Oil Smuggling

Criminal Flows 1 Comment


Oil smuggling refers to the transporting illicit forms of oils, fuels and other petrochemical materials across borders. Oil is smuggled for many reasons including tax evasion, sanctions evasion or because it comes from oil theft, piracy and crimes against maritime infrastructures such as oil platforms and pipelines.

Smuggled oil can end up in neighbouring countries or foreign markets with its source obscured through forged bills of landing, ship-to-ship transfers,1 or mixture with legitimate sources on a single ship.2 Illicit oil is often traded at less transparent ‘spot markets’ where document checks are less stringent.3 On a smaller scale oil can also be hidden in barrels or jerry cans and then transported by other types of maritime craft.4

The loading of smuggled oil often takes the form of bunkering, accompanied by false paperwork or other means to hide its source, which is addressed specifically elsewhere on this site.

Smuggled Iranian oil transported in yellow plastic drums at Gwadar fish harbour by Moign Khawaja (Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0))


Small-scale smuggling

At its most modest oil smuggling takes place in an individual or ad hoc manner, for example when artisanal fishers smuggle oil to neighbouring countries in small fishing vessels, especially in border areas.5 This often results due from variation in fuel prices due to subsidies and differing tax levels, making it profitable to smuggle oil from a country where fuel is cheaper to that that is more expensive. In some cases fuel can be sold for up to a 1000% mark-up depending on price differentials between the source and terminus.6

Examples include the smuggling of subsidised fuel from Malaysia to Thailand and the Philippines, from Nigeria to its neighbours, or the selling of Venezuelan fuel to offshore vessels.7 These are all oil-producing countries where oil is cheaper than in neighbouring states. Ralby and Soud argue that even though they take place at a small scale, these practices can have significant consequences.8 Smuggled jerry cans of oil from Ecuador, for example, are suspected to help fuel the drug trade in Colombia. In some cases fuel can be sold for up to a 1000% mark-up depending on price differentials between the source and terminus.9

Large-scale smuggling

Oil smuggling can also take place at a larger scale and implicate well-organised actors such as transnational criminal networks, militant groups and terrorists, and even states. This form of oil smuggling and the activities that underpin it have sometimes been regarded as security issues and are likely to be more heavily criminalised.

Perhaps the best evidenced case is oil smuggling in Nigeria. Oil is stolen from pipelines or production facilities in the Niger Delta by militant groups and other actors.10 It is then transported to sea in small barges and loaded onto tankers. While some of this oil is refined and sold domestically, it is also smuggled by organised networks of criminals.11 Networks in Europe, Lebanon, Russia, Australia and elsewhere have been found to play roles in financing, transporting, and money laundering throughout this smuggling chain.12 The US, West African countries, Brazil, Europe, and China have all been named as destinations for stolen oil.13 Oil smuggling in Nigeria has also been linked to corruption through the alleged involvement of members of the military, oil company employees, and politicians in the trade.14

Oil smuggling in Nigeria is often highly sophisticated, with criminals using advanced communications equipment and having access to large tankers.15 Smaller tankers will wait until they are relatively full before transferring their illicit cargos to international class ‘mother ships’ waiting offshore.16. Illicit oil can be concealed in various ways, including by mixing it with legitimately sourced loads, or transferring stolen oil between vessels to hide its origin. While underway, the ship name, ship’s flag, or the ownership of the oil can be changed multiple times to further obscure its source.17

Oil theft has become one of Nigeria’s most profitable private businesses,18 from which international actors also profit handsomely. However, it is also a problem of development and economic exclusion.19 Some have argued that poverty drives disenfranchised people to attack the pipelines in a context in which it is the elite who primarily benefit from oil revenues, despite the environmental degradation and food insecurity that oil extraction has caused in some parts of the Niger basin.20 Ugor for example, argues that oil theft is best understood as a counterculture that challenges the legitimacy of the Nigerian elite.21

Oil theft and smuggling does not only occur in Nigeria. In Libya, for example, it has been alleged that militant groups work with personnel from the Libyan Coast Guard to transfer stolen diesel to criminal networks in Europe.22 Tankers disable their AIS transponders before entering Libyan waters, and await small vessels ferrying diesel out, before mixing it through ship-to-ship transfers to obscure its source.23 Oil theft and smuggling also takes place in Mexico and Indonesia.24 In other cases, oil is stolen from ships, through piracy or fraud, or from shallow coastal pipelines and oil platforms.

