* World's newest state on the brink of civil war
* IGAD sends envoys to seek freedom for detainees in Juba
* S. Sudan holds third-largest oil reserves in Africa
By Aaron Maasho
ADDIS ABABA, Jan 7 (Reuters) - South Sudanese rebels and a government delegation started peace talks on Tuesday to try to end fighting that has left the world's newest state on the brink of civil war.
The talks in neighbouring Ethiopia will focus on brokering a ceasefire to halt three weeks of violence that has killed at least 1,000 people and driven 200,000 from their homes.
"We have begun our meeting on the cessation of hostilities," a member of the government delegation told Reuters. After opening, the talks quickly took a break to allow consultations in Juba about the release of detained rebels.
The fighting, often along ethnic faultlines, has pitted President Salva Kiir's SPLA government forces against rebels loyal to former vice president Riek Machar.
Tuesday was the first face-to-face session, after a formal opening ceremony on Saturday, due to delays caused by haggling over the fate of 11 detainees held by the government in Juba. The rebels initially insisted on securing their release before negotiations started.
A diplomat said the Intergovernmental Authority on Development (IGAD), a regional grouping of east African nations that initiated the talks, had sent its envoys to Juba to press Kiir to free the detainees.
The trio of envoys is led by Seyoum Mesfin, a former Ethiopian foreign minister, the diplomat said. "They will push for the detainees' release," said the diplomat, close to the talks.
CONSULTATIONS
"The talks are going on but we are here for consultations," Kenyan Lieutenant-General Lazarus Sumbeiywo, one of the three IGAD envoys, told Reuters on arrival in Juba.
The talks in Addis paused to await the return of the IGAD envoys, expected later on Tuesday, officials said.
China, the biggest investor in South Sudan's oil industry through state-owned Chinese oil giants National Petroleum Corp (CNPC) and Sinopec, called on Monday for an immediate ceasefire. Beijing is concerned by the unrest that had forced the government to cut oil production by about a fifth.
The fighting forced CNPC to evacuate workers.
Sudan, which also has an economic interest in its southern neighbour's oil output, said the Juba government discussed the deployment of a joint force to secure its oilfields during a visit by Sudanese President Omar al-Bashir on Monday.
The prospect of security cooperation between the two countries would represent an improvement in ties, after the civil war foes came close to conflict again in disputes over oil fees and the border in the early part of 2012.
All of landlocked South Sudan's oil is piped through its northern neighbour, providing vital hard currency in transit fees for Khartoum.
South Sudan's oil production fell by 45,000 barrels per day to 200,000 bpd after oilfields in its northern Unity state were shut down due to fighting. Upper Nile state is still pumping about 200,000 bpd, the government says.
Oil major BP estimates that South Sudan holds sub-Saharan Africa's third-largest reserves.
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