"The world is in the midst of a sustained oil boom. Yet Africa's leading producer is hemorrhaging the proceeds," the Financial Times observed Monday.
"The Nigerian treasury, which should be raking in record revenues, has been squeezed at both ends of the oil trade -- upstream, by one of the biggest frauds in Nigerian history related to a fuel subsidy bill worth upward of $16 billion in 2011, and downstream, by the theft of oil of an industrial scale at source."
Nigeria is one of the top 10 crude oil exporters but after decades of institutionalized corruption and inept management of the oil industry, the country's economic backbone, the country has to import most of its refined fuel requirements.
Official estimates state around 180,000 barrels of oil a day are siphoned from pipelines and wellheads in the Nile Delta in the south, Nigeria's main oil production center, and smuggled abroad by the tankerload by highly organized criminal gangs, some linked to important politicians.
This plundering of state assets, known locally as "bunkering," costs Africa's most populous nation around $12 billion a year. Nigerian Finance Minister Ngozi Okonjo-Iweala said the overall drain on the economy could be as high as $14 billion for the year.
"The proceeds finance the political patronage system as well as personal fortunes, and have been corroding the legitimacy of the state at local, national and federal levels, the Financial Times noted.
All efforts to stamp out this illegal trade, which industry sources say has steadily grown under government of President Goodluck Jonathan, a southern Christian who hails from the Delta region.
Nigeria, Africa's second largest economy after South Africa, relies of oil for 75 percent of its hard currency earnings and 90 percent of state revenues. It has oil reserves of around 37.2 billion barrels. Its reserves of natural gas are pegged at 187 trillion cubic feet but the U.S. Geological Survey says the country could contain three times that amount.
This month a leaked report commissioned by the government said that cut-price gas deals between Nigerian officials and international oil companies have cost the country $29 billion since 2002.
A senate investigation in April found that fraud and mismanagement of state fuel subsidies had cost the state $8.6 billion in 2009-11.
Okonjo-Iweala said in June that oil theft resulted in a 17 percent drop in official oil sales in April, or about 400,000 bpd, worth around $1.2 billion at the time.
In 2011, state agencies reported that gangs ruptured pipelines 4,468 times, compared to an average of 1,746 a year in 2001-10.
The oil theft is carried out by criminal syndicates, which operate with rogue traders, amid deep-rooted corruption that pervades all levels of government.
The stolen oil is loaded onto small tankers, which rendezvous with larger vessels offshore. Those vessels use bogus shipping documents to move the crude into legitimate markets in Europe, Asia and North America.
This is particularly moot in the Delta, a region of swamps and creeks where in 2005, disgruntled, impoverished tribesmen, long neglected by the federal government and denied access to oil revenues, launched an insurgency and attacked oil installations.
These militants controlled various regions where oil theft was rampant and security forces are well paid to look the other way.
Bunkering syndicates cooperate with the heavily armed militant factions who Western oilmen say are linked to Nigeria's political godfathers who wield immense influence in state and federal politics.
The insurgency died down after a 2009 government amnesty under which some 26,000 militants surrendered weapons in return for promises of state stipends and jobs.
These failed to materialize and the violence has picked up again.
Jonathan has come under intense pressure to clean up the energy sector after he sought in January to end fuel subsidies that cost the state $8 billion in 2011, much of it siphoned off by corrupt officials.
But that caused fuel prices to double, triggering widespread protests that carried the threat of wider economic collapse and political instability.
The protests have died down but long-term economic liabilities remain unresolved.
Notable deaths of 2014 [PHOTOS]