Sudanese President Omar al-Bashir waves to the crowd outside the Defense Ministry in Khartoum on April 20, 2012.
President Omar al-Bashir has said that Sudan does not need oil transit fees from South Sudan and will not reopen its pipeline to southern oil.
"We do not want fees from oil and we will not open the pipeline. South Sudanese oil will not go through our land," Bashir said on Friday, shortly after the country’s military drove South Sudanese forces out of the Heglig region, where a major oil field is located, AFP reported.
Earlier, Sudanese Defense Minister Abdel-Rahim Mohamed Hussein declared victory, saying the Sudanese armed forces had "liberated" the area by force.
Afterwards, thousands of people took to the streets of Khartoum to celebrate.
South Sudan's seizure of the territory more than a week ago had raised concerns that the two states were sliding into war.
"Our troops were able to liberate Heglig town by force, and captured it at 2:20 p.m. (1120 GMT) today," Hussein announced on state television on Friday.
The announcement came shortly after South Sudan said that its troops would withdraw from the disputed region.
"Our enemy suffered heavy losses in people and equipment," the Sudanese defense minister stated.
Tension between the two neighboring states escalated after the South seized the town of Heglig and its oil fields last week.
A historic peace agreement between North and South Sudan signed in 2005 paved the way for an independence referendum in January 2011, in which southerners voted almost unanimously to secede.
South Sudan became independent on July 9, 2011, after decades of conflict with the north.
However, the new oil-rich nation is one of the least developed countries in the world, where one in seven children dies before the age of five.