By Yara Bayoumy
KHARTOUM (Reuters) - Sudanese President Omar Hassan al-Bashir said on Sunday he would not allow conflict with South Sudan to overshadow "strategic relations" with its people, striking a less confrontational tone over a crisis that has raised fears of war.
After South Sudan seized the contested Heglig oilfield last month, Bashir vowed to free the South's citizens from the ruling Sudan People's Liberation Movement whom he called "insects".
During a month of conflict, the United Nations condemned Sudan's air strikes on South Sudan's territory and international pressure forced the South to withdraw from Heglig.
The fighting prompted the U.N. Security Council to pass a resolution threatening sanctions if they did not follow an African Union roadmap to stop fighting and return to talks.
On Sunday Bashir said South Sudanese government's "infringements" on Sudanese territory "and their muddying of the neighborly, brotherly relations between the two countries in a blatant way will not deflect us from our view of the future and our strategic relations with the people of South Sudan".
"... We look with wisdom and foresight to well-established relations between us and the people of South Sudan," said Bashir, speaking in an uncharacteristically mild manner, at a conference to discuss a five-year national strategic plan.
Khartoum and Juba say they have accepted the resolution. But Sudan has said it could find difficulty in implementing "parts" of it while South Sudanese troops were still inside its territory and reserved the right to defend its land. South Sudan says these areas are its own.
The South has also accused its northern neighbor of launching air strikes on its territories. Khartoum has denied reports of specific attacks but said it had a right to use its air power in self-defense.
Both sides also accuse each other of backing rebel militia, and both deny each other's claims.
The crisis has halted nearly all oil production in the region, strangling both oil-dependent economies.
Bashir said the country's economic hardship was temporary following the loss in oil revenues and that it was not a "catastrophe that heralds collapse".
Sudan lost three-quarters of its oil after South Sudan seceded from its northern neighbor in July as part of a 2005 settlement that ended two decades of civil war.
The two sides have since been in conflict over oil revenue shares, border demarcation and citizenship. They are supposed to sit down to talks by an AU-imposed deadline of Tuesday and resolve all outstanding issues within three months.
Before South Sudan's seizure of Heglig, the oilfield was producing about half of Sudan's 115,000 bpd output. Sudan's oil minister has said Heglig has started pumping oil again, but has not specified the amount it was producing.
(Editing by Louise Ireland)