Tax hike at LNG terminal would hit Irving Oil, not Repsol

Any jump in property taxes at Saint John's Canaport LNG development is likely to hit Irving Oil alone and its partner in the development, Repsol, is so far expressing no concern about the issue.

Repsol, the Spanish energy company which owns 75 per centof the Canaport LNG development to Irving Oil's 25 per cent, has consistently said it has no ownership interest in the property the development sits on and is not affected by the property's tax bill.

"Neither Repsol nor Canaport LNG are directly involved in the tax issue and so we can't comment on it," Repsol's Calgary-basedspokesman Brent Anderson said in an emailedstatement to CBC News on Wednesday.

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On Monday, Saint John city council voted to ask the provincial governmentto repeal a special tax rate for the city's LNG development 15 years ahead of schedule.Ifsuccessful, the move would raise property taxes from$500,000 per year at the site to more than$8 million.

The Canaport LNG development is built on land that is owned solely by Irving Oil Ltd.

The development pays Irving $12 million US ($16 million Cdn) per year in rent.

According to lease documents governing the entire arrangement and obtained by CBC News, Irving Oil alone is responsible for paying property taxes.The lease includes no provision for Repsol to help pay for increases in property taxes, unless they are caused by an expansion.

"(The) landlord shall pay all property taxes assessed or imposed on real property in respect of Canaport LNG terminal and the leased land,"the lease states.

That means if property taxes at the LNG development shoot up because of a loss of the tax deal, Irving Oil alone will have to pay the difference.

In Fredericton, Energy Minister Donald Arseneault acknowledged Liberals opposed the entireLNG tax arrangement in2005, but said that doesn't mean they will necessarily agree to undo it now.

"We made our feelings known at that time back in 2005, but time has passed," said Arseneault.

"The city's going through their own challenges and we have to respect that, but at the same time the energy sector is a very important sector to the economy of New Brunswick.

"We want to take everything into consideration so that whatever the decision may be, is for the benefit of New Brunswickers."