Agreement dated as of November 3, 2014 amongNuStar Logistics, L.P., NuStar Energy L.P., the Lenders partythereto and The Bank of Nova Scotia, as Issuing Bank andAdministrative Agent NuStar Energy L.P.’s Current Report on Form 8-K filedNovember 6, 2014 (File No. 001-16417), Exhibit 10.2 10.25 Purchase and Sale Agreement, dated as of June 15, 2015, amongNuStar Energy Services, Inc., NuStar Logistics, L.P., NuStarPipeline Operating Partnership L.P. and NuStar Supply &Trading LLC, as Originators, NuStar Energy L.P., as Servicer, andNuStar Finance LLC, as Buyer NuStar Energy L.P.'s Current Report on Form 8-K filed June 19,2015 (File No. 001-16417), Exhibit 10.1 10.26 Receivables Financing Agreement, dated as of June 15, 2015, byand among NuStar Finance LLC, as Borrower, the persons fromtime to time party thereto as Lenders and Group Agents, PNCBank, National Association, as Administrative Agent, and NuStarEnergy L.P., as initial Servicer NuStar Energy L.P.'s Current Report on Form 8-K filed June 19,2015 (File No. 001-16417), Exhibit 10.2 10.27 Omnibus Amendment, dated as of January 15, 2016, which is theFirst Amendment to the Purchase and Sale Agreement referencedabove and the First Amendment to the Receivables FinancingAgreement referenced above among the respective parties thereto NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2015 (File No. 001-16417), Exhibit 10.26 10.28 Second Amendment to Purchase and Sale Agreement, dated as ofSeptember 20, 2017, by and among the Originators listed therein,NuStar Energy L.P., NuStar Finance LLC, Mizuho Bank, Ltd. andPNC Bank, National Association NuStar Energy L.P.’s Current Report on Form 8-K filedSeptember 20, 2017 (File No. 001-16417), Exhibit 10.01 10.29 Second Amendment to Receivables Financing Agreement, datedas of September 20, 2017, by and among NuStar Finance, LLC, asBorrower, NuStar Energy L.P., as initial Servicer, Mizuho Bank,Ltd. and PNC Bank, National Association NuStar Energy L.P.’s Current Report on Form 8-K filedSeptember 20, 2017 (File No. 001-16417), Exhibit 10.02 +10.30 NuStar GP, LLC Fifth Amended and Restated 2000 Long-TermIncentive Plan, amended and restated as of January 28, 2016 * Originally filed as Appendix A to NuStar Energy L.P.’s ProxyStatement on Schedule 14A filed December 17, 2015 (File No.001-16417) and refiled herewith +10.31 First Amendment to the NuStar GP, LLC Fifth Amended andRestated 2000 Long-Term Incentive Plan, dated as of February 7,2018 * +10.32 Form of 2012 Restricted Unit Award Agreement under the NuStarGP, LLC Third Amended and Restated 2000 Long-TermIncentive Plan NuStar Energy L.P.’s Current Report on Form 8-K filed January31, 2012 (File No. 001-16417), Exhibit 10.2 +10.33 Form of 2013 Restricted Unit Award Agreement under the NuStarGP, LLC Third Amended and Restated 2000 Long-TermIncentive Plan NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2013 (File No. 001-16417), Exhibit 10.15 181Table of ContentsExhibitNumber Description Incorporated by Referenceto the Following Document +10.34 Form of Restricted Unit Award Agreement under the NuStar GP,LLC Fifth Amended and Restated 2000 Long-Term IncentivePlan NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2016 (File No. 001-16417), Exhibit 10.28 +10.35 Form of 2017 Performance Unit Agreement under the NuStar GP,LLC Fifth Amended and Restated 2000 Long-Term IncentivePlan NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended March 31, 2017 (File No. 001-16417), Exhibit 10.01 +10.36 Form of Non-employee Director Restricted Unit AwardAgreement under the NuStar GP, LLC Fifth Amended andRestated 2000 Long-Term Incentive Plan NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2016 (File No. 001-16417), Exhibit 10.31 +10.37 NuStar Energy L.P. Annual Bonus Plan NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2006 (File No. 001-16417), Exhibit 10.18 +10.38 Form of NuStar Energy L.P. Amended and Restated Change ofControl Severance Agreement NuStar Energy L.P.’s Current Report on Form 8-K filed August 4,2016 (File No. 001-16417), Exhibit 10.1 +10.39 Form of Executive Change of Control Waiver Agreement datedeffective as of February 7, 2018 * +10.40 Form of Non-employee Director Change of Control WaiverAgreement dated effective as of February 7, 2018 * +10.41 NuStar Excess Pension Plan, amended and restated effective as ofJanuary 1, 2014 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2015 (File No. 001-16417), Exhibit 10.45 +10.42 NuStar Excess Thrift Plan, amended and restated effective as ofJanuary 1, 2008 NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2008 (File No. 001-16417), Exhibit 10.30 +10.43 Amendment to NuStar Excess Thrift Plan, effective as of January1, 2017 NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended March 31, 2017 (File No. 001-16417), Exhibit 10.02 10.44 Non-Compete Agreement, dated July 19, 2006, between ValeroGP Holdings, LLC, Valero L.P., Riverwalk Logistics, L.P. andValero GP, LLC NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended September 30, 2006 (File No. 001-16417), Exhibit 10.03 10.45 Services Agreement, effective as of January 1, 2008, betweenNuStar GP, LLC and NuStar Energy L.P. NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended March 31, 2008 (File No. 001-16417), Exhibit 10.01 10.46 Amended and Restated Services Agreement dated March 1, 2016between NuStar Energy L.P., NuStar GP Holdings, LLC, NuStarGP, LLC and NuStar Services Company LLC NuStar Energy L.P.’s Current Report on Form 8-K filed March 1,2016 (File No. 001-16417), Exhibit 10.2 10.47 Assignment and Assumption Agreement dated March 1, 2016between NuStar GP, LLC and NuStar Services Company LLC NuStar Energy L.P.’s Current Report on Form 8-K filed March 1,2016 (File No. 001-16417), Exhibit 10.1 10.48 Amended and Restated Aircraft Time Sharing Agreement, datedas of September 4, 2009, between NuStar Logistics, L.P. andWilliam E. Greehey NuStar Energy L.P.’s Annual Report on Form 10-K for year endedDecember 31, 2009 (File No. 001-16417), Exhibit 10.24 10.49 First Amendment to Amended and Restated Aircraft TimeSharing Agreement, dated as of August 18, 2017, between NuStarLogistics, L.P. and William E. Greehey NuStar Energy L.P.’s Quarterly Report on Form 10-Q for quarterended September 30, 2017 (File No. 001-16417), Exhibit 10.02 182Table of ContentsExhibitNumber Description Incorporated by Referenceto the Following Document 10.50 Support Agreement, dated as of February 7, 2018, by and amongNuStar Energy L.P., Riverwalk Logistics, L.P., NuStar GP, LLC,Marshall Merger Sub LLC, Riverwalk Holdings, LLC and NuStarGP Holdings, LLC NuStar Energy L.P.’s Current Report on Form 8-K filed February8, 2018 (File No. 001-16417), Exhibit 10.1 12.01 Statement of Computation of Ratio of Earnings to Fixed Charges * 21.01 List of subsidiaries of NuStar Energy L.P. * 23.01 Consent of KPMG LLP dated February 28, 2018 (NuStar EnergyL.P.) * 24.01 Powers of Attorney (included in signature page of this Form 10-K) * 31.01 Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer * 31.02 Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer * 32.01 Section 1350 Certification (under Section 906 of the Sarbanes-Oxley Act of 2002) of principal executive officer ** 32.02 Section 1350 Certification (under Section 906 of the Sarbanes-Oxley Act of 2002) of principal financial officer ** 101.INS XBRL Instance Document * 101.SCH XBRL Taxonomy Extension Schema Document * 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document * 101.DEF XBRL Taxonomy Extension Definition Linkbase Document * 101.LAB XBRL Taxonomy Extension Label Linkbase Document * 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document **Filed herewith. **Furnished herewith. +Identifies management contracts or compensatory plans or arrangements required to be filed as an exhibit hereto pursuant to Item 15(c) of Form 10-K.Copies of exhibits filed as a part of this Form 10-K may be obtained by unitholders of record at a charge of $0.15 per page, minimum $5.00 each request.Direct inquiries to Corporate Secretary, NuStar Energy L.P., 19003 IH-10 West, San Antonio, Texas 78257.ITEM 16. FORM 10-K SUMMARYNot applicable.183Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized. NUSTAR ENERGY L.P.(Registrant) By:Riverwalk Logistics, L.P., its general partner By: NuStar GP, LLC, its general partner By:/s/ Bradley C. Barron Bradley C. Barron President and Chief Executive Officer February 28, 2018 By:/s/ Thomas R. Shoaf Thomas R. Shoaf Executive Vice President and Chief Financial Officer February 28, 2018 By:/s/ Jorge A. del Alamo Jorge A. del Alamo Senior Vice President and Controller February 28, 2018184Table of ContentsPOWER OF ATTORNEYKNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Bradley C. Barron, Thomas R.Shoaf and Amy L. Perry, or any of them, each with power to act without the other, his true and lawful attorney-in-fact and agent, with full power ofsubstitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all subsequent amendments andsupplements to this Annual Report on Form 10-K, and to file the same, or cause to be filed the same, with all exhibits thereto, and other documents inconnection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power to do and perform eachand every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person,hereby qualifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated. SignatureTitleDate /s/ William E. GreeheyChairman of the BoardFebruary 28, 2018William E. Greehey /s/ Bradley C. BarronPresident, Chief ExecutiveFebruary 28, 2018Bradley C. BarronOfficer and Director(Principal Executive Officer) /s/ Thomas R. ShoafExecutive Vice PresidentFebruary 28, 2018Thomas R. Shoafand Chief Financial Officer(Principal Financial Officer) /s/ Jorge A. del AlamoSenior Vice President and ControllerFebruary 28, 2018Jorge A. del Alamo(Principal Accounting Officer) /s/ J. Dan BatesDirectorFebruary 28, 2018J. Dan Bates /s/ Dan J. HillDirectorFebruary 28, 2018Dan J. Hill /s/ Robert J. MunchDirectorFebruary 28, 2018Robert J. Munch /s/ W. Grady RosierDirectorFebruary 28, 2018W. Grady Rosier 185Exhibit 10.30NUSTAR GP, LLC FIFTH AMENDED AND RESTATED2000 LONG-TERM INCENTIVE PLANAmended and Restated on January 28, 2016SECTION 1. Purpose of the Plan.The NuStar