By Aaron Maasho
ADDIS ABABA (Reuters) - The African Union sought on Monday to defuse hostilities between Sudan and South Sudan that brought them close to war last year and end a freeze on oil exports that threatens to wreck their economies.
South Sudan seceded from the north in 2011 after decades of wars but border disputes and disagreements over oil pipeline fees have dragged on, delaying the economic development that would bring hope to their war-weary populations.
The South shut down its oil production of 350,000 barrels per day a year ago to try to force a cut in the fees it pays the north to pipe its crude to a coastal terminal for export.
With oil the lifeline of both economies, the move is straining their state budgets, weakening their currencies, stoking inflation and worsening economic hardship.
The African Union (AU) brought together Sudan's President Omar Hassan al-Bashir and South Sudan's Salva Kiir a week ago in the Ethiopian capital Addis Ababa to press them to fulfill promises made in September to pull back troops from the north-south border.
The creation of a buffer zone along the frontier would help defuse tensions, perhaps enough for the flow of oil to resume.
After that meeting, AU mediator Thabo Mbeki said both sides had agreed to set up the buffer zone. The regional body planned to publish a timeframe on Sunday, when the talks were supposed to resume. But both delegations arrived late, delaying the start by a day.
Monday's session, attended by Sudanese Defence Minister Abdel Raheem Mohammed Hussein and his southern counterpart John Kong Nyuon, focused again on how to implement the buffer zone, AU officials in Addis Ababa said.
"The discussions will center on overall implementation of the agreements," said Atif Kiir, spokesman for South Sudan's delegation. There was no immediate comment from Sudan.
Animosity runs high between Bashir's government in Khartoum and his former foes up the Nile in Juba.
Nearly 2 million people died in a north-south civil war that left South Sudan economically devastated and awash with guns.
Khartoum now accuses the south of supporting a rebellion within Sudan by former members of the southern insurgent army who found themselves north of the border at partition.
South Sudan has denied supporting the rebels.
Sudan's defence minister said last month that the two sides would tackle the sensitive issue for the first time in the latest round of talks.
(Reporting by Aaron Maasho; Editing by Tom Pfeiffer)