From: http://drupal.org/node/1185210
User Relationships provides individual panel pane visibility checks based on relationship status.
In order to use this functionality:
Make sure that the User context has been enabled for the current variant (most likely current user)
Add a new visibility rule for the pane you would like to control
Select 'User Relationship' and configure for your use case.
That being said, I wrote those instructions for Drupal 6 while porting this feature to 7 and there may be bugs with the 7.x implementation. If you find anything make sure to post what you find on the issue queue.
If you want to customize your implementation further that code would be a good starting point, and please post any additional visibility rules back to the queue.