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AFP
The lead mediator in a furious oil row between Sudan and South Sudan urged the two states Saturday to ease their unilateral actions ahead of a new round of talks to resolve the crisis.

South Sudan has shut down oil production after accusing Sudan, on whose pipeline and refinery it depends to export oil, of stealing its crude.

Khartoum admits to confiscating 1.7 million barrels of South Sudanese crude since vowing in November to take 23 percent of southern oil exports as payment in kind for the use of its infrastrucure.

"We are asking the South to resume the production and we are asking the two parties to abandon the use of unilateral actions," mediator Pierre Buyoya told AFP.

Sudan and South Sudan leaders have warned of fresh conflict if no solution is found to the worsening dispute.

"Neither party is ready to go to war, it's what I believe," said Buyoya, a former Burundian president, adding however that the negotiations faced "serious challenges."

The African Union-backed talks in the Ethiopian capital are expected to run until Wednesday. The AU panel hopes technical details, such as a pipeline fee and outstanding arrears, will be decided "if the parties accept to talk," Buyoya said.

On Friday, British-based campaign group Global Witness said the international community must intervene in the latest round of the negotiations to ease the rising tensions.

"The AU, China and Western governments must push for an immediate resolution to the ongoing oil dispute between Sudan and South Sudan," the group said in a statement.

"Public exchanges between the governments have become increasingly tense, both referring to the possibility of renewed war, as they appear to be preparing for confrontation along the border."

The South depends on oil for more than 90 percent of its revenues, while Khartoum's finance minister said late last year that the loss of oil from the South left a budget shortfall of 30 percent.

Since then, Sudan has witnessed spiralling inflation -- which the government sees reaching 17 percent this year -- and the sharp devaluation of the Sudanese pound.

Seeking to shake off dependence on Sudan, South Sudan said Thursday said it had signed an agreement to build an oil pipeline to the port of Djibouti via neighbouring Ethiopia.

Djibouti, on the Gulf of Aden at the entrance to the Red Sea, lies at least 1,000 kilometres from South Sudan's oilfields and crosses remote areas rife with rebel forces.

Last month, Juba also announced that it had signed a deal to build a pipeline to the Kenyan coast at Lamu, where a new deep-water port is planned.

The still undemarcated border between Sudan and South Sudan has also sparked tensions, but on Friday the two sides signed a "non-aggression" treaty committing them to respect each other's territorial integrity.

Friday's agreement will also establish a monitoring mechanism allowing either side to lodge complaints if border disputes erupt.