JUBA/KHARTOUM South Sudan said the Sudanese air force bombed key oil fields in a cross-border raid on Tuesday, the latest violence in some of the worst fighting between the neighbours since the South's secession in July.
Sudan denied any 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.
U.N. Secretary-General Ban Ki-moon said he was worried about the fighting that started on Monday in several places along the poorly-marked border, of which many parts are disputed.
The two countries have been at loggerheads since the South became independent last year under a 2005 peace deal that ended decades of civil war.
Oil, the lifeline of both economies, is at the heart of the feud. The landlocked South took most of known reserves when it became independent but needs to export its oil through Sudan. Juba shut down its output of 350,000 barrels a day after Khartoum started taking oil to compensate for what it calls unpaid transit fees.
The latest violence prompted Sudanese President Omar Hassan al-Bashir to suspend a trip to Juba on April 3 to meet his southern counterpart Salva Kiir where he was due to discuss a long list of disputes, Sudan's state radio said.
South Sudan accused Khartoum of bombing the main oil fields in Unity state near the border.
"This morning as you called I heard the Antonov hovering over Bentiu town because it has just dropped some bombs in the main Unity oil fields," Unity state Information Minister Gideon Gatpan told Reuters.
"It has now gone back, possibly for refuelling, and may come back," he said by telephone.
Asian oil group GNPOC - the Greater Nile Petroleum Operating Company, a consortium led by China's CNPC - confirmed the bombing.
"The warplanes are hovering everywhere ... One bomb actually just missed Unity base camp but anywhere else so far there is no information," said Vice President Chom Juaj.
"They bombed the oil field but so far we are still waiting for the report from the field telling us if they are damaged or not," he said.
But a spokesman for Sudan's foreign ministry denied any air strike on Unity state, saying ground forces had attacked southern artillery positions in response to an earlier attack.
"The SPLA (southern army) attacked the area of Heglig on Sudanese soil. So we used artillery to respond to the SPLA artillery," El-Obeid Morawah said.
Both sides blamed each other for having started the fighting on Monday. Events in the 1,800 km (1,100 miles) long border area are hard to verify as much of the territory is disputed and not accessible for journalists.
The new violence ends a recent rapprochement between the neighbours which had made some progress this month in talks in the Ethiopian capital Addis Ababa, sponsored by the African Union, trying to end the bitter dispute.
Both countries have been unable to agree how much the landlocked South should pay to export its crude through Sudan, prompting it to shut down its production after Khartoum started taking some oil for what it calls an unpaid transit fee.
Khartoum and Juba earlier this month reached two agreements on 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 negotiation table.
"The agreements in Addis Ababa and a visit of a southern delegation (on Friday) to Khartoum was only swindle and manipulation," he told state news agency SUNA late on Monday.
Officials in Khartoum could not immediately be reached to confirm that Bashir's visit to Juba had been suspended as reported by Sudanese radio and newspapers.
Each country has accused the other of supporting rebels on either side of the border but direct confrontations are rare.
Sudan's army has been fighting SPLM-North rebels in South Kordofan since June. Clashes spread in September to Sudan's Blue Nile state which also borders South Sudan.
Both South Kordofan and Blue Nile are home to large communities who sided with the south during the civil war but were left on the Sudan side of the border after the secession. Khartoum says SPLM-North is supported by South Sudan, an accusation dismissed by the southern government.
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.
(Reporting by Hereward Holland and Ulf Laessing; Additional reporting by Khalid Abddelaziz and Stephanie Ulmer-Nebehay in Geneva; Editing by Robin Pomeroy)