* Up to 700,000 South Sudanese live in Sudan
* They face uncertain future from Sunday
* Border fighting hampers return of South Sudanese
By Ulf Laessing and Khalid Abdelaziz
KHARTOUM, April 6 (Reuters) - Osman may find himself in legal limbo on Sunday when he and hundreds of thousands of other southerners lose their residency rights in Sudan, nine months after their homeland seceded.
A notional homeland in Osman's case.
"I am a victim of southern secession. I was born and raised in the north, have never been to the south and my wife is from the north," said Osman, who speaks Arabic like most Sudanese, not English or any of the tribal languages common in the south.
"I want to stay in Sudan but the government does not allow it," said the 35-year-old engineer, declining to give his family name for fear of trouble with the authorities.
He is unable to get a Sudanese identity card as his father is from the south, but also cannot get a South Sudan passport since Juba has not yet opened a functioning embassy in Khartoum.
"I am kind of stateless," Osman complained.
Worse still, he risks separation from his wife and children when a transition period for southerners to live and work in Sudan without permits expires on April 8.
South Sudan became independent in July under a 2005 peace deal that ended decades of civil war. Khartoum has ruled out dual citizenship for myriad southerners who have lived in the north for decades, many of them after fleeing the fighting.
Sudan and South Sudan remain at loggerheads over many secession-related disputes. Border fighting last week prompted global powers to warn a return to full-blown war was possible.
Sudanese President Omar Hassan al-Bashir had been due to meet his southern counterpart Salva Kiir on April 3, but called off the summit after the clashes. They were to have signed two agreements, on residency and on free movement of citizens of both nations, which would let southerners to stay in the north.
"There is uncertainty," said Jill Helke, head of the Sudan mission of the International Organization for Migration, which is helping tens of thousands of people to move to the south.
"It is unclear what will happen. It can go very smoothly with Sudan being practical and just extending the transition period, giving a grace period or showing flexibility. (But) if there are political problems it can be different."
State news agency SUNA said in January, before an initial agreement to grant residency was reached in March, that southerners would be treated as foreigners from April 8.
But Juba, overwhelmed with the task of building a state from scratch, has failed to open an embassy in Khartoum that can issue the passports needed to apply for residency permits.
More than 370,000 southerners, who are mostly Christians or animists, have gone home since October 2010. Tens of thousands more are now packing up, feeling they no longer have a future in the mainly Muslim north.
Bashir has said Sudan will adopt an Islamic constitution, while other officials have said the country needs to cut down on foreign workers to create jobs to fight an economic crisis.
"I don't want to stay in the north," said 56-year-old Michael, who used to work for Sudan's government until he was fired along with tens of thousands other southerners in July.
"I am still here because I haven't been paid my severance yet. I don't know how to solve this problem."
LIST OF DISPUTES
The unclear legal status for South Sudanese in the north is just one of many unresolved issues between the former foes.
Oil, the lifeline of both countries, is another.
They are arguing over how much the South should pay to export crude through Sudan, prompting Juba to halt its entire output to stop Khartoum seizing oil in lieu of "unpaid fees".
They also need to mark their 1,800 km (1,200 mile) border and find a security arrangement for the frontier regions, where both accuse the other of supporting rebels in their territory.
The African Union managed to bring both sides to the negotiating table this week after the border fighting, but talks were adjourned on Wednesday with no progress.
Even some Sudanese officials admit they do not know what will happen to southerners living in Sudan after Sunday.
"They say they will be foreigners," said al-Sair al-Umda, head of Sudan's official internally displaced person (IDP) center, citing local media reports about the South Sudanese.
"But we haven't been issued any papers yet (to treat them as foreigners). We will go ahead with our plan. We will give anybody who wants to go south his proper documents."
Estimates of the number of southerners living in Sudan range from 300,000 to 700,000. Many live in slums on the outskirts of Khartoum where they arrived in the 1980s to escape civil war.
"It is very difficult to say who is a southerner. Many don't have documents or have never been to the south," Helke said.
Some southerners have even returned after failing to find work in South Sudan, one of the world's least developed nations.
"I went to my country after independence to the city of Wau but came back," said 24-year-old car-washer Charlino. "I want to stay here because I won't find work there."
Tens of thousands of southerners waiting to go home since independence have been held up because South Sudan was unable fund their transport by Nile barge, bus or train.
Border fighting has also made land travel harder.
A convoy with up to 1,700 returnees was caught up in last week's violence. Half the buses and trucks pushed on over the border while the rest came back, a U.N. report said on Monday.
Around 11,000 people are stuck at the Sudanese Nile port of Kosti where they wait for barges that have yet to materialise.
In February, Sudan stopped Nile transports after accusing Juba of loading weapons on barges on the return trips to supply rebels in Sudan's border land. Juba denies the charges.
"We want both countries to find a solution for our situation," said Osman. (Editing by Alistair Lyon)
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