* Neighbours at odds over border, oil fees, land
* Came close to conflict in April
By Aaron Maasho
ADDIS ABABA, March 8 (Reuters) - Sudan and South Sudan resumed stalled talks on Friday aimed at setting up a demilitarised border zone along their porous border, an official said, in a fresh bid to settle a long-standing dispute over oil and land.
South Sudan seceded from the north in 2011 after decades of war but border disputes and disagreements over oil pipeline fees dragged on, delaying much-needed economic development.
The landlocked South shut down its oil production of 350,000 barrels per day a year ago during a row over how much it should pay the north to pipe its crude to a coastal terminal for export.
With oil the lifeline of both economies, the move has strained their state budgets, weakened currencies, stoked inflation and worsened economic hardship.
Defence ministers from both sides started a new round of talks in Addis Ababa to set up a buffer zone along the frontier, a southern delegation member said.
After teetering on the brink of full-scale conflict in April over the worst border clashes since their split, both countries agreed in September to set up a buffer zone, which could defuse tensions enough for the South to resume oil output.
However, neither side has pulled its army from the almost 2,000-km (1,200-mile) border due to mistrust left from one of Africa's longest civil wars.
Friday's talks will be the first gathering in nearly two months held on the back of mutual accusations that both were making new demands for the border zone.
Two meetings between Sudan's President Omar Hassan al-Bashir and South Sudan's Salva Kiir in Addis Ababa in January failed to break the stalemate.
Animosity runs high between Bashir's government in Khartoum and his former foes up the Nile in Juba.
Nearly 2 million people died in the north-south civil war, which left South Sudan economically devastated and awash with guns.
Khartoum also accuses Juba of backing rebels of the Sudan People's Liberation Movement-North (SPLM-North) in South Kordofan and Blue Nile, two Sudan states bordering the South.
The SPLM-North, made up of fighters who sided with the South during the civil war, controls part of the Sudan side of the border, which complicates setting up the buffer zone.
South Sudan has denied supporting the rebels. (Reporting by Aaron Maasho; Editing by Alexander Dziadosz and Michael Roddy)