South Sudanese Chief Negotiator Pagan Amum charged that Sudan was orchestrating fresh attacks against its southern neighbor. The Sudan People's Liberation Army, he said, shot down a MiG-29 jet fighter in South Sudan's Unity state.
The hostilities put a bitter note on negotiations between the two nations at an African Union meeting in the Ethiopian capital, Addis Ababa.
Former South African President Thabo Mbeki, who heads up a mediation panel, said both parties had laid out a six-point plan to reduce escalating tensions that included an immediate cessation of hostilities and the withdrawal of armed forces from each other's territory.
The South Sudan delegation was ready to sign but Khartoum declined and said President Omar al-Bashir would have to review the agreement.
Amum called on his counterpart to come back to the table to finalize the agreement. But the Sudanese defense minister and his delegation left Ethiopia and Amum said he received word about the Unity state attacks Wednesday afternoon. The Addis Ababa talks have been marred all along with fresh border violence.
Upon independence last year, South Sudan took 75% of the formerly united country's oil reserves, and oil accounts for 98% of the new state's revenues.
Both countries are suffering economically since an oil production shutdown began in January. Border and citizenship agreements could open the way to a deal to resume oil production.
Recent clashes, however, cast doubt on whether either country would honor any agreements.
Aside from clashes between government forces, both countries accuse each other of supporting militia or rebel forces in their territories.
In a statement Wednesday, the African Union expressed concern for the escalating violence along the 1,200 mile border and in Southern Kordofan state.
An African Union panel will travel to both Khartoum and Juba -- the South Sudan capital -- to meet with al-Bashir and South Sudan President Salva Kiir Mayardit before the two leaders attend a summit.
U.S. State Department spokeswoman Victoria Nuland urged South Sudan last month to cease military support for rebels fighting the Khartoum government in the states of Blue Nile and Southern Kordofan. Southern officials have repeatedly denied providing support to the rebels.
Nuland also demanded that Khartoum "end aerial bombardments of civilian areas."
The war has already sent more than 100,000 refugees across the border into South Sudan, and the United States and United Nations have warned that hundreds more could follow, fleeing hunger and violence.