S.Sudan oil shutdown to increase food aid dependence-UN

* Oil revenues make up 98 percent of South Sudan's income
* U.N. warns of "longer season of hunger" in 2012
By Hereward Holland
PIBOR, South Sudan, Feb 3 (Reuters) - South Sudan's decision to shut down its oil output will make many more people dependent on food aid in one of the world's most undeveloped nations, the United Nations said.
Landlocked South Sudan, which relies on oil revenues, turned off its oil production last week in response to the seizure of some of its oil by neighbouring Sudan over a row about pipeline transit fees.
South Sudan needs to export its crude through Sudanese export facilities but both countries have failed to agree on a transit fee. Talks sponsored by the African Union are expected to resume next week but diplomats say no compromise is in sight.

South Sudan became independent in July, but decades of civil war and neglect have left the country at the bottom of most development indices. The U.N. World Food Program warns one third of its population will require food aid this year.
"The situation in the country is extremely precarious, and the risk of a dangerous decline is very real," said Valerie Amos, U.N. under-secretary for humanitarian affairs.
South Sudan in 2012 will see an earlier and "longer season of hunger" than last year, she said late on Thursday after visiting Pibor town in Jonglei state which has been hit hard by tribal violence.
LIFEBLOOD
"If oil production is shut down, many people will feel the effects; humanitarian needs will inevitably increase, and the combined efforts of the government, the aid community and the donors will not be enough," Amos said.
"The whole world is concerned that the talks between Sudan and South Sudan have broken down in the way that they have. Peace, security and stability is what the people of Sudan and South Sudan need."
Oil is the lifeblood for both economies but South Sudan is much more vulnerable, a war-ravaged country that must be built almost from scratch. Oil revenues make up 98 percent of state income compared to more than 50 percent in former unified Sudan.
Amos said fighting between the Murle and Lou Nuer tribes in Jonglei, which started in Christmas, had now affected more than 140,000 people, 20,000 more than previously estimated.
"It is a terrible situation. People have lost loved ones, their possessions, and their livelihoods," she said.
More than 6,000 armed youth of the Lou Nuer marched on settlements of the rival Murle tribe over Christmas, killing scores of people and triggering many revenge attacks.
Amos said some 700,000 South Sudanese still living in Sudan may return home soon to join 360,000 others who have arrived since late 2010, putting a big strain on the new nation and relief efforts to help them.
"Capacity is already extremely stretched and (there are) challenges that we face in terms of raising money for air operations, because the transport system is really non-existent, you're not able to bring in food and other supplies by road," Amos said.
Sudan has said it will treat South Sudanese as foreigners from April, requiring them to get residency permits they struggle to get because Juba has not opened yet a functioning embassy in Khartoum.
Apart from oil, both countries also need to mark their joint border, find a solution to share Sudan's external debt of $38 billion and end a conflict over the disputed region of Abyei. (Reporting by Hereward Holland; Editing by Ulf Laessing and Sophie Hares)