The propagation of solitary waves, so-called nematicons, in a nonlinear nematic liquid crystal is considered in the nonlocal regime. Approximate modulation equations governing the evolution of input beams into steady nematicons are derived by using suitable trial functions in a Lagrangian formulation of the equations for a nematic liquid crystal. The variational equations are then extended to include the effect of diffractive loss as the beam evolves. It is found that the nonlocal nature of the interaction between the light and the nematic has a significant effect on the form of this diffractive radiation. Furthermore, it is this shed radiation that allows the input beam to evolve to a steady nematicon. Finally, excellent agreement is found between solutions of the modulation equations and numerical solutions of the nematic liquid-crystal equations.