Nigeria lost at least 100,000 barrels of oil per day, around 5% of total output, in the first quarter of 2013 to theft from its onshore and swamp operations alone, a new Chatham House report estimates.
This illicit oil is likely to have found ready buyers in West Africa, the US, Europe and several Asian countries.
Stolen Nigerian crude and the profits from it are laundered around the world, threatening the integrity of financial markets and the legitimate oil business. Within Nigeria, the world's 13th largest oil producer, the practice is tied to political violence, corruption and instability.
Despite this, no Nigerian oil thieves have been prosecuted internationally, and knowledge of the illegal business and its practitioners remains poor, says Nigeria's Criminal Crude: International Options to Combat the Export of Stolen Oil.
Criminal Crude - the first independent, in-depth report on the international dimensions of Nigerian oil theft - explores the problem in the context of legal trading markets and Nigeria's own oil sector and political culture.
The report describes oil theft as a species of organized crime that is almost totally off the international community's radar.
Nigeria cannot resolve the problem alone, but it needs to take the initiative to develop an achievable strategy with its foreign government partners. Even then, much more intelligence is needed to connect the very complex issues and range of actors involved.
"Foreign governments may want to say this is not their problem," says co-author Aaron Sayne, "But without better knowledge of how oil theft affects security and strategically important markets, not every government can say so with confidence."
Criminal Crude offers a four-point framework for states seeking to take first steps against Nigerian oil theft.
First, Nigeria and its foreign government partners should prioritize the gathering, analysis and sharing of intelligence on oil theft. The report offers preliminary conclusions about how much oil is stolen, how the oil and money move globally and the links between oil theft and insecurity.
It highlights knowledge gaps and points out specific priorities for investigators overseas.
Second, Nigeria should consider taking other steps to build the confidence of foreign government partners. Interviews for Criminal Crude found officials in other countries willing to act on oil theft, but only if Nigeria takes some serious steps first.
Third, other states should begin cleaning up parts of the trade they know are taking place within their borders. This could involve tracking ships by satellite; investigating possible links between crude theft, drug smuggling or terrorism; following international money trails; or targeting known thieves through "smart sanctions."
Fourth, Nigeria should articulate its own multi-point, multi-partner strategy for addressing oil theft. Most international initiatives would require Nigerian cooperation to succeed, and the stolen oil trade is a Nigerian problem first. The Nigerian government is likely to have the best intelligence on how the business works.
The analysis in the report finds that there are no easy answers: tackling this form of transnational organised crime is about making smart choices with tools that work, in a high risk environment where political will easily waivers. Criminal Crude provides a solid basis for greater international engagement on the trade in stolen Nigerian oil.
"A key issue is how much other stakeholders such as international oil companies, oil traders and shippers would be willing to contribute at the risk of undermining their relationships, reputations and capacity to operate in Nigeria," says Christina Katsouris, co-author.