Yar'Adua, in Tokyo at a summit of leaders from the Group of Eight rich nations, said he would soon present a proposal to the United Nations laying out steps to end the illicit trade, which is worth several billion dollars a year.

"Stolen crude should be treated like stolen diamonds because they both generate blood money," Yar'Adua said in a statement released by his office in the Nigerian capital Abuja.

"Like what is now known as "blood diamond", stolen crude aids corruption and violence and can provoke war," he said after meeting with World Bank President Robert Zoellick and Japanese Prime Minister Yasuo Fukuda on the sidelines of the G8 summit.

Nigeria is the world's eighth biggest exporter of crude oil but a sizeable proportion of its output is stolen by thieves who either drill into pipelines or hijack barges loaded with oil, theft which is known locally as "bunkering".

Some estimates put the amount of crude stolen from Nigeria's Niger Delta at 100,000 barrels per day, equivalent to around $14 million daily or $5.1 billion a year at current prices. It is shipped out of Nigeria and sold on the international market.

Human Rights Watch has put the amount stolen at two or three times that level.

Unrest in the Niger Delta, the heartland of the oil industry in Africa's top producer, had largely been driven by militant groups alleging neglect by successive governments but has become increasingly intertwined with bunkering and rank criminality.

Militant groups have blown up oil pipelines and kidnapped foreign oil workers to press for more development but criminal gangs have armed and sustained themselves through the lucrative trade in stolen oil and kidnappings for ransom.

The resulting unrest has cut Nigeria's oil output by around a fifth since early 2006.

Yar'Adua has promised that a long-awaited peace summit will address the root causes of the frustrations among local communities but has also warned he will not tolerate the presence of armed groups in the delta's labyrinthine creeks.

Many doubt the summit will achieve much given a lack of cohesive strategy among federal, state and local governments and with the region's main militant group, the Movement for the Emancipation of the Niger Delta, saying it will not attend.