Sudanese President Omar al-Bashir and his South Sudan counterpart Salva Kiir failed to resolve a dispute over oil after day-long talks hosted by an African peace bloc Friday in Ethiopia.
The two leaders met amid heightened tensions after the South accused Khartoum of stealing $815 million worth of crude oil.
Sudan admits to taking oil from the South, but says it was to compensate for export fees and use of its refineries.
"There are some sticking points... in general terms I believe there is quite a lot of progress but not enough for us to be able to clinch a deal now," said Ethiopian Prime Minister Meles Zenawi.
Meles is the current chair of the regional bloc, the Inter-Governmental Authority on Development. Kenyan President Mwai Kibaki, Somali leader Sharif Sheik Ahmed and Djibouti's Ismael Omar Guelleh also attended the talks.
However South Sudan's chief negotiator Pagan Amum said the negotiations were tense, but confirmed they would continue.
"These talks... have reached an impasse because of the intransigence of the government of Sudan," Amum told reporters.
"The mood of course was not good because you can imagine sitting with somebody who is stealing your property."
Juba this week began to halt oil production after it ordered a complete shutdown over the dispute with Khartoum, a former civil war foe. Over half the wells are now shut, the South says.
The leaders proposed a deal to reverse unilateral decisions by the countries and to work on signing a comprehensive agreement, Meles said, adding that the talks would continue at an African Union summit starting Sunday.
Bashir and Kiir left the meeting separately and refused to comment.
South Sudan split from Sudan in July, taking with it three quarters of the country's oil, which makes up more than 90 percent of the South's revenue.
Landlocked South Sudan signed an agreement with Kenya Tuesday to build an oil pipeline to a Kenyan port, potentially freeing it from its dependence on exporting oil through Sudan.
However, industry experts have said that building a pipeline could take more than three years and cost as much as $4 billion -- a staggering cost for the South, where oil production is already close to peaking.
South Sudan has also approached Ethiopia to build a pipeline connecting to the Red Sea state of Djibouti.
Earlier this month, South Sudan signed its first oil deals with foreign nations since it won independence last July, inking agreements with Chinese, Indian and Malaysian firms.
The deals, which replace deals signed with Khartoum under a unified Sudan, cover oil production in the two key petroleum states of Unity and Upper Nile.
Khartoum also opened bids to international companies days after the South penned its deals.
After South Sudan gained its independence in July, Sudan, which also depends on oil, was scrambling for ways to bolster its finances.
Meanwhile South Sudan said Friday it had discovered new figures that it claimed showed the north had colluded with oil companies to provide lower production figures on paper than was actually being pumped from the ground.
"All the figures that are being given to the (South's oil) ministry as a base for the production sharing among the partners -- this was not true, it was misleading," said Stephen Dhieu Dau, the South's oil minister.
"We believe Khartoum is now pumping more reserves," he told reporters in Juba, claiming figures in some cases under-reported oil production by as much as 15 percent.
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