Muscat - Fearing that oil reserves may one day fail to support its economy and growing population, the Gulf sultanate of Oman is investing billions of dollars in a massive tourist resort near the Arabian sea coast.

On Saturday, Oman's quest to draw tourists was unveiled in plans to construct "The Blue City" (Al-Madina Al-Zarqa), an ambitious $15-billion tourism project inspired by the success of large-scale building in neighbouring Dubai, the capital of the United Arab Emirates (UAE).

"The priority for the government is to diversify the economy and create new jobs," Oman's finance minister Ahmad Bin Abdl Nabi Mekki told the Times of Oman, a local English newspaper.

Ruled by sultan, the Muslim country is perched on the eastern edge of the Arabian peninsula, bordered by Saudi Arabia, Yemen and the UAE.

Characterised by hundreds of kilometres of beaches, stunning natural scenery, rugged mountains and baking deserts, Oman saw its fledgling tourist industry take a hard blow after the September 11, 2001 terror attacks on the United States.

Tourism officials hope "The Blue City" will boost the tourist sector and diversify revenue sources over the long term.

The project will cover a 35-square-kilometre site along the Al-Sawadi seafront, 100 kilometres north-west of the capital.

Promoters say it will be a "real city" housing about 200 000 people, ideal for a country facing a growth spurt in its population. More than half of Oman's 2,54 million people are under age 20.

Construction on "The Blue City" is to begin by the end of 2005 and last for 15 years.

The plan follows in the footsteps of a construction-frenzy in nearby Dubai, where developers are building what they call "the world's biggest waterfront development."

"Dubai Waterfront" is touted as an 81-million-square-metre beachfront landmark that will be larger than Manhattan, Dubai property developers say.

Until recently, Oman has avoided Dubai's mass tourism pitch, targeting instead middle- and high-class tourists to try to better stimulate the economy and not offend local sensitivities.

But Oman's oil reserves are gradually being depleted.

In recent years, Oman has reaped the benefits of surging world crude prices. Its receipts for 2004 were 78 percent higher than forecasted.

According to the Times of Oman, the sultanate produces currently about 767 000 barrels per day (bpd), compared to 819 000 bpd in 2003, and 898 000 bpd in 2002.

Although the project appears to be purely private, run by a Bahraini-Omani joint-venture, the Omani government helped significantly by obtaining a royal decree granting the developers a 75-year concession to utilise the land.

The government appeared willing to help the private sector in developing infrastructure for tourism because officials hope the massive complex will create tens of thousands of jobs.

About 30 000 young Omanis enter the job market each year but face an employment rate of about 20 percent.

But in a region where certain countries, like the emirate of Dubai, bet strongly on modernisation and Westernisation, Oman opted instead to emphasise the appeal of "authentic Arabia," and remain faithful to its culture and traditions as it tries to attract visitors.

In 2004, the Sultanate received 1,5 million visitors, compared to 5,4 million in Dubai, a figure it aspires to double by 2010.

Officials say "The Blue City" and its ability to attract foreign investment is a sign of international confidence in the country's stability, in spite of the May conviction of 31 Islamists who were sentenced to lengthy prison terms for attempting to topple the regime.

The project "reflects confidence in Oman, (its) regime, (its) politics (its) system and the credibility of Oman's economy," tourism under-secretary Mohsen ben Khamis al-Bqalouchi said.

Article by - Christian Chaise - www.iol.co.za