Sudan said Thursday it had received initial approval for international mediation in Khartoum's and Cairo's decade-long dispute with upstream Ethiopia over its controversial Blue Nile mega-dam project.

Last month, Khartoum suggested mediation by a quartet of the African Union, European Union, United Nations and the United States, a proposal welcomed by Cairo, but rejected by Addis Ababa.

The Grand Ethiopian Renaissance Dam (GERD), set to be Africa's largest hydroelectric project, has been a source of tension in Sudan and Egypt ever since Addis Ababa broke ground on it nearly a decade ago.

On Thursday, Sudan's chief negotiator Mustafa al-Zubeir said the proposal had been initially approved by the quartet.

'The quartet seeks to reach consensus between the three countries to proceed with their work as mediators,' Zubeir told AFP.

The Nile, the world's longest river, is a lifeline supplying both water and electricity to the 10 countries it traverses.

Ethiopia says the hydroelectric power produced by the dam will be vital to meet the energy needs of its 110 million people.

Egypt, which depends on the Nile for about 97 percent of its irrigation and drinking water, sees the dam as an existential threat.

Sudan fears its own dams will be compromised if Ethiopia proceeds with filling the GERD before a deal is reached.

Addis Ababa announced last July it had completed its first year filling target and would proceed with the second stage, regardless of whether an agreement is in place.

The dam dispute comes as Addis Ababa and Khartoum argue over a ownership of a contested fertile border territory.