Irving Oil has told the Gallant government it will reluctantly pay full municipal property taxes to Saint John at the Canaport LNG development if compelled, according to Energy Minister Donald Arseneault.​

"We had conversations with the (Irving Oil) CEO Mr. (Ian) Whitcomb about that situation," said Arseneault, who spoke at length about the LNG tax controversy during this week's CBC political panel.

"There's no doubt they were disappointed to see that happening but they were willing to live with whatever the government wanted to decide on that," said Arseneault.

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Energy Minister Donald Arseneault says the government will likely wait until after the May municipal elections to see if the new Saint John council still wants it to quash the Irving tax deal on Canaport. (CBC)

City council voted 7-2 in December to ask the province to repeal the 2005 tax agreement, which slashed property taxes by 90 per cent and established a fixed tax payment of $500,000 annually until 2030.

Arseneault noted he voted against the tax deal when it originally came before the Legislature in 2005 and was never convinced the concession was needed in the first place.

"I think Irving Oil has the ability to pay those property taxes," he said

The tax concession saves Irving Oil $7.5 million per year in annual municipal property taxes on land it leases to Canaport LNG. Under terms of that lease Irving Oil earns $12.25 million US per year in rent from the property.

The Gallant government had said little about the request from Saint John since receiving it other than to confirm it is under consideration, until Arseneault opened up this week.