GP, LLC 2000 Long-Term Incentive Plan (the “Plan”) is intended to promote the interests of NuStar Energy L.P., aDelaware limited partnership (the “Partnership”), by providing to employees and directors of NuStar GP, LLC, a Delaware limitedliability company (the “Company”), the Partnership, NuStar Services Company LLC, a Delaware limited liability company and whollyowned subsidiary of the Partnership (the “Partnership Sub”) and their respective Affiliates who perform services for the Partnership andits subsidiaries with Unit-based incentive awards for superior performance. The Plan is also intended to enhance the Company’s, thePartnership’s, Partnership Sub’s and their Affiliates’ ability to attract and retain employees whose services are key to the growth andprofitability of the Partnership, and to encourage them to devote their best efforts to the business of the Partnership, thereby advancingthe Partnership’s interests.SECTION 2. Definitions.As used in the Plan, the following terms shall have the meanings set forth below:2.1 “Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or moreintermediaries, controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control”means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person,whether through ownership of voting securities, by contract or otherwise. Notwithstanding the immediately preceding two sentences,with respect to Options that are intended to comply with Treasury Regulation § 1.409A-1(b)(5)(i)(A) and other awards that are intendedto comply with Treasury Regulation § 1.409A-1(b)(5)(i)(B), “Affiliate” means a corporation or other type of entity in a chain ofcorporations or other entities in which each corporation or other entity has a “controlling interest” in another corporation or entity in thechain, starting with the Partnership and ending with the corporation or other entity for which the Employee or Director performsservices. For purposes of this Section 2.1, “controlling interest” means (i) in the case of a corporation, ownership of stock possessing atleast 50% of total combined voting power of all classes of stock of such corporation entitled to vote or at least 50% of the total value ofshares of all classes of stock of such corporation; (ii) in the case of a partnership, ownership of at least 50% of the profits interest orcapital interest of such partnership; (iii) in the case of a sole proprietorship, ownership of the sole proprietorship; or (iv) in the case of atrust or estate, ownership of an actuarial interest (as defined in Treasury Regulation § 1.414(c)-2(b)(2)(ii)) of at least 50% of such trustor estate.2.2 “Award” means a grant of one or more Options, Performance Units, Performance Cash, Restricted Units, or Unit Awardspursuant to the Plan, and any tandem DERs granted with respect to such Award.2.3 “Board” means the Board of Directors of the Company.2.4 “Cause” shall mean the:(i) conviction of the Participant by a state or federal court of a felony involving moral turpitude;(ii) conviction of the Participant by a state or federal court of embezzlement or misappropriation of funds of theCompany, the Partnership, Partnership Sub or any of their respective Affiliates;1(iii) the Company’s (or applicable Affiliate’s, including the Partnership and Partnership Sub) reasonable determinationthat the Participant has committed an act of fraud, embezzlement, theft, or misappropriation of funds in connection with suchParticipant’s duties in the course of his or her employment with the Employer;(iv) the Company’s (or its applicable Affiliate’s, including the Partnership and Partnership Sub) reasonabledetermination that the Participant has engaged in gross mismanagement, negligence or misconduct which causes or couldpotentially cause material loss, damage or injury to the Company, the Partnership, Partnership Sub or any of their respectiveAffiliates or their respective employees; or(v) the Company’s (or applicable Affiliate’s, including the Partnership and Partnership Sub) reasonable determinationthat (a) the Participant has violated any policy of the Company, the Partnership, Partnership Sub or any of their applicablerespective Affiliates, including but not limited to, policies regarding sexual harassment, insider trading, confidentiality,substance abuse and/or conflicts of interest, which violation could result in the termination of the Participant’s employment orservice as a non-employee Director of the Company (or applicable Affiliate, including the Partnership and Partnership Sub), or(b) the Participant has failed to satisfactorily perform the material duties of Participant’s position with the Company, thePartnership, Partnership Sub or any of their respective Affiliates.2.5 “Change of Control” means, and shall be deemed to have occurred upon the occurrence of one or more of the followingevents:With respect to an Employee or Director of the Company or its Affiliates (other than of the Partnership, Partnership Sub andtheir respective subsidiaries):(i) any sale, exchange or other disposition (in one transaction or a series of related transactions) of all or substantiallyall of the assets of the Company or the Partnership to any Person or its Affiliates, unless immediately following such sale,exchange or other disposition such assets are owned, directly or indirectly, by NuStar GP Holdings, LLC and its Affiliates or theCompany;(ii) the consolidation or merger of the Partnership or the Company with or into another Person pursuant to atransaction in which the outstanding voting interests of the Company are changed into or exchanged for cash, securities or otherproperty, other than any such transaction where, in the case of the Company, (a) all outstanding voting interests of the Companyare changed into or exchanged for voting stock or interests of the surviving corporation or entity or its parent and (b) theholders of the voting interests of the Company immediately prior to such transaction own, directly or indirectly, not less than amajority of the voting stock or interests of the surviving corporation or entity or its parent immediately after such transactionand, in the case of the Partnership, NuStar GP Holdings, LLC retains operational control, whether by way of holding a generalpartner interest, managing member interest or a majority of the outstanding voting interests of the surviving corporation or entityor its parent, NuStar GP Holdings, LLC; or(iii) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act) being or becomingthe “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all voting interestsof NuStar GP Holdings, LLC or the Company then outstanding, other than, in the case of the Company, in a merger orconsolidation which would not constitute a Change of Control under clause (ii) above; or(iv) in the case of NuStar GP Holdings, LLC, the consummation of a reorganization, merger, consolidation or otherform of business transaction or series of business transactions, in each case, with respect to which more than 50% of the votingpower of the outstanding equity interests in NuStar GP Holdings,2LLC cease to be owned by the persons who owned such interests immediately prior to such reorganization, merger,consolidation or other form of business transaction or series of business transactions.With respect to an Employee or Director of the Partnership, Partnership Sub or their respective subsidiaries:(v) any sale, exchange or other disposition (in one transaction or a series of related transactions) of all or substantiallyall of the assets of the Partnership or Partnership Sub to any Person or its Affiliates, unless immediately following such sale,exchange or other disposition such assets are owned, directly or indirectly, by NuStar GP Holdings, LLC, the Company, thePartnership, Partnership Sub or any of their respective Affiliates;(w) the consolidation or merger of the Partnership or Partnership Sub with or into another Person pursuant to atransaction in which the outstanding voting interests of the Partnership or Partnership Sub, as applicable, are changed into orexchanged for cash, securities or other property, other than any such transaction where, in the case of Partnership Sub, (a) alloutstanding voting interests of the Partnership or Partnership Sub, as applicable, are changed into or exchanged for voting stockor interests of the surviving corporation or entity or its parent and (b) the holders of the voting interests of the Partnership orPartnership Sub, as applicable, immediately prior to such transaction own, directly or indirectly, not less than a majority of thevoting stock or interests of the surviving corporation or entity or its parent immediately after such transaction and, in the case ofthe Partnership, NuStar GP Holdings, LLC retains operational control, whether by way of holding a general partner interest,managing member interest or a majority of the outstanding voting interests of the surviving corporation or entity or its parent,NuStar GP Holdings, LLC;(x) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act) being or becomingthe “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all voting interestsof NuStar GP Holdings, LLC, the Company, the Partnership or Partnership Sub then outstanding, other than in a merger orconsolidation which would not constitute a Change of Control under clause (w) above;(y) the limited partners of the Partnership approve, in one or a series of transactions, a plan of complete liquidation ofthe Partnership; or(z) in the case of NuStar GP Holdings, LLC, the consummation of a reorganization, merger, consolidation or otherform of business transaction or series of business transactions, in each case, with respect to which more than 50% of the votingpower of the outstanding equity interests in NuStar GP Holdings, LLC cease to be owned by the persons who owned suchinterests immediately prior to such reorganization, merger, consolidation or other form of business transaction or series ofbusiness transactions.Notwithstanding the foregoing, in any circumstance or transaction in which compensation payable pursuant to this Plan, theterms of an Award and/or any Award agreement would be subject to the income tax under the Section 409A Rules if the foregoingdefinition of “Change in Control” were