Oman plans to launch the construction of the first part of a $15 billion rail network in the fourth quarter of 2014, a government official said on Wednesday.

"We expect the works will start in 2014 and in the fourth quarter, the first segment starts," Salim bin Said bin Salim Alami, assistant director-general at the transportation ministry, told Reuters on the sidelines of a rail conference.

By then, contracts for various project packages will have been awarded by the Oman Railway Company, formed to manage and operate the Sultanate's railway system, he said. A contract for the project management consultancy will be awarded next year.

The state-funded, 2,244 km rail network - the country's first - would link the desert town of Buraimi, bordering the UAE, to six major settlements in Oman including the industrial city of Sohar.

It would eventually connect to a planned rail network across the six-nation GCC and eventually to neighbouring Yemen.

"Our vision in this project is to help the logistics industry and trade, a significant GDP player in Oman