South Sudan took control of the contested oil-producing Heglig region last week, prompting Sudan's parliament to brand its former civil war foe an "enemy" on Monday and to call for a swift recapture.
Analysts believe the outcome of the escalating border fighting is more likely to be determined by which faltering economy collapses first, rather than by military prowess.
"Despite the high cost of the war, despite the destruction that the war can cause ... our options are very limited. We can tolerate some sacrifice, until we can liberate our land," Sudan's ambassador to Kenya, Kamal Ismail Saeed, said.
"So from our side, yes, it is expensive but that doesn't deter us or that doesn't stop us from exerting all effort to liberate our land," he told reporters in Nairobi.
"We have been in war without oil for several years and we survived ... As a matter of fact ... the good news (is) we have developed other sources and fields of oil and that will really compensate our loss."
Fighting over oil payments and territory has withered the combined crude output of both countries.
The Heglig field is vital to Sudan's economy because it accounts for half the 115,000 barrels per day output that remained in its control when South Sudan seceded in July.
Meanwhile the South has completely closed its 350,000 bpd output because it cannot agree transit fees with its northern neighbor.
The latest clashes have also dampened hopes that Sudan and South Sudan can reach a deal soon on disputed issues such as demarcation of their 1,800-km (1,200-mile) border, division of debt and the status of citizens in each other's territory.
Saeed insisted Khartoum could weather the latest conflict, which has sent food prices soaring and hit the currency as officials try to make up for the sudden loss in revenues.
NEW OILFIELDS
He said production from new fields in west Kordofan, in Darfur and in the states of White Nile and Blue Nile would offset much of the loss of Heglig's output.
"We used to produce 115,000 barrels a day before the attack, we lost about 40,000, and now we'll get another 30,000," he said.
South Sudan insists Heglig is rightfully part of the South and says it will not withdraw its troops unless the United Nations deploys a neutral force to monitor a ceasefire. Saeed said that was unacceptable.
"They have two options: either to withdraw very quickly or withdraw. We will reserve the right to use all means at our access to kick them out of there, and we will do it," he said.
"They will be thrown out of there very soon."
Meanwhile U.N. Secretary-General Ban Ki-moon expressed alarm over reports of a buildup of militia forces in the disputed Abyei border region.
The U.N. statement did not say where the reports were from or give details but called it a violation of a June agreement in which both sides said they would withdraw forces from the region.
Ban called on Khartoum to "ensure the full and immediate withdrawal of these elements from the area".
Abyei, which is prized for its fertile grazing land and produces some oil, was a major battleground during Sudan's civil war and is symbolically potent for both sides. Both countries lay claim to it.
Khartoum seized Abyei in May last year after a southern attack on an army convoy, triggering an exodus of tens of thousands of civilians. The Security Council authorized the deployment of 3,800 U.N. peacekeepers in Abyei in June.
Some 2 million people died in Sudan's civil war, waged for all but a few years between 1955 and 2005 over conflicts of ideology, ethnicity, oil and religion.
(Additional reporting by Louis Charbonneau at the United Nations; Writing by Yara Bayoumy and Alexander Dziadosz; Editing by Kevin Liffey)
Reuters