to apply, but would not be so subject if the term “Change of Control” were defined herein tomean a “change in control event” within the meaning of Treasury Regulation §1.409A-3(i)(5), then “Change of Control” means, butonly to the extent necessary to prevent such compensation from becoming subject to the income tax under the Section 409A Rules, atransaction or circumstance that satisfies the requirements of both (1) a Change of Control under the applicable clause (i) through (iv) or(v) through (z), as applicable, above, and (2) a “change in control event” within the meaning of Treasury Regulation §1.409A-3(i)(5).2.6 “Code” means the Internal Revenue Code of 1986, as amended.32.7 “Committee” means the Compensation Committee of the Board or such other committee of the Board appointed toadminister the Plan.2.8 “Covered Participants” means a Participant who is a “covered employee” as defined in Section 162(m)(3) of the Code,and the regulations promulgated thereunder, and any individual the Committee determines should be treated like such a coveredemployee.2.9 “Date of Grant” means the effective date on which an Award is made to a Participant as set forth in the terms of anyAward and/or any applicable Award Agreement.2.10 “DER” means a contingent right, granted in tandem with a specific Award, to receive an amount in cash equal to thecash distributions made by the Partnership with respect to a Unit during the period such Award is outstanding.2.11 “Director” means a “non-employee director” as defined in Rule 16b-3, of the Company, the Partnership, Partnership Subor their respective subsidiaries.2.12 “Employee” means any employee, as determined by the Committee, of the Company, the Partnership, Partnership Sub oran Affiliate of any of the foregoing.2.13 “Employer” means the applicable entity among the Company, the Partnership, Partnership Sub and their respectiveAffiliates that employs the Employee or with respect to which a Director serves as a director.2.14 “Exchange Act” means the Securities Exchange Act of 1934, as amended.2.15 “Fair Market Value” means the closing sales price of a Unit on the New York Stock Exchange on the applicable date (orif there is no trading in the Units on such date, on the immediately preceding date on which there was trading). If Units are not publiclytraded at the time a determination of fair market value is required to be made hereunder, the determination of fair market value shall bemade in good faith by the Committee through the reasonable application of a reasonable valuation method.2.16 “Option” means an option to purchase Units as described in Section 6.1.2.17 “Participant” means any Employee or Director granted an Award under the Plan.2.18 “Performance Award” means an Award made pursuant to this Plan to a Participant, which Award is subject to theattainment of one or more Performance Goals. Performance Awards may be in the form of either Performance Units, Performance Cashor DERs.2.19 “Performance Cash” means an Award, designated as Performance Cash and denominated in cash, granted to aParticipant pursuant to Section 6.4 hereof, the value of which is conditioned, in whole or in part, by the attainment of PerformanceGoals in a manner deemed appropriate by the Committee and described in the terms of the Award and/or an Award agreement.2.20 “Performance Criteria” or “Performance Goals” or “Performance Measures” mean the objectives established by theCommittee for a Performance Period, for the purpose of determining when an Award subject to such objectives is earned.2.21 “Performance Period” means the time period designated by the Committee during which performance goals must be met.42.22 “Performance Unit” means an Award, designated as a Performance Unit in the form of Units or other securities of theCompany, granted to a Participant pursuant to Section 6.4 hereof, the value of which is determined, in whole or in part, by the value ofUnits and/or conditioned on the attainment of Performance Goals in a manner deemed appropriate by the Committee and described inthe Award terms and/or Award agreement.2.23 “Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporatedorganization, association, government agency or political subdivision thereof or other entity.2.24 “Restricted Period” means the period established by the Committee with respect to the vesting of an Award during whichthe Award either remains subject to forfeiture or is not exercisable by the Participant.2.25 “Restricted Unit” means a phantom unit granted under the Plan that is equivalent in value to a Unit, and that upon orfollowing vesting entitles the Participant to receive one Unit or, if expressly provided by the Committee in the terms of the applicableAward, a cash payment of an amount equal to the Fair Market Value of one Unit on the date of vesting.2.26 “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act, or any successor rule or regulationthereof as in effect from time to time.2.27 “SEC” means the Securities and Exchange Commission.2.28 “Separation” means the Participant ceases, for any reason, to be employed by or to serve as a director for any of: theCompany, the Partnership, Partnership Sub or any Affiliate of any of the foregoing.2.29 “Unit” means a common unit of the Partnership.2.30 “Unit Award” means an award of a Unit that, as determined by the Committee, may, but is not required to, be subject toa Restricted Period.Notwithstanding anything in this Section 2 to the contrary, with respect to Awards outstanding immediately prior to the adoption of thisfifth amendment and restatement of the Plan, except as otherwise expressly provided herein, defined terms with respect thereto shallhave the meanings set forth in the fourth amendment and restatement of the Plan.SECTION 3. Administration.The Plan shall be administered by the Committee. A majority of the Committee shall constitute a quorum, and the acts of themembers of the Committee who are present at any meeting thereof at which a quorum is present, or acts unanimously approved by themembers of the Committee in writing, shall be the acts of the Committee. Subject to the terms of the Plan and applicable law, and inaddition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power andauthority to:(i) determine individuals eligible to be Participants;(ii) designate Participants;(iii) determine the type or types of Awards to be granted to a Participant;(iv) determine the number of Units to be covered by Awards;5(v) determine the terms and conditions of any Award (including but not limited to performance requirements for suchAward);(vi) determine whether, to what extent, and under what circumstances Awards may be settled, exercised, canceled, orforfeited or the vesting or exercisability thereof accelerated;(vii) interpret and administer the Plan and any instrument or agreement relating to an Award made under the Plan;(viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deemappropriate for the proper administration of the Plan; and(ix) make any other determination and take any other action that the Committee deems necessary or desirable for theadministration of the Plan.Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under orwith respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final,conclusive, and binding upon all Persons, including the Company, the Partnership, Partnership Sub, any Affiliate, any Participant, andany beneficiary of any Award.SECTION 4. Units Available for Awards.4.1 Units Available. Subject to adjustment as provided in Section 4.3, the number of Units with respect to which Awards maybe granted under the Plan is 3,250,000. If any Award expires, is canceled, exercised, paid or otherwise terminates without the deliveryof Units (for the avoidance of doubt, the grant of Units under a Unit Award that is subject to a Restricted Period is not a delivery ofUnits for this purpose unless and until such Units vest and any restrictions placed upon them under the Plan lapse), or if any Unitsunder an Award are held back to cover the exercise price or tax withholding, then the Units covered by such Award, to the extent ofsuch expiration, cancellation, exercise, payment, termination or hold back, shall again be Units with respect to which Awards may begranted. In the event that Units issued under the Plan are reacquired by the Partnership or the Company pursuant to any forfeitureprovision, such Units shall again be available for the purposes of the Plan. In the event a Participant pays for any Award through thedelivery of previously acquired Units, the number of Units available shall be increased by the number of Units delivered by theParticipant.4.2 Sources of Units Deliverable Under Awards. Any Units delivered pursuant to an Award shall consist, in whole or in part,of Units acquired in the open market, from the Partnership, the Company, any Affiliate of either of the foregoing or any other Person, ornewly issued Units by the Partnership, or any combination of the foregoing, as determined by the Committee in its discretion.4.3 Adjustments. If the Committee determines that any distribution (whether in the form of cash, Units, other securities, orother property), recapitalization, split, reverse split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase,or exchange of Units or other securities of the Partnership, issuance of warrants or other rights to purchase Units or other securities ofthe Partnership, or other similar transaction or event affects the Units such that an adjustment is determined by the Committee to beappropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under thePlan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Units (or othersecurities or property) with respect to which Awards may be granted, (ii) the number and type of Units (or other securities or property)subject to outstanding Awards, and (iii) if deemed appropriate, make provision for a cash payment to the holder of an outstandingAward; provided, that the number of Units subject to any Award shall always be a whole number.6SECTION 5. Eligibility.Any Employee or Director shall be eligible to be designated a Participant.SECTION 6. Awards.6.1 Options. The Committee shall have the authority to determine the Employees and Directors to whom Options shall begranted, the number of Units to be covered by each Option, the purchase price therefor and the conditions and limitations applicable tothe exercise of the Option, including the following terms and conditions and such additional terms and conditions, as the Committeeshall determine, that are not inconsistent with the provisions of the Plan.