North Sudan has put at risk possible debt relief worth billions of dollars by seizing the disputed town of Abyei, US envoy Princeton Lyman has said. It had also jeopardized negotiations due to be resolved before South Sudan's independence in July, he said. He added that Washington would find it difficult to remove Sudan from its list of state sponsors of terrorism unless troops were withdrawn from Abyei. The UN says Abyei has been looted and set ablaze since its weekend capture. Some 20,000 people, almost the whole population of the town, have fled. South Sudan's secession follows decades of north-south conflict and some fear the dispute over Abyei, which both sides claim, could reignite the war. The 2005 peace deal ended 22 years of civil war in which some 1.5 million died. A UN Security Council delegation is due to hold talks on Tuesday with Salva Kiir, president of the south, in the southern capital of Juba. Important steps The US placed Sudan on its list of state sponsors of terrorism in 1993 and imposed sanctions four years later. In the past it has suggested a peaceful transition to independence for the south and a negotiated solution to the separate conflict in Darfur could normalise relations. Mr Lyman, the US envoy to Sudan, said Washington has been working with the World Bank on whether to relieve Sudan's debt, estimated at $38bn (£23.5bn). He said the government was also considering naming a full ambassador in Khartoum after the south's secession on 9 July, Reuters news agency reports. "All of these are important steps of normalisation. They can't be fulfilled if we don't" meet the conditions of the peace deal, AFP news agency quotes My Lyman as saying. "If we don't have Abyei being negotiated, rather than occupied, it'll be hard to move forward on those items." Mr Lyman said the north and south must find a resolution to their outstanding issues, which includes division of future oil revenues. "This is not a marriage made in heaven," Reuters news agency quotes him as saying. "The two may not kiss on the cheek but they do have to shake hands. They need each other, that's the reality." Meanwhile, the Kenyan negotiator of the 2005 peace deal, Gen Lazaro Sumbeiywo, told the BBC's Network Africa programme that he blamed a lack of political will on both sides for failing to resolve tensions over Abyei. "Abyei should be made an independent kingdom, with hindsight I can say that very clearly," he said, adding that the UN could continue to provide its security. Tension over Abyei - a small town claimed by a southern group, the Dinka Ngok, and northern nomads, the Misseriya - has been rising since a referendum on its future scheduled for January was postponed. Since then there have been fears that clashes in the region could spark a new war between the Khartoum-based government of Sudan and the soon-to-be independent South Sudan. Under the 2005 peace agreement, Abyei was granted special status and a joint administration was set up in 2008. Source: BBC