South Sudan has restarted oil production, ending a bitter 15-month row with former civil-war enemy Sudan and marking a major breakthrough in relations after bloody border clashes last year.

Sudan and South Sudan came close to a return to all-out conflict last year in bitter fightingalong their undemarcated border in April and March, a conflict prompted partly by their disputes over oil.

"The oil is now flowing," Stephen Dhieu Dau, South Sudan oil minister, said on Saturday as he flicked a switch to restart production at a ceremony in the Thar Jath field in Unity state.

"This is a sign of peace."

As Dau made the remarks, crowds danced in celebration.

South Sudan halted crude production in early 2012, cutting off most of its revenue after accusing Khartoum of theft in a row over export fees.

At talks in Addis Ababa, Ethiopia, last month, the two countries finally settled on detailed timetables to ease tensions, after months of intermittent border clashes, by resuming oil flows and implementing other key pacts.

Guarantees sought

Earlier deals had remained stalled after Khartoum pushed for guarantees that South Sudan would no longer back rebels fighting in its border areas of South Kordofan and Blue Nile.

The shutdown has cost both impoverished nations billions of dollars. China was the biggest buyer of the oil.

South Sudan won independence in July 2011 after a referendum set up under a 2005 peace agreement that ended more than two decades of bloody civil war. It won control of roughly 75 percent of the 470,000 barrels per day of crude produced by the formerly unified country.

The separation left Khartoum without most of its export earnings and half of its fiscal revenues. Before the shutdown, oil provided South Sudan with 98 percent of its revenue.

But while South Sudan has the bulk of the oil fields, the pipeline infrastructure all runs north through Sudan.

During the oil shutdown, South Sudan said it was exploring the possibility of building new pipelines, either to the Indian Ocean through Kenya to the south, or to the Gulf of Aden through Ethiopia and Djibouti to the east.

'Message of commitment'

Dau said the resumption of production was "a message of the commitment of the leadership of the government and the people of South Sudan to comply with the agreements signed with Sudan."

It was sign of the "commitment that the two states ... must be viable, must be prosperous, they must live together," he added.

Oil deals agreed between Juba and Khartoum are worth between $1bn and $1.5bn annually in transit fees and other payments for Sudan.

Billions more dollars would reach South Sudan from its oil sales.

Khartoum earlier said South Sudanese oil would be shipped from Sudan by the end of May.

"Sudan and South Sudan agreed to start oil pumping in mid-April and the exportation by the end of May," Sudan's official SUNA news agency said late Friday.

Sudan's undersecretary at the petroleum ministry, Awad Abdul Fatah, said that when "all is back to normal working," it was expected that some 250,000 to 350,000 barrels of oil a day would be pumped from South Sudan through Sudan.