The government may waive up to $7 billion in royalty payments from companies pumping oil and natural gas on federal territory in the next five years, the New York Times reported on Tuesday, citing administration officials and budget documents.

The royalty relief would amount to one of the biggest giveaways of oil and gas in U.S. history, even though the administration assumes oil prices will remain above $50 a barrel throughout that period, the Times report said.

The report cited estimates in the Interior Department's recent budget plan that would allow companies to pump about $65 billion in oil and natural gas without paying royalties.

Administration officials cited by the report said the benefit stems from regulations dating back to 1996, when energy prices were relatively low and lawmakers wanted to encourage exploration in higher cost areas such as the deep waters of the Gulf of Mexico.

Much of the oil and gas from such leases is just beginning to be pumped due to the time required to explore deep waters and build large offshore platforms.

"We need to remember the primary reason that incentives are given," said Johnnie M. Burton, director of the federal Minerals Management Service, according to the report. "It's not to make more money, necessarily. It's to make more oil, more gas, because production of fuel for our nation is essential to our economy and essential to our people."