NEW YORK (CNNMoney.com) -- The U.S. Interior Department abandoned claims that the oil giant Chevron underpaid the government for natural gas produced in the Gulf of Mexico, which could pave the way for other energy firms from paying royalties to the government, according to a report published Tuesday.

The confidential decision by the agency, obtained and reported by the New York Times, ordered Chevron (down $0.02 to $66.37, Charts) to pay just $6 million in additional royalties, when it faced having to pay tens of million of dollars if the U.S. won its claim.

The agency's Minerals Management Service told the paper in a statement it would have been useless spending federal dollars to pursue the claim against Chevron.

The decision, according to the Times, also paves the way for other rival energy companies to avoid paying millions of dollars in royalties as well, by making it easier for oil and gas companies to lower the value of what they pump each year from federal property and their payments to the government.

"If this decision is left standing, it would result in the loss of tens of millions, if not hundreds of millions, of dollars in royalties owed by other companies." Richard T. Dorman, a lawyer representing private citizens suing Chevron over its federal royalty payments, told the paper.

Energy firms are required to pay the federal government royalties in exchange for the right to drill on federal land and in federal waters such as the Gulf of Mexico, according to the paper.

Last year, companies producing natural gas paid the government $5.15 billion in royalties, the Times reported.

The news comes more than one month after four government auditors, who monitor leases for oil and gas on federal property, charged the Interior Department with suppressing their efforts to recover millions of dollars from companies such as Shell Oil (up $0.26 to $69.31, Charts) they said cheated the government, the Times reported last month.

In addition, Chevron, Devon Energy (down $0.29 to $66.00, Charts) and Statoil (up $0.05 to $25.09, Charts) may avoid more than $1 billion in royalty payments on a recent oil find in the Gulf of Mexico due to a mistake the Interior Department made in signing offshore leases in the late 1990's, the Times reported previously.

Big Oil's best days may be over - for now