By Cynthia Johnston

KHARTOUM, May 30 (Reuters) - Sudan's government has proposed a joint north-south administration for the oil-rich flashpoint Abyei area where clashes displaced tens of thousands of people this month, state media said on Friday.

Heavy fighting erupted between northern and southern Sudanese troops in Abyei in mid-May, killing more than 20 northern soldiers and an unknown number of southerners, and prompting fears of further conflict.

"The President of the Republic, Field Marshal Omar (Hassan) al-Bashir, disclosed that the government has suggested establishment of a joint administration for Abyei area," state news agency SUNA reported.

It said Bashir had announced the proposal at a news conference in Tokyo on Friday but gave no more details about his plan for the disputed central town, which is close to oilfields that produce up to half of Sudan's daily 500,000-barrel output.

Southern President Salva Kiir and Sudan's Vice President Ali Osman Taha were discussing the idea, SUNA said.

Northern and southern leaders have blamed each other for the fighting in Abyei, which led to a humanitarian crisis as roughly 50,000 civilians fled just at the onset of the rainy season.

Abyei, on Sudan's yet undecided north-south border, has been a main point of contention since the former foes signed a peace deal in 2005 ending over two decades of civil war fought along ethnic, religious and ideological lines and complicated by oil.

Over three years after they signed the 2005 accord, the sides have not agreed on borders or a local government for Abyei, which will choose to join the north or south in 2011, when the entire south will vote on secession.

The south appointed an administrator for Abyei earlier this year, a move criticised by the northern ruling party, which has its own official in charge of Abyei.

'POWDER KEG'

Pagan Amum, secretary general of the southern former rebel Sudan People's Liberation Movement, said on Monday that Sudan was on the brink of a fresh civil war following the clashes.

The U.S. Special Envoy to Sudan Richard Williamson told journalists after meeting Kiir on Friday in the southern capital Juba that Abyei remained "a powder keg that could explode and destroy all that's been accomplished".

South Sudanese officials complained Khartoum was keeping larger than normal numbers of soldiers in the Abyei area.

"They're building up. There's no doubt about it," the semi-autonomous south Sudan's Presidential Affairs Minister Luka Biong said, without giving details. He said north-south talks to re-establish peace in oil-rich Abyei would continue on Saturday.

The southern army's deputy chief of staff Salva Mathok said there were nearly 11,000 northern soldiers in the Abyei area, adding that Khartoum had until recently kept only 3,000 to 4,000 troops there.

Sudanese army officials could not immediately be reached for comment. Sudan had last week denied it was building up troops.

Under the terms of the peace deal, Abyei is to be guarded by special joint units of northern and southern soldiers.

Speaking to the southern parliament on Wednesday, Southern President Salva Kiir said he had agreed with Sudan's President Omar Hassan al-Bashir to withdraw southern troops together with a northern army brigade.

"(But) what we saw was more troops coming down the road to Abyei," he said, adding that the build-up of forces had been concentrated on the roads that link north and south Sudan, and are vital trade links for the landlocked south. (Writing by Cynthia Johnston; Additional reporting by Skye Wheeler in Juba; Editing by Charles Dick)

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