Terrorist & State-sponsored smuggling

Some cases of oil smuggling have been linked to state-based actors and international terrorist groups. Examples include the movement of oil sourced from or delivered to counties under sanction, such as North Korea25 and Iran.26. The Islamic State group are also widely thought to have used oil smuggling to help sustain their activities.27


There are no overall estimates of the scale of small-scale oil smuggling and even case-by-case indicators are incomplete. Smugglers in the Malaysia-Thailand case, for example, have had vessels seized with between 10,000 – 200,000 litres of oil onboard, but it is unclear as to how many of these seizures occur annually and how many are successful. 28 Ralby and Soud argue the illicit market for Ecuadorian fuel is worth 600 million US Dollars, giving some indication of the scale of the problem in this specific case.31 These numbers are small when compared to the Nigerian case, where estimates have ranged from 100,000 to 400,000 barrels per day over the last two decades.32 This is thought to account for between 10-25 per cent of Nigeria’s daily oil production. These figures fluctuate depending on periodic efforts to police the region.33 There is some contestation over these statistics however. Higher numbers are provided by the Nigerian government, while oil companies claim it is an overestimation and instead reaches a maximum of 200,000 barrels per day.34

It is also difficult to assess the amount of oil that is smuggled by sanction-busting countries due to the lack of publicly available data. Tanker Tracker, a web-based organisation that tracks illicit tankers with AIS and satellite data, argue that Iranian oil smuggled to Syria by one ship alone reached 1.4 million barrels.35 At its peak, it is thought that Iran can smuggle up 300,000 – 900,000 barrels per day.36

As such, while there is no overall estimate, it is clear that the problem of oil smuggling is large in scope.



Oil smuggling damages the legitimate economy. Nation states lose tax revenue if their population are buying fuel from smugglers. Source countries may also lose revenue from licit sources of oil if it is stolen, as will the oil companies and legitimate suppliers.

There is no overall figure of the overall cost of oil smuggling to the legitimate economy, but case-by-case estimates provide some indication. For example, in Nigeria losses to the state have been estimated at between $750 million-$1.5 billion and $3.5 billion-$6.2 billion annually in 2003.37 Some government actors claim that in 2014 they lost $14 billion, and more recent figures suggest $4.5 billion in 2021.38

In the case of Nigeria, the oil theft that underpins oil smuggling is also problematic for the livelihoods of fishers and farmers, because it can lead to an increased risk of spillage and environmental degradation.39


Money from oil smuggling can facilitate arms purchases and so sustain conflict by militants and armed groups.40 This is thought to have occurred in the Niger Delta and the South of Thailand.41 Oil smuggling from sanctioned countries sustains sanctioned regimes and undermines the effectiveness of international sanctions measures.

Linkages & Synergies

Oil smuggling has been linked to other forms of maritime smuggling too. In Nigeria, for example, oil has been exchanged for drugs and weapons.42 Ralby and Soud suggest that this linkage to drug trafficking goes even deeper, because cocaine producers require gasoline supplies to make their product.43 They argue that fuel is smuggled alongside drugs, as well as gold, and that this income stream can be almost as significant as the drugs itself.

Oil smuggling has been linked to piracy through the theft of oil from tankers at sea.44 and to IUU fishers, who may use illicit oil to fuel their vessels. It has also been linked to human trafficking and slavery. For example, fishing vessels used to smuggle oil smugglers in Southeast Asia have been sometimes been found to employ forced labour onboard.45 In Libya, the networks and actors responsible for oil smuggling have also been implicated in people smuggling activities. drawn between oil smuggling and people smuggling, as often the same actors or networks are involved.


There is no global governance mechanism that controls oil smuggling, nor is there a strong degree of international cooperation to combat the issue. Instead, states have tended to enforce their own regulations with their own resources, which has seen varying national responses with varying degrees of success on a case-by-case basis. Research remains sparse however. Much of the focus has been on the success of the Nigerian government in curtailing oil theft and smuggling. Some of the lessons learnt from this case are generalisable to other contexts and reflect responses to other forms of trafficking.

The Nigerian case demonstrates the importance of national regulation in combating the trade. The Nigerian government has developed strong regulatory mechanisms, such as the requirement of bunkering licenses and inspections of bunkering vessels.46 Under these regulations, no ship carrying crude oil can depart from Nigeria without documentation and the specific authorisation of customs officers. Ship-to-ship transfers are also prohibited outside of approved areas.

With these regulations in place, it is anticipated that it will be easier to spot vessels attempting to circumvent these measures. Even so, ships not following these regulations are rarely prosecuted.47 Even where prosecutions do occur, these do not impact on criminal networks and corrupt activities that facilitate the trade.48

Nigeria has also developed its enforcement capacities. Naval patrols and increased surveillance in ports and at sea have had a demonstrable impact on intercepting and reducing oil smuggling.49 Nigeria has also deployed a Joint Task Force which specifically targets oil theft and smuggling.50 Even so, monitoring and capacity challenges remain.51 A lack of international cooperation has exacerbated these problems, with calls for countries in the Gulf of Guinea improve information exchange to better monitor crude oil vessels.52

Coordination between enforcement agencies is also important. The signing of a memorandum of understanding between the Nigerian Maritime Administration and Safety Agency, and the Nigerian Navy has been viewed as an important first step towards tacking oil theft and smuggling effectively.53 However, coordination in practice continues to be hampered by duplication and ongoing rivalries between departments and agencies. Even so, Stable Seas argue that improved interagency coordination has contributed to a 13 per cent decrease in smuggled petroleum products from 2018 to 2019.54

Other responses have focused on land, including the use of private security guards around vulnerable areas, educating communities about the problems of oil smuggling, providing alternative livelihood opportunities, and amnesty programmes. As of yet, however, there is little evidence on the degree to which these measures have been successful.

List of references

  1. Testa 2019
  2. Ralby & Soud 2018; Katsouris & Sayne 2013
  3. Mileva & Siegfried 2007; Pitman & Chinweze 2018
  4. Anuar & Harun 2019; Fabian & Kasmir 2022
  5. Anuar & Harun 2019; Fabian & Kasmir 2022
  6. Ralby & Soud 2018
  7. Ralby & Soud 2018; Stable Seas 2020
  8. Ralby & Soud 2018
  9. Ralby & Soud 2018
  10. Human Rights Watch 2003; Asuni 2009; Akinola 2011; Onuoha 2008; Onuoha et al. 2017; Chukwudi & Victor 2021
  11. Human Rights Watch 2003; Onuoha 2013; Ugwuanyi 2013; Boris 2015
  12. Garuba 2010; Asuni 2009; Ugor 2013; Katsouris & Sayne 2013
  13. Katsouris & Sayne 2013; Garuba 2010; Human Rights Watch 2003
  14. Asuni 2009; Human Rights Watch 2003; Boris 2015
  15. Asuni 2009; Human Rights Watch 2003; Garuba 2010; Davis et al. 2006; Ikelegbe 2006
  16. Katsouris & Sayne 2013
  17. Onuoha 2013
  18. Human Rights Watch 2003
  19. Garuba 2010; Naanen & Tolani 2014; Naanen 2019; Bebeteidoh et al. 2020; Oyefusi 2014; Bodo & Gimah 2019
  20. Boris 2015; Garuba 2010; Igbuku 2014; Wizor & Wali 2020; Ugor 2013; Tonwe & Aghedo 2012
  21. Ugor 2013
  22. Ralby & Soud 2018
  23. Ralby & Soud 2018
  24. Dalby 2014; Berbotto & Chainey 2021; Dey & Rodriguez-Espindola 2019
  25. Ralby & Soud 2018; Xiao 2021; Department for Justice 2021
  26. Lipin 2022; Tanker Trackers 2021; Khasawneh et al. 2019; McQue 2022
  27. Ralby & Soud 2018
  28. Bangkok Post 2012; Phuket News 2013
  29. Ralby & Soud 201829

    There are stronger estimates for oil theft. In Mexico, for example, theft is thought to account for 5000 to 10,000 barrels per day, and 2000 to 3000 barrels in Indonesia.30Dalby 2014

  30. Odalanu 2016; Boris 2015; Gaskia 2013
  31. Human Rights Watch 2003
  32. Human Rights Watch 2003
  33. Tanker Tracker 2021
  34. USIP 2022
  35. Human Rights Watch 2003
  36. Boris 2015; Ojewale & Roux 2022
  37. Simon et al. 2014; Obenade & Amangabara 2014; Odalanu & Eronmhonsele 2015; Enakireru & Irene 2016; Ojewale & Roux 2022
  38. Garuba 2010
  39. Bangkok Post 2012; Ralby & Soud 2018
  40. Garuba 2010
  41. Ralby & Soud 2018
  42. Murphy 2013a; 2013b; Nwalozie 2020; Onuoha 2012; Hastings & Phillips 2015
  43. Ralby & Soud 2018
  44. Department of Petroleum Resources 2016
  45. Osinowo 2015; Naanen 2019
  46. Transparency International 2019
  47. Ikelegbe 2006; Onuoha n.d.
  48. Husted 2019
  49. Garuba 2010
  50. Odalanu & Eronmhonsele 2015
  51. UNODC 2021; Nte 2012
  52. Stable Seas 2020
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