Sudan, South Sudan leaders to discuss border, oil - Reuters

Sudan's President Omar Hassan al-Bashir and South Sudan's Salva Kiir will wrap up two weeks of negotiations in Ethiopia where the African Union (AU) has been mediating to try to end fighting along the 1,800-kilometre (1,200-mile) border.

The two countries must reach a comprehensive peace deal this weekend or risk incurring U.N. Security Council sanctions.

Such a deal would provide both nations with oil revenues needed to avoid economic collapse although they must also sort out other issues left outstanding at secession in July 2011.

The two reached an interim deal in August to restart oil exports from landlocked South Sudan through Sudan to its Red Sea ports after Juba had turned off wells in a row over export fees. But Sudan insists on first reaching a security accord.

The summit was due to take place in the southern capital Juba in April but was cancelled when the fighting broke out and South Sudan briefly seized an oilfield vital to Sudan's economy.

Both leaders met briefly in July on the sidelines of an African Union summit but have not held any formal summit for one year.

On Saturday, Sudan conditionally accepted an AU-brokered agreement, already agreed by South Sudan, for a demilitarized border zone along the entire border.

Bashir and Kiir are also expected to sign deals to boost trade and grant citizens of both nations residency in the other country, ending uncertainty for southerners stuck in the north.

South Sudan, where most follow Christianity and animism, seceded from the mainly Muslim north in July 2011 under a 2005 peace agreement that ended decades of civil war.

Secession left a long list of issues unresolved such as marking the border, fees for southern oil fees and ending accusations of rebel support in each other's territory.

The two have failed to implement previous agreements and have not made much progress at the talks over five disputed border areas. This will be left to a future round or possible lengthy arbitration.

The presidents are also expected to discuss a solution for the disputed border region of Abyei, where previous attempts to hold a referendum have failed because neither can agree on who is eligible to vote.

There was also no sign of progress in indirect talks held in Addis Ababa between Sudan and the rebel group Sudan People's Liberation Movement-North (SPLM-North) which is fighting the Sudan's army in two areas bordering South Sudan.

Khartoum accuses Juba of supporting the SPLM-North. South Sudan accuses Sudan of supporting militias in the new republic.

(This story is corrected to show that Bashir and Kiir met on sidelines of African Union summit in July)

(Reporting by Ulf Laessing; Editing by Louisse Ireland)