While most of the Middle East’s wealthy monarchies are working to steer their government budgets away from dependence on the energy industry, Oman is forging a unique path in its pursuit of economic diversification: in at least one case, the sultanate will use its petroleum reservoirs to finance the development of a historic site and tourist attraction. This strategy offers a model for how Oman’s neighbors, such as Saudi Arabia and the United Arab Emirates—which are likewise rich in cultural heritage and natural resources—might brace their own economies for the future.

In late June, the Omani Heritage and Tourism Ministry reached an agreement with Oman Liquefied Natural Gas LLC, often shortened to “Oman LNG,” under which the company will bankroll efforts to remake the historic site of Qalhat as a tourist destination.

Oman LNG, a state-owned enterprise whose other major shareholders include Mitsubishi Corporation, Shell Gas and Power International B.V., and TotalEnergies SE, will fund what a press release from the Oman News Agency described as “management and protection offices for the site, visiting paths, signboards, viewing platforms and other such basic facilities.” The timeline for Qalhat’s renovation seems unclear, but the Omani Heritage and Tourism Ministry estimated the cost of the project at 311,067 Omani rials, equivalent to over US$800,000.

Oman Qalhat economy

A map showing the historic Kingdom of Hormuz, in which Qalhat became the second-most important city.

Situated on the Gulf of Oman just north of the city of Sur, Qalhat served as “the first legendary capital of Oman,” in the words of a booklet about the historic site published by the Omani Heritage and Tourism Ministry. The archeological record traces the establishment of the city to the 11th century. Evolving into a strategic port and trading post over the following years, Qalhat became the second-most important city in the Kingdom of Hormuz, which lasted in one form or another well into the 17th century. The abandonment of the city in the 16th century, following Hormuz’s occupation by Portuguese forces and a devastating attack on Qalhat by Ottoman raiders, ensured the ultimate preservation of the historic site.

Qalhat contains an intact hammam, mausoleum, mosques, workshops, and many other major archeological sites. The Omani Heritage and Tourism Ministry argues that, since Qalhat “has never been occupied or resettled,” the city boasts “outstanding archeological potential.”

Scholars have appreciated Qalhat’s significance for almost a millennium. The Arab cartographer Muhammad al-Idrisi took note of the city in the 12th century, and Ibn al-Mujawir sketched Qalhat’s distinctive fortifications in his much-cited 13th-century travel book. The famous Moroccan Amazigh explorer Ibn Battuta even wrote about Qalhat’s “good markets and one of the most beautiful mosques” in “The Rihla,” after paying the city a visit in 1331. With the assistance of Oman LNG, Omani officials hope that they can keep attracting visitors to Qalhat in the 21st century.

Oman Qalhat economy

Bibi Maryam Mausoleum at Qalhat. The structure is reminiscent of Sassanian era chahr taqi fire temples. (Bassam Al Jayousi/Google Panoramic)

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Oman LNG’s ties to Qalhat predate its June agreement with the Omani Heritage and Tourism Ministry. Though the city’s inhabitants left long ago, its port remains in use—today serving as one of Oman’s most important terminals for the export of liquified natural gas. Oman LNG also runs a plant for liquified natural gas in the city through Qalhat LNG, a joint venture between the state-owned enterprise, Oman’s government, Mitsubishi, and other foreign companies.

In the past, Qalhat’s archeological sites provided little more than a scenic backdrop for Oman LNG’s commercial activities. Nonetheless, the Omani Heritage and Tourism Ministry’s deal with Oman LNG will reshape the relationship between the heritage site and its wealthiest tenant.

Omani news agencies’ coverage of the agreement portrayed it as “a model for strengthening the partnership between the heritage sector and the private sector,” a characterization that minimizes Oman LNG’s ties to the Omani state. Given that Oman’s government controls 51 percent of its shares, the company falls well within the public sector and represents official Omani interests. Mohammed Al Rumhi, Oman’s Energy Minister, has even chaired Oman LNG’s board of directors.

Oman Qalhat economy

Qalhat was added to the UNESCO “World Heritage List” in 2018.

The involvement of Oman LNG and the Omani Heritage and Tourism Ministry in the Qalhat project marks a partnership not between the private sector and the public sector, but between two arms of Oman’s government. This more centralized arrangement will, in turn, likely keep the historic site’s renovation on track and advance Oman’s years-long promotion of Qalhat.

In 2018, Oman won official recognition of Qalhat’s historical significance from the United Nations Educational, Scientific, and Cultural Organization, better known as “UNESCO.” That year, UNESCO added the city to its “World Heritage List” because “Qalhat presents a unique testimony to the Kingdom of Hormuz” and because, in a nod to the city’s remarkable preservation, “the urban plan and the excavated buildings of Qalhat show features and characteristics specific to the Kingdom of Hormuz and the archaeological remains are its most complete representation.”

UNESCO’s endorsement, coupled with investment from Oman LNG, could transform Qalhat into one of Oman’s top tourist destinations. Last year, the energy industry accounted for 72 percent of Oman’s government budget, an indicator of how far the sultanate still has to go to achieve economic diversity and why boosting other industries, such as tourism, is increasing in importance.

Like Oman, all the other energy superpowers of the Middle East are wrestling with the challenge of economic diversification: Saudi Arabia too is investing in its own cultural heritage as a potential lure for tourists. The issue appears more acute for Oman, however, given that it has fewer and smaller petroleum reservoirs than many of its neighbors. A 2021 report from BP suggests that Oman will exhaust its supply of petroleum in 15 years and natural gas in 18 years.

As Oman seeks to make the most of the fossil fuels that it has left, Oman LNG’s investment in Qalhat as a tourist attraction signals a novel approach to economic diversification. The sultanate is pouring revenue from the energy industry into Qalhat, a monument to its past, and into tourism, an industry of the future. Oman’s wealthier neighbors may soon follow its example.