(i) Exercise Price. The purchase price per Unit purchasable under an Option shall be determined by the Committee atthe time the Option is granted but shall not be less than its Fair Market Value as of the date of grant.(ii) Time and Method of Exercise. The Committee shall determine the Restricted Period (i.e., the time or times at whichan Option may be exercised in whole or in part) and the method or methods by which payment of the exercise price withrespect thereto may be made or deemed to have been made which may include, without limitation, cash, check acceptable to theEmployer or other applicable Affiliate, a “cashless-broker” exercise (through procedures approved by the Employer), othersecurities or other property, a note from the Participant (in a form acceptable to the Employer or other applicable Affiliate), orany combination thereof, having a value on the exercise date equal to the relevant exercise price.(iii) Term. Subject to earlier termination as provided in the terms of the Award and/or any Award agreement or thePlan, each Option shall expire on the 10th anniversary of its date of grant.(iv) Forfeiture. Except as otherwise provided in this Plan, in the terms of an Award and/or Award agreement, or in awritten employment agreement (if any) between the Participant and the Employer, upon the Participant’s Separation during theapplicable Restricted Period, that portion of any Option that has not vested on or prior to the date of Separation shallautomatically lapse and be forfeited by the Participant at the close of business on the date of the Participant’s Separation. TheCommittee or the Chief Executive Officer may waive in whole or in part such forfeiture with respect to a Participant’s Options.6.2 Restricted Units. The Committee shall have the authority to determine the Employees and Directors to whom RestrictedUnits shall be granted, the number of Restricted Units to be granted to each such Participant, the duration of the Restricted Period (ifany), the conditions under which the Restricted Units may become vested (which may be immediate upon grant) or forfeited, and suchother terms and conditions as the Committee may establish respecting such Awards, including whether DERs are granted with respect tosuch Restricted Units.(i) DERs. To the extent provided by the Committee, in its discretion, a grant of Restricted Units may include a tandemDER grant, which may provide that such DERs shall be paid directly to the Participant, be credited to a bookkeeping account(with or without interest in the discretion of the Committee) subject to the same restrictions as the tandem Award, or be subjectto such other provisions or restrictions as determined by the Committee in its discretion.(ii) Forfeiture. Except as otherwise provided in this Plan, in the terms of an Award and/or Award agreement, or in awritten employment agreement (if any) between the Participant and the Employer, upon Participant’s Separation during theapplicable Restricted Period, all Restricted Units shall be forfeited by the Participant at the close of business on the date of theParticipant’s Separation. The Committee or the7Chief Executive Officer may waive in whole or in part such forfeiture with respect to a Participant’s Restricted Units.6.3 General.(i) Awards May be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted eitheralone or in addition to, in tandem with, or in substitution for any other Award granted under the Plan or any award grantedunder any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or awardsgranted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a different timefrom the grant of such other Awards or awards.(ii) Limits on Transfer of Awards. No Award and no right under any such Award may be assigned, alienated, pledged,attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent anddistribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void andunenforceable against the Company or any Affiliate.(iii) Terms of Awards. Except as otherwise provided herein, the term of each Award shall be for such period as may bedetermined by the Committee.(iv) Unit Certificates. All certificates for Units or other securities of the Partnership delivered under the Plan pursuantto any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee maydeem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon whichsuch Units or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend orlegends to be put on any such certificates to make appropriate reference to such restrictions.(v) Consideration for Grants. Awards may be granted for no cash consideration or for such consideration as theCommittee determines including, without limitation, such minimal cash consideration as may be required by applicable law.(vi) Delivery of Units or other Securities and Payment by Participant of Consideration. Notwithstanding anything inthe Plan, the terms of any Award and/or any Award agreement to the contrary, delivery of Units pursuant to the exercise orvesting of an Award may be deferred for any period during which, in the good faith determination of the Committee, theEmployer or applicable Affiliate thereof is not reasonably able to obtain Units to deliver pursuant to such Award withoutviolating the rules or regulations of any applicable law or securities exchange. No Units or other securities shall be deliveredpursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan, the terms of any Awardand/or any applicable Award agreement (including, without limitation, any exercise price or any tax withholding) is receivableby the Employer or applicable Affiliate thereof. Such payment may be made by such method or methods and in such form orforms as the Committee shall determine, including, without limitation, cash, other Awards, withholding of Units, or anycombination thereof; provided that the combined value, as determined by the Committee, of all cash and cash equivalent andthe value of any such Units or other property so tendered to the Employer or applicable Affiliate thereof, as of the date of suchtender, is at least equal to the full amount required to be paid to the Employer pursuant to the Plan, the terms of any Awardand/or any applicable Award agreement.(vii) Change of Control. Upon a Change of Control, all Awards shall automatically vest and become payable orexercisable, as the case may be, in full. In this regard, all Restricted Periods shall terminate8and all performance criteria, if any, shall be deemed to have been achieved at the maximum level. To the extent an Option is notexercised, upon the Change of Control, the Committee may, in its discretion, cancel such Award or provide for an assumptionof such Award or a replacement grant on substantially the same terms; provided, however, upon any cancellation of an Optionthat has a positive “spread,” the holder shall be paid an amount in cash and/or other property, as determined by the Committee,equal to such “spread” of such Option and, in the event there is no positive “spread,” such Option shall be cancelled withoutpayment of consideration therefor.6.4 Performance Based Awards.(i) Grant of Performance Awards. The Committee may issue Performance Awards in the form of Performance Units,Performance Cash, or DERs to Participants subject to the Performance Goals and Performance Period as it shall determine andset forth in the terms of the Award and/or any Award agreement. The Committee shall have complete discretion in determiningthe number and/or value of Performance Awards granted to each Participant. Any Performance Units granted under the Planshall have a minimum Restricted Period of one year from the Date of Grant, provided that the Committee may provide forearlier vesting. Participants receiving Performance Awards are not required to pay the Employer or applicable Affiliate thereoftherefor (except for applicable tax withholding) other than the rendering of services.(ii) Value of Performance Awards. The Committee shall set Performance Goals in its discretion for each Participantwho is granted a Performance Award. Such Performance Goals may be particular to a Participant, may relate to the performanceof his or her Employer, may be based on the division which employs him or her, may be based on the performance of thePartnership generally, or a combination of the foregoing. The Performance Goals may be based on achievement of balancesheet or income statement objectives, or any other objectives established by the Committee. The Performance Goals may beabsolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated.The extent to which such Performance Goals are met will determine the number and/or value of the Performance Award to theParticipant.(iii) Form of Payment. Payment of the amount to which a Participant shall be entitled upon the settlement of aPerformance Award shall be made in Units or, if expressly provided by the Committee in the terms of the applicable Award, incash.(iv) Forfeiture. Except as otherwise provided in this Plan, in the terms of an Award and/or Award agreement, or in awritten employment agreement (if any) between the Participant and the Employer, upon Participant’s Separation during theapplicable Performance Period or Restricted Period, all Performance Awards shall be forfeited by the Participant at the close ofbusiness on the date of the Participant’s Separation. The Committee or the Chief Executive Officer may waive in whole or inpart such forfeiture with respect to a Participant’s Performance Awards.6.5 Unit Awards. The Committee shall have the authority to determine the Employees and Directors to whom Unit Awardsshall be granted, the number of Units to be granted to each such Participant, the duration of the Restricted Period (if any), the conditionsunder which the Units awarded thereunder may become vested (which may be immediate upon grant) or forfeited, and such other termsand conditions as the Committee may establish respecting such Awards. Upon or as soon as reasonably practicable following thevesting of each Unit under a Unit Award that is subject to a Restricted Period, subject to satisfying the tax withholding obligations ofSection 8.2, the Participant shall be entitled to have the restrictions removed from his or her Unit certificate (or book-entry account, asapplicable) so that the Participant then holds an unrestricted Unit.9(i) Distributions. The Committee, in its discretion, may provide that distributions with respect to Units under a UnitAward that is subject to a Restricted Period shall be paid directly to the Participant without restriction, be credited to abookkeeping account (with or without interest in the discretion of the Committee) subject to the same restrictions as the UnitAward, or be subject to such other provisions or restrictions as determined by the Committee in its discretion. In the absence ofsuch provision by the Committee in the terms of the Award and/or an Award agreement, distributions with respect to Unitsunder a Unit Award that is subject to a Restricted Period shall be subject to the same vesting and forfeiture requirements andRestricted Period as the underlying Units.(ii) Forfeiture. Except as otherwise provided in this Plan, in the terms of an Award and/or in an Award agreement, or ina written employment agreement (if any) between the Participant and the Employer, upon Participant’s Separation during anapplicable Restricted Period, all unvested Units under the Unit Award shall be forfeited by the Participant at the close ofbusiness on the date of the Participant’s Separation. The Committee or the Chief Executive Officer may waive in whole or inpart such forfeiture with respect to a Participant’s Units under the Unit Award.SECTION 7. Amendment and Termination.Except to the extent prohibited by applicable law:7.1 Amendments to the Plan. Except as required by applicable law or the rules of the principal securities exchange on whichthe Units are traded and subject to Section 7.2 below, the Board or the Committee may amend, alter, suspend, discontinue, or terminatethe Plan in any manner, including increasing the number of Units available for Awards under the Plan, without the consent of anypartner, Participant, other holder or beneficiary of an Award, or other Person.7.2 Amendments to Awards. Unless otherwise expressly provided in an Award and/or in an Award agreement or in the Plan,the Committee may waive any conditions or rights under, amend any terms of, or alter any Award therefore granted.7.3 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee is herebyauthorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual ornonrecurring events (including, without limitation, the events described in Section 4.3 of the Plan) affecting the Partnership or thefinancial statements of the Partnership, or of changes in applicable laws, regulations, or accounting principles, whenever the Committeedetermines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefitsintended to be made available under the Plan.SECTION 8. General Provisions.8.1 No Rights to Awards. No Person shall have any claim to be granted any Award, and there is no obligation for uniformityof treatment of Participants. The terms and conditions of Awards need not be the same with respect to each Participant.8.2 Withholding. The Employer or any Affiliate is authorized to withhold from any Award, from any payment due or transfermade under any Award or from any compensation or other amount owing to a Participant the amount (in cash, Units, other securities,Units that would otherwise be issued pursuant to such Award or other property) of any applicable taxes payable in respect of the grantof an Award, the lapse of restrictions thereon, or any payment or transfer under an Award or under the Plan and to take such otheraction as may be necessary in the opinion of the Employer (or applicable Affiliate) to satisfy all obligations for the payment of suchtaxes. In the event that10Units that would otherwise be issued pursuant to an Award are used to satisfy such withholding obligations, the number of Units whichmay be so withheld or surrendered shall be limited to the number of Units that according to generally accepted accounting principleswould not result in liability accounting for the entirety of the award.8.3 No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained inthe employ of the Company, the Partnership, Partnership Sub or any Affiliate of any of the foregoing or to remain on the Board or otherdirectorship, as applicable. Further, the Company, the Partnership, Partnership Sub or an applicable respective Affiliate of any of theforegoing may at any time dismiss a Participant from employment, free from any liability or any claim under the Plan, unless otherwiseexpressly provided in the Plan, the terms of any Award and/or in any Award agreement.8.4 Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shallbe determined in accordance with the laws of the State of Delaware and applicable federal law.8.5 Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceablein any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by theCommittee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed ordeemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provisionshall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full forceand effect.8.6 Other Laws. The Committee may refuse to issue or transfer any Units or other consideration under an Award if, in its solediscretion, it determines that the issuance or transfer of such Units or such other consideration might violate any applicable law orregulation, the rules of the principal securities exchange on which the Units are then traded, or entitle the Partnership or an Affiliate torecover the entire then Fair Market Value thereof under Section 16(b) of the Exchange Act, and any payment tendered to the Employeror applicable Affiliate thereof by a Participant, other holder or beneficiary in connection with the exercise of such Award shall bepromptly refunded to the relevant Participant, holder or beneficiary.8.7 No Trust or Fund Created. Neither the Plan nor the Award shall create or be construed to create a trust or separate fund ofany kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that anyPerson acquires a right to receive payments from the Company, the Partnership, Partnership Sub or any Affiliate of any of the foregoingpursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company, the Partnership,Partnership Sub or any applicable Affiliate.8.8 No Fractional Units. No fractional Units shall be issued or delivered pursuant to the Plan or any Award, and theCommittee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Units orwhether such fractional Units or any rights thereto shall be canceled, terminated, or otherwise eliminated.8.9 Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference.Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provisionthereof.8.10 Gender and Number. Words in the masculine gender shall include the feminine gender, the plural shall include thesingular and the singular shall include the plural.118.11 Claw-back Policy. All Awards (including any proceeds, gains or other economic benefit actually or constructivelyreceived by the Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Units underlying the Award)shall be subject to the provisions of any claw-back policy implemented by, as applicable, the Partnership, the Company or any Affiliateof either of the foregoing, including, without limitation, any claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, to the extent set forth insuch claw-back policy, the terms of any applicable Awards and/or in any applicable Award agreement.8.12 No Guarantee of Tax Consequences. None of the Board, the Company, the Partnership, Partnership Sub or any Affiliateof any of the foregoing makes any commitment or guarantee that any federal, state, local or other tax treatment will (or will not) applyor be available to any Participant (or to any person claiming through or on behalf of any Participant) or assumes any liability orresponsibility with respect to taxes and penalties and interest thereon arising hereunder with respect to any Participant (or to any personclaiming through or on behalf of any Participant).8.13 Section 409A. This Plan, the Awards and the terms of all Awards and/or Award agreements are intended to either complywith or be exempt from Section 409A of the Code, and ambiguous provisions hereof, if any, shall be construed and interpreted in amanner consistent with such intent. The Company and its respective Affiliates make no representations that the Plan, the administrationof the Plan, the Awards, the terms of the Awards and/or Award agreements or amounts payable hereunder comply with, or are exemptfrom, Section 409A of the Code, and undertake no obligation to ensure such compliance or exemption. For purposes of Section 409Aof the Code, each payment or amount due under this Plan shall be considered a separate payment, and a Participant’s entitlement to aseries of payments under this Plan shall be treated as an entitlement to a series of separate payments. Notwithstanding any otherprovision of the Plan, the terms of an Award and/or any Award agreement to the contrary, if a Participant is a “specified employee”under Section 409A of the Code, except to the extent permitted thereunder, no benefit or payment that is not otherwise exempt fromSection 409A of the Code (after taking into account all applicable exceptions thereunder, including to the exceptions for short-termdeferrals and for “separation pay only upon an involuntary separation from service”) shall be made to that Participant under the Plan orthe affected Award granted thereunder on account of the Participant’s “separation from service,” as defined in Section 409A of theCode, until the later of the date prescribed for payment in the Plan or the affected Award granted thereunder and the first (1st) day ofthe seventh (7th) calendar month that begins after the date of the Participant’s separation from service (or, if earlier, the date of death ofthe Participant). Unless otherwise provided in the terms of any Award and/or Award agreement, any amount that is otherwise payablewithin the delay period described in the immediately preceding sentence will be aggregated and paid in a lump sum without interest.SECTION 9. Term of the Plan.The fourth amendment and restatement of the Plan became effective on January 1, 2014. The current amendment andrestatement was approved by the holders of Units and became effective January 28, 2016 (the “Effective Date”). The Plan shallcontinue until the date terminated by the Board or Units are no longer available for grants of Awards under the Plan, whichever occursfirst; provided, however, that notwithstanding the foregoing, no Award shall be made under the Plan after the tenth anniversary of theEffective Date, January 28, 2026. However, unless otherwise expressly provided in the Plan or in the terms of an Award and/or anyapplicable Award agreement, any Award granted prior to such termination, and the authority of the Board or the Committee to amend,alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under such Award, shall extendbeyond such termination date. In the event sponsorship of the Plan is transferred from the Company to an Affiliate thereof, the term ofthe plan shall continue until the tenth anniversary of the Effective Date, January 28, 2026, unless terminated earlier as provided herein.12SECTION 10. Special Provisions Applicable to Covered Participants.Awards subject to Performance Criteria paid to Covered Participants under this Plan shall be governed by the conditions of thisSection 10 in addition to the requirements of Section 6.4, above. Should conditions set forth under this Section 10 conflict with therequirements of Section 6.4, the conditions of this Section 10 shall prevail.10.1 Establishment of Performance Measures, Goals or Criteria. All Performance Measures, Goals, or Criteria relating toCovered Participants for a relevant Performance Period shall be established by the Committee in writing prior to the beginning of thePerformance Period, or by such other later date for the Performance Period as may be permitted under Section 162(m) of the Code. ThePerformance Goals may be identical for all Participants or, at the discretion of the Committee, may be different to reflect moreappropriate measures of individual performance.10.2 Performance Goals. The Committee shall establish the Performance Goals relating to Covered Participants for aPerformance Period in writing. Performance Goals may include alternative and multiple Performance Goals and may be based on one ormore business and/or financial criteria. In establishing the Performance Goals for the Performance Period, the Committee in itsdiscretion may include one or any combination of the following criteria in either absolute or relative terms, for the Partnership or anyAffiliate:(i) Increased revenue;(ii) Net income measures (including but not limited to income after capital costs and income before or after taxes);(iii) Unit price measures (including but not limited to growth measures and total unitholder return);(iv) Market share;(v) Earnings per unit (actual or targeted growth);(vi) Earnings before interest, taxes, depreciation, and amortization (“EBITDA”);(vii) Economic value added (“EVA®”);(viii) Cash flow measures (including but not limited to net cash flow and net cash flow before financing activities);(ix) Return measures (including but not limited to return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity);(x) Operating measures (including operating income, funds from operations, cash from operations, after-tax operatingincome, sales volumes, production volumes, and production efficiency);(xi) Expense measures (including but not limited to overhead cost and general and administrative expense);(xii) Margins;(xiii) Unitholder value;13(xiv) Total unitholder return;(xv) Proceeds from dispositions;(xvi) Pipeline and terminal utilization;(xvii) Total market value; and(xviii) Corporate values measures (including ethics and compliance, environmental, and safety).10.3 Compliance with Section 162(m). The Performance Goals must be objective and must satisfy third party “objectivity”standards under Section 162(m) of the Code, and the regulations promulgated thereunder. In interpreting Plan provisions relating toAwards subject to Performance Goals paid to Covered Participants, it is the intent of the Plan to conform with the standards of Section162(m) of the Code and Treasury Regulation §1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting the Planshall be guided by such provisions.10.4 Adjustments. The Committee is authorized to make adjustments in the method of calculating attainment of PerformanceGoals in recognition of: (i) extraordinary or non-recurring items, (ii) changes in tax laws, (iii) changes in generally accepted accountingprinciples or changes in accounting principles, (iv) charges related to restructured or discontinued operations, (v) restatement of priorperiod financial results, and (vi) any other unusual, non-recurring gain or loss that is separately identified and quantified in theCompany’s financial statements. Notwithstanding the foregoing, the Committee may, at its sole discretion, reduce the performanceresults upon which Awards are based under the Plan, to offset any unintended result(s) arising from events not anticipated when thePerformance Goals were established, or for any other purpose, provided that such adjustment is permitted by Section 162(m) of theCode.10.5 Discretionary Adjustments. The Performance Goals shall not allow for any discretion by the Committee as to an increasein any Award, but discretion to lower an Award is permissible.10.6 Certification. The Award and payment of any Award under this Plan to a Covered Participant with respect to a relevantPerformance Period shall be contingent upon the attainment of the Performance Goals that are applicable to such Covered Participant.The Committee shall certify in writing prior to payment of any such Award that such applicable Performance Goals relating to theAward are satisfied. Approved minutes of the Committee may be used for this purpose.10.7 Other Considerations. All Awards to Covered Participants under this Plan shall be further subject to such otherconditions, restrictions, and requirements as the Committee may determine to be necessary to carry out the purpose of this Section 10.14Exhibit 10.31FIRST AMENDMENT TO THENUSTAR GP, LLC FIFTH AMENDED AND RESTATED2000 LONG-TERM INCENTIVE PLANThis First Amendment (this “Amendment’) to the NuStar GP, LLC Fifth Amended and Restated 2000 Long-Term IncentivePlan (the “Plan”) is made and entered into as of February 7, 2018 pursuant to resolutions of the Compensation Committee (the“Compensation Committee”) of the board of directors (the “Board”) of NuStar GP, LLC, a Delaware limited liability company andthe general partner (the “Company”) of Riverwalk Logistics, L.P., a Delaware limited partnership and the general partner (the“General Partner”) of NuStar Energy L.P., a Delaware limited partnership (the “Partnership”).WHEREAS, Section 7(a) of the Plan provides that the Compensation Committee or the Board may amend the Plan for anyreason and without the consent of any holder of an award thereunder;WHEREAS, the Compensation Committee believes that amending the Plan as set forth in this Amendment will not adverselyaffect the material rights of any holder of an award thereunder; andWHEREAS, in connection with the Merger (as defined in the Agreement and Plan of Merger, dated as of February 7, 2018, byand among the Partnership, the General Partner, the Company, Marshall Merger Sub LLC, a Delaware limited liability company and awholly owned subsidiary of the Partnership, NuStar GP Holdings, LLC, a Delaware limited liability company (“NSH”) andRiverwalk Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of NSH), the Company desires toamend the Plan to clarify that the Merger does not constitute a “Change of Control” within the meaning of the Plan.NOW, THEREFORE, it is hereby agreed as follows:1.Section 2.5 of the Plan is hereby amended to add to the end thereof the following:Notwithstanding anything in this Plan or any Award to the contrary, no Change of Control shall occur or be deemed tooccur upon the consummation of the transactions contemplated by the Agreement and Plan of Merger by and amongNuStar Energy L.P., Riverwalk Logistics, L.P., NuStar GP, LLC, Marshall Merger Sub LLC, Riverwalk Holdings,LLC and NuStar GP Holdings, LLC to be dated on or about February 7, 2018, as it may be amended from time totime.2.Except as hereby modified, the Plan shall remain in full force and effect.[Signature Page Follows]IN WITNESS WHEREOF, the Company has executed this First Amendment to the NuStar GP, LLC Fifth Amended andRestated 2000 Long-Term Incentive Plan as of the date first written above.NUSTAR GP, LLC By: /s/ Thomas R. Shoaf Name: Thomas R. ShoafTitle: Executive Vice President and ChiefFinancial OfficerSignature Page to the First Amendment to the NuStar GP, LLCFifth Amended and Restated 2000 Long-Term Incentive PlanExhibit 10.39[Executive]CHANGE OF CONTROL WAIVER AGREEMENTThis Agreement (“Agreement”) is hereby entered into effective as of February 7, 2018 by and between ___________ (the“Executive”), NuStar Services Company LLC, a Delaware limited liability company (the “Employer”), NuStar Energy L.P., aDelaware limited partnership (the “Partnership”), NuStar GP, LLC, a Delaware limited liability company (“NuStar GP”), andNuStar GP Holdings, LLC, a Delaware limited liability company (“NSH”) (collectively, the Employer, the Partnership, NuStar GPand NSH and their respective affiliates referred to herein as “NuStar”).RECITALSWHEREAS, the Executive, the Employer and the Partnership previously entered into the Amended and RestatedChange of Control Severance Agreement dated as of ____________ (the “CIC Agreement”) which provides the Executive withcertain payments and benefits in the event that the Executive’s employment with the Employer is terminated for certain reasons duringa specified period of time following a “Change of Control” (as defined in the CIC Agreement);WHEREAS, pursuant to the NuStar GP Holdings, LLC Long-Term Incentive Plan (the “NSH LTIP”) and theNuStar GP, LLC Fifth Amended and Restated 2000 Long-Term Incentive Plan (the “Partnership LTIP”), the Executive wasgranted, respectively, certain awards of phantom units representing member interests in NSH (the “NSH Phantom Units”), certainawards of performance units representing common units of the Partnership (the “Partnership Performance Units”), and certainawards of phantom units representing common units of the Partnership (the “Partnership Phantom Units”), in each case, which aresubject to certain vesting conditions and represented by the awards described on Exhibit A hereto (collectively, the “Awards”);WHEREAS, under the terms of the NSH LTIP, the Partnership LTIP and the Awards, in the event of a “Change ofControl” (as defined in the NSH LTIP and the Partnership LTIP), all outstanding NSH Phantom Units granted under the NSH LTIP,all outstanding Partnership Performance Units granted under the Partnership LTIP, and all outstanding Partnership Phantom Unitsgranted under the Partnership LTIP generally become fully vested on the date thereof;WHEREAS, contemporaneously herewith, the Partnership, Riverwalk Logistics, L.P., a Delaware limited partnershipand the general partner of the Partnership (“Riverwalk”), NuStar GP, Marshall Merger Sub LLC, a Delaware limited liabilitycompany and wholly owned subsidiary of the Partnership (“Merger Sub”), NSH and Riverwalk Holdings, LLC, a Delaware limitedliability company and a wholly owned subsidiary of NSH, are entering into an Agreement and Plan of Merger (the “MergerAgreement”) pursuant to which Merger Sub will merge with and into NSH, with NSH being the surviving entity, such that followingthe transactions contemplated by the Merger Agreement, the Partnership will be the sole member of such surviving entity and suchsurviving entity will be the sole member of NuStar GP; WHEREAS, in connection with the transactions contemplated by the Merger Agreement (the “Merger”), the NSHLTIP and the Partnership LTIP have been amended (the “Amendments”) in accordance with the terms thereof, to provide that theMerger is not a “Change of Control” (as defined in the NSH LTIP and the Partnership LTIP);WHEREAS, in connection with the Merger, a “Change of Control” (as defined in the CIC Agreement) and/or a“Change of Control” (as defined in the NSH LTIP and the Partnership LTIP prior to the Amendments) could or could be deemed tooccur and the Executive may be (or, in the case of the NSH LTIP or the Partnership LTIP, would have been if the Amendments hadnot been adopted) entitled to the payments and benefits provided under the CIC Agreement, the NSH LTIP, the Partnership LTIP andthe Awards upon and in connection with the consummation of the Merger, including but not limited to post-termination payments andbenefits if the Executive’s employment is terminated for certain reasons during a specified period following the consummation of theMerger and the immediate vesting of all of the outstanding NSH Phantom Units and all of the outstanding Partnership Phantom Unitsheld by the Executive as of the date of such Merger and the immediate vesting at 200% of all outstanding Partnership PerformanceUnits held by the Executive as of the date of such Merger (collectively, the “Change of Control Benefits”); andWHEREAS, the parties did not intend for any Change of Control Benefits to be payable upon or in connection with abusiness combination like the Merger.WAIVER AND CONSENTNOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties agree as follows:1. Notwithstanding the terms of the CIC Agreement, the NSH LTIP, the Partnership LTIP or the Awards, the parties agreethat the Merger shall not constitute or be deemed to constitute a “Change of Control” (as defined in the CIC Agreement, the NSHLTIP or the Partnership LTIP) and the Amendments were validly adopted.2. The Executive agrees and acknowledges that the Executive shall not receive any of the Change of Control Benefits thatmay otherwise have been payable to or provided to the Executive upon or in connection with the consummation of the Merger. TheExecutive irrevocably waives any and all Change of Control Benefits that may otherwise have been payable to or provided to theExecutive upon the consummation of the Merger and the Executive’s right to receive any of Change of Control Benefits in the futurewith respect to or arising out of the Merger.3. The Executive agrees that Executive’s waiver of the Change of Control Benefits under the terms of this Agreement shallnot constitute a breach by NuStar of any provision of the CIC Agreement and shall not give the Executive the right to terminateExecutive’s employment due to Good Reason (as defined in the CIC Agreement).4. Except as expressly provided herein, all other terms and conditions of the CIC Agreement, the NSH LTIP, the PartnershipLTIP and the Awards shall remain in full force and effect; provided, however, that the CIC Agreement, the NSH LTIP, the PartnershipLTIP and/or the Awards may be amended pursuant to their terms to reflect the terms of this Agreement and/or the occurrence of theMerger. For the avoidance of doubt, nothing in this Agreement shall affect the Executive’s right to any payments or benefits providedunder the terms of the CIC Agreement, the NSH LTIP, the Partnership LTIP or the Awards with respect to any transaction occurringafter the Merger that constitutes or could be deemed to constitute a “Change of Control” as defined therein.5. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware withoutreference to such state’s principles of conflicts of law. The Executive hereby (i) irrevocably consents to the exclusive jurisdiction ofany court located in the State of Delaware in connection with any matter based upon or arising out of this Agreement or the matterscontemplated herein, (ii) agrees that process may be served upon the Executive in any manner authorized by the laws of the Delaware,and (iii) irrevocably waives, and covenants not to assert or plead, any objection which the Executive might otherwise have to suchjurisdiction and such process.6. Executive acknowledges and agrees that this Agreement will be binding upon and inure to the benefit of (i) the heirs,executors and legal representatives of the undersigned Executive upon the undersigned Executive’s death and (ii) any successor ofNuStar and its subsidiaries or affiliates. Any such successor will be deemed substituted for NuStar under the terms of this Agreementfor purposes of enforcing the rights hereunder of NuStar.7. In the event the Merger Agreement is terminated in accordance with its terms, this Agreement shall terminate concurrentlytherewith. In the event the Merger does not occur or fails to become effective, this Agreement shall be without force or effect.8. The Executive certifies, acknowledges and agrees that the Executive has read and completely understands this Agreementand that the Executive is signing freely and voluntarily, without duress, coercion or undue influence.9. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of whichtogether shall constitute one document.[Signature Page Follows; Remainder of Page Intentionally Left Blank]IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first written above. __________________________________ Executive NuStar Services Company LLCBy: Name:Title: NuStar Energy L.P.By: Riverwalk Logistics, L.P., its general partnerBy: NuStar GP, LLC, its general partnerBy: Name:Title:NuStar GP Holdings, LLCBy: Name:Title:NuStar GP, LLCBy: Name:Title:Exhibit A[List of outstanding Awards granted to the Executive]Exhibit 10.40[NS Non-Employee Director Form]CHANGE OF CONTROL WAIVER AGREEMENTThis Agreement (“Agreement”) is hereby entered into effective as of February 7, 2018 by and between ____________ (the“Director”), NuStar Energy L.P., a Delaware limited partnership (the “Partnership”), NuStar Services Company LLC and NuStarGP, LLC (“NuStar GP”) (collectively, the Partnership, NuStar GP and their respective affiliates referred to herein as “NuStar”).RECITALSWHEREAS, pursuant to the NuStar GP, LLC Fifth Amended and Restated 2000 Long-Term Incentive Plan (the“Partnership LTIP”), the Director was granted certain awards of phantom units representing common units of the Partnership (the“Partnership Phantom Units”)which are subject to certain vesting conditions and represented by the awards described in Exhibit Ahereto (collectively, the “Awards”);WHEREAS, under the terms of the Partnership LTIP and the Awards, in the event of a “Change of Control” (asdefined in the Partnership LTIP), all outstanding Partnership Phantom Units granted under the Partnership LTIP generally becomefully vested on the date thereof;WHEREAS, contemporaneously herewith, the Partnership, Riverwalk Logistics, L.P., a Delaware limited partnershipand the general partner of the Partnership (“Riverwalk”), NuStar GP, Marshall Merger Sub LLC, a Delaware limited liabilitycompany and wholly owned subsidiary of the Partnership (“Merger Sub”), NuStar GP Holdings, LLC, a Delaware limited liabilitycompany (“NSH”) and Riverwalk Holdings, LLC, a Delaware limited liability and a wholly owned subsidiary of NSH, are enteringinto an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Merger Sub will merge with and into NSH,with NSH being the surviving entity, such that following the transactions contemplated by the Merger Agreement, the Partnership willbe the sole member of such surviving entity and such surviving entity will be the sole member of NuStar GP;WHEREAS, in connection with the transactions contemplated by the Merger Agreement (the “Merger”), thePartnership LTIP has been amended (the “Amendment”) in accordance with the terms thereof, to provide that the Merger is not a“Change of Control” (as defined in the Partnership LTIP);WHEREAS, in connection with the Merger, a “Change of Control” (as defined in the Partnership LTIP prior to theAmendment) could or could be deemed to occur and the Director may be (or, in the case of the Partnership LTIP, would have been ifthe Amendment had not been adopted) entitled to the payments and benefits provided under the Partnership LTIP and the Awardsupon and in connection with the consummation of the Merger, including but not limited to the immediate vesting of all of theoutstanding Partnership Phantom Units held by the Director as of the date of such Merger (collectively, the “Change of ControlBenefits”); andWHEREAS, the parties did not intend for any Change of Control Benefits to be payable upon or in connection with abusiness combination like the Merger.WAIVER AND CONSENTNOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,the parties agree as follows:1. Notwithstanding the terms of the Partnership LTIP or the Awards, the parties agree that the Merger shall not constitute orbe deemed to constitute a “Change of Control” (as defined in the Partnership LTIP) and the Amendment was validly adopted.2. The Director agrees and acknowledges that the Director shall not receive any of the Change of Control Benefits that mayotherwise have been payable to the Director upon or in connection with the consummation of the Merger. The Director irrevocablywaives any and all Change of Control Benefits that may otherwise have been payable to the Director upon the consummation of theMerger and the Director’s right to receive any Change of Control Benefits in the future with respect to or arising out of the Merger.3. Except as expressly provided herein, all other terms and conditions of the Partnership LTIP and the Awards shall remain infull force and effect; provided, however, that the Partnership LTIP and/or the Awards may be amended pursuant to their terms toreflect the terms of this Agreement and/or the occurrence of the Merger. For the avoidance of doubt, nothing in this Agreement shallaffect the Director’s right to any payments or benefits provided under the terms of the Partnership LTIP or the Awards with respect toany transaction occurring after the Merger that constitutes or could be deemed to constitute a “Change of Control” as defined in thePartnership LTIP.4. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware withoutreference to such state’s principles of conflicts of law. The Director hereby (i) irrevocably consents to the exclusive jurisdiction of anycourt located in the State of Delaware in connection with any matter based upon or arising out of this Agreement or the matterscontemplated herein, (ii) agrees that process may be served upon the Director in any manner authorized by the laws of the Delaware,and (iii) irrevocably waives, and covenants not to assert or plead, any objection which the Director might otherwise have to suchjurisdiction and such process.5. Director acknowledges and agrees that this Agreement will be binding upon and inure to the benefit of (i) the heirs,executors and legal representatives of the undersigned Director upon the undersigned Director’s death and (ii) any successor of NuStarand its subsidiaries or affiliates. Any such successor will be deemed substituted for NuStar under the terms of this Agreement forpurposes of enforcing the rights hereunder of NuStar.6. In the event the Merger Agreement is terminated in accordance with its terms, this Agreement shall terminate concurrentlytherewith. In the event the Merger does not occur or fails to become effective, this Agreement shall be without force or effect.7. The Director certifies, acknowledges and agrees that the Director has read and completely understands this Agreement andthat the Director is signing freely and voluntarily, without duress, coercion or undue influence.8. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of whichtogether shall constitute one document.[Signature Page Follows; Remainder of Page Intentionally Left Blank]IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first written above. ___________________________ Director NuStar Energy L.P.By: Riverwalk Logistics, L.P., its general partnerBy: NuStar GP, LLC, its general partnerBy: Name:Title:NuStar GP, LLCBy: Name:Title:NuStar Services Company LLCBy: Name:Title:Exhibit A[List of outstanding Awards granted to the Director]Exhibit 12.01NUSTAR ENERGY L.P.STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(Thousands of Dollars, Except Ratio Data) Years Ended December 31, 2017 2016 2015 2014 2013Earnings: Income (loss) from continuingoperations before provision forincome taxes and income fromequity investees$157,901 $161,976 $320,658 $220,174 $(132,786)Add: Fixed charges190,674 154,085 150,661 153,236 149,090Amortization of capitalized interest1,871 1,722 1,573 1,385 1,216Distributions from joint ventures— — 2,500 7,587 7,956Less: Interest capitalized(5,529) (3,414) (5,549) (5,667) (4,501)Total earnings$344,917 $314,369 $469,843 $376,715 $20,975Fixed charges: Interest expense, net$173,083 $138,350 $131,868 $132,281 $127,119Interest capitalized5,529 3,414 5,549 5,667 4,501Rental expense interest factor (a)12,062 12,321 13,244 15,288 17,470Total fixed charges$190,674 $154,085 $150,661 $153,236 $149,090 Preferred unit distributions (b)$40,448 $1,925 Total fixed charges plus preferred unit distributions(b)$231,122 $156,010 Ratio of earnings to fixed charges1.8x 2.0x 3.1x 2.5x (c)Ratio of earnings to fixed charges plus preferred unitdistributions (b)1.5x 2.0x (a)The interest portion of rental expense represents one-third of rents, which is deemed representative of the interest portion of rental expense. (b)For the years ended December 31, 2015, 2014 and 2013, we had no preferred units outstanding. (c)For the year ended December 31, 2013, earnings were insufficient to cover fixed charges by $128.1 million. The deficiency included a goodwillimpairment loss of $304.5 million related to the Statia terminals reporting unit.Exhibit 21.01Subsidiaries of NuStar Energy L.P.Name of EntityJurisdiction of OrganizationBicen Development Corporation N.V.NetherlandsCooperatie NuStar Holdings U.A.NetherlandsLegacyStar Services, LLCDelawareNS Security Services, LLCDelawareNuStar Burgos, LLCDelawareNuStar Caribe Terminals, Inc.DelawareNuStar Eastham LimitedEnglandNuStar Energy Services, Inc.DelawareNuStar Finance LLCDelawareNuStar GP, Inc.DelawareNuStar Grangemouth LimitedScotlandNuStar Holdings B.V.NetherlandsNuStar Internacional, S de R.L. de C.V.MexicoNuStar Logistics, L.P.DelawareNuStar Permian Crude Logistics, LLCDelawareNuStar Permian Holdings, LLCDelawareNuStar Permian Transportation and Storage, LLCDelawareNuStar Pipeline Company, LLCDelawareNuStar Pipeline Holding Company, LLCDelawareNuStar Pipeline Operating Partnership L.P.DelawareNuStar Pipeline Partners L.P.DelawareNuStar Refining, LLCDelawareNuStar Services Company LLCDelawareNuStar Supply & Trading LLCDelawareNuStar Terminals Antilles N.V.CuracaoNuStar Terminals B.V.NetherlandsNuStar Terminals Canada Co.CanadaNuStar Terminals Canada Holdings Co.CanadaNuStar Terminals Canada PartnershipCanadaNuStar Terminals Corporation N.V.CuracaoNuStar Terminals Delaware, Inc.DelawareNuStar Terminals International N.V.CuracaoNuStar Terminals LimitedEnglandNew Star Terminals Marine Services N.V.NetherlandsNuStar Terminals New Jersey, Inc.DelawareNuStar Terminals N.V.NetherlandsNuStar Terminals Operations Partnership L.P.DelawareNuStar Terminals Partners TX L.P.DelawareNuStar Terminals Services, Inc.DelawareNuStar Terminals Texas, Inc.DelawareName of EntityJurisdiction of OrganizationNuStar Texas Holdings, Inc.DelawarePetroburgos, S. de R.L. de C.V.MexicoPoint Tupper Marine Services Co.CanadaSaba Company N.V.NetherlandsSeven Seas Steamship Company (Sint Eustatius) N.V.NetherlandsShore Terminals LLCDelawareST Linden Terminal, LLCDelawareStar Creek Ranch, LLCDelawareExhibit 23.01Consent of Independent Registered Public Accounting FirmThe Board of DirectorsNuStar GP, LLC:We consent to the incorporation by reference in the registration statements on Form S-8 (Nos. 333-138133, 333-81806, and 333-209717) and on Form S-3 (Nos. 333-204217 and 333-212338) of NuStar Energy L.P. of our reports dated February 28, 2018, withrespect to the consolidated balance sheets of NuStar Energy L.P. and subsidiaries as of December 31, 2017 and 2016, and the relatedconsolidated statements of income, comprehensive income, partners’ equity, and cash flows for each of the years in the three-yearperiod ended December 31, 2017, and the related notes (collectively, the “consolidated financial statements”), and the effectiveness ofinternal control over financial reporting as of December 31, 2017, which reports appear in the December 31, 2017 annual report onForm 10‑K of NuStar Energy L.P./s/ KPMG LLPSan Antonio, TexasFebruary 28, 2018Exhibit 31.01CERTIFICATION PURSUANT TO SECTION 302OF THE SARBANES-OXLEY ACT OF 2002I, Bradley C. Barron, certify that:1. I have reviewed this annual report on Form 10-K of NuStar Energy L.P. (the “registrant”);2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: February 28, 2018/s/ Bradley C. BarronBradley C. BarronPresident and Chief Executive OfficerExhibit 31.02CERTIFICATION PURSUANT TO SECTION 302OF THE SARBANES-OXLEY ACT OF 2002I, Thomas R. Shoaf, certify that:1. I have reviewed this annual report on Form 10-K of NuStar Energy L.P. (the “registrant”);2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Date: February 28, 2018/s/ Thomas R. ShoafThomas R. ShoafExecutive Vice President and Chief Financial OfficerExhibit 32.01CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of NuStar Energy L.P. (the Partnership) on Form 10-K for the year ended December 31, 2017, as filed with theSecurities and Exchange Commission on the date hereof (the Report), I, Bradley C. Barron, President and Chief Executive Officer of NuStar GP, LLC, thegeneral partner of the general partner of the Partnership, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that:1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/ Bradley C. BarronBradley C. BarronPresident and Chief Executive OfficerFebruary 28, 2018Exhibit 32.02CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of NuStar Energy L.P. (the Partnership) on Form 10-K for the year ended December 31, 2017, as filed with theSecurities and Exchange Commission on the date hereof (the Report), I, Thomas R. Shoaf, Executive Vice President and Chief Financial Officer of NuStar GP,LLC, the general partner of the general partner of the Partnership, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002, that:1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/ Thomas R. ShoafThomas R. ShoafExecutive Vice President and Chief Financial OfficerFebruary 28, 2018

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