Talks between Sudan and South Sudan resumed in the Ethiopian capital Tuesday to resolve a furious oil dispute as tensions remain high between the two nations.

"I don't think the environment has witnessed any positive development," South Sudan chief negotiator Pagan Amum said.

Delegations from both sides will also discuss nationality and border issues at the African Union-led headed by former South African president Thabo Mbeki.

The two countries have been at loggerheads since the South split from the north in July, threatening to reignite conflict between the two former civil war foes.

Oil has been a major sticking point in the talks, since Juba took 75 per cent of oil at independence, but Khartoum controls processing and export facilities.

Pagan accused Khartoum of threatening to "wage war" in the South after a series of skirmishes erupted along the disputed border in recent months.

"We are concerned the government of Sudan is beating drums of war, they are mobilizing... to wage war against South Sudan," he said.

But he remained optimistic a deal could be reached at this round of talks if Khartoum agrees to charge per barrel fees in line with international standards. Juba is demanding a fee of $0.69 per barrel, plus approximately $5.00 third party fees, while Khartoum has proposed a $36 per barrel export fee.

"I do not see why there should be no deal on oil, I see no reason, they should accept the standard of industry," he said.

The AU on Monday called on the leaders of both nations to "demonstrate the required spirit of compromise and commitment to good neighborliness, in order speedily to conclude negotiations on all the pending issues," according to a statement.

The talks are expected to continue until March 16.