By Skye Wheeler
Reuters
Tuesday, January 19, 2010; 8:56 AM

YAMBIO, Sudan (Reuters) - Sudan's president on Tuesday said he would support the country's oil-producing south if it chose independence in a looming referendum, in his closest acknowledgement of the possibility of separation.

The unusually conciliatory speech from President Omar Hassan al-Bashir came as Sudan marked the fifth anniversary of a 2005 peace deal that ended more than two decades of north-south civil war and promised the referendum.

Southerners are widely expected to choose independence in the ballot, scheduled for January 2011, although analysts have up to now warned Bashir's northern supporters would resist any loss of control over southern oil fields.

Bashir told dignitaries gathered in the remote southern town of Yambio that his northern National Congress Party (NCP) still wanted to keep Sudan unified.

"But if the result of the referendum is separation ... the Khartoum government will be the first to recognize this decision. We will support the new-born government in the south," he said.

Security was tight as Bashir spoke in a newly-constructed stadium in Yambio, close to the border with the Democratic Republic of Congo (DRC).

Analysts and activists have released a series of reports in recent weeks, warning Sudan's northern and southern armies were re-arming and the country could slide back to war in the run-up to the southern referendum.

South Sudan's President Salva Kiir, speaking at the same event, played down fears that the 2011 vote would lead to a confrontation with the north.

"Let me be clear ... that even if the south decides to separate from the north in 2011, it is not going to split into the Indian Ocean or the Atlantic Ocean ... Let us prepare ourselves to embrace the outcome of the referendum peacefully," he told the crowd.

"The (River) Nile will continue to flow from south to north ... Arab nomads will continue to look for pastures and water in south Sudan and no one would think of denying those rights. Before appropriate oil infrastructure is developed in south Sudan, the oil will continue to flow south to north," he added.

Most of Sudan's proven oil reserves lie in the south, but the crude is funneled north to the Red Sea, through pipelines and refineries to Port Sudan.

There have been fears a separation would spark clashes between heavily-armed nomadic groups who regularly move their livestock over the north-south border looking for fodder.

The 2005 Comprehensive Peace Agreement created a semi- autonomous government in the south, shared out oil wealth, and promised the referendum, as well as national elections, scheduled for April.

Sudan's north-south war broadly pitted Khartoum's Islamist government against rebels from the south, where most follow Christianity and traditional beliefs.

Africa's longest civil war, complicated by issues of ethnicity, oil and ideology, claimed 2 million lives and drove more than 4 million from their homes.

(Additional reporting by Khaled Abdel Aziz in Khartoum, writing by Andrew Heavens)