South Sudan army admits loss of key oil town of Bentiu

South Sudan's army said Wednesday rebels had wrested control of the key oil town of Bentiu, one of the most bitterly contested regions in the four-month-long conflict.

The town, capital of oil-producing Unity state, is now the only major settlement held by the forces of rebel leader Riek Machar, a former vice-president.

"We are moving forward to retake the town from the forces of Riek Machar, who entered the town on Tuesday after our forces withdrew," army spokesman Philip Aguer told AFP, accusing the rebels of "committing atrocities including the killing of civilians."

Rebels had previously seized Bentiu in December at the beginning of the conflict, but were chased out of it a month later.

"The rebels were killing innocent people as they entered, there were killings at the hospital, in the market and mosque," Aguer added, although the reports could not be independently confirmed.

He had no reports of clashes on Wednesday due to communication problems, but said it "was highly likely there was fighting."

Rebel chief Machar told AFP on Monday his forces would target crucial oilfields, vowing that the war will not end until the country's president is removed from power.

The rebels, who celebrated the capture of Bentiu on Tuesday, issued at the same time an ultimatum to oil companies to shut down production.

Aguer said that the rebels had launched an attack on an oil refinery under construction near Bentiu at Lalop, but that it remained under the army's control.

Before fighting broke out in the young nation, which won independence from Sudan less than three years ago after a decades of civil war, oil provided more than 95 per cent of its government budget.

The conflict in South Sudan has left thousands dead and forced around a million people to flee their homes since fighting broke out on December 15 in the capital Juba before spreading to other states in the oil-rich nation.