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South Sudan said its neighbor Sudan launched airstrikes on major oilfields in its Unity state on Tuesday, in one of the most serious reported confrontations since the South declared independence from Sudan in July.
Asian oil group GNPOC - the Greater Nile Petroleum Operating Company, a consortium led by China's CNPC - confirmed its facilities had been hit.
Sudan denied launching air strikes but said its ground forces had attacked southern artillery positions which had fired at the disputed oil-producing area of Heglig that is partly controlled by Khartoum.
Analysts have long said tensions between the countries could erupt into a full blown war and disrupt the surrounding region, which includes some of Africa's most promising economies.
South Sudan won its independence under a 2005 peace deal that ended decades of civil war with Khartoum, but distrust still runs deep. Both sides are still at loggerheads over the position of their shared border and how much the landlocked south should pay to transport its oil through Sudan.
The latest violence has already set back efforts to resolve the countries' disputes. Sudanese President Omar Hassan al-Bashir suspending talks with his southern counterpart Salva Kiir aimed at resolving their disputes after the clashes, state media reported.
U.N. Secretary-General Ban Ki-moon said he was worried about the fighting that started on Monday in several places along the border.
South Sudan said it evacuated workers from oil fields in its Unity state after the bombing on Tuesday.
"We still need to assess the destruction. They were bombing the facilities by air," South Sudan's petroleum and mining minister Stephen Dhieu Dau told Reuters by telephone.
An area was bombed between the towns of Bentiu and Rubkona, which lie close to each other, a spokesman for South's Sudan People's Liberation Army added. "These have been bombed since this morning," Philip Aguer told reporters.
"There is a credibility crisis in Khartoum between those who are for war and those who are for peace," Aguer said, adding that fighting on the ground continued during the day on Tuesday.
The head of Sudan's national security and intelligence services Mohammed Atta al-Moula told journalists Sudanese troops were fighting southern soldiers on the Sudanese side of the border.
"Until one hour ago troops of the southern army were still ten kilometers on our side of the border. We have now advanced ... and are still expelling them." Some prisoners had been taken, he said on Tuesday afternoon.
"We hope this will be no full war," he added. "We have no intentions beyond liberating our (occupied) land. We don't want to enter southern territory."
Events along the 1,800 km (1,100 miles) long border area are hard to verify as much of the territory is disputed and barred to journalists.
OIL TALKS OFF
The violence has ended a recent rapprochement between the neighbors which had made some progress this month in talks in the Ethiopian capital Addis Ababa, sponsored by the African Union.
Khartoum and Juba earlier this month reached two agreements on the free movement of citizens in each other's territory, a step that had raised hopes that an oil deal was also possible during the presidents' meeting.
But Sudan's Information Minister Abdallah Ali Masar questioned the recent agreements, accusing Juba of playing tricks at the negotiating table.
"The agreements in Addis Ababa and a visit of a southern delegation (on Friday) to Khartoum was only a swindle and manipulation," he told state news agency SUNA late on Monday.
Each country has accused the other of supporting rebels on either side of the border.
The U.N. refugee agency UNHCR said it was worried about the safety of 16,000 refugees in Yida camp, South Sudan, near the border where fighting was reported on Monday.
"It is very close to Yida, that is why we are concerned," UNHCR spokeswoman Fatoumata Lejeune-Kaba said. "It was already volatile, dangerous and life-threatening. News of increased cross-border clashes makes it much worse."
(Additional reporting by Khalid Abddelaziz and Stephanie Ulmer-Nebehay in Geneva; Editing by Andrew Heavens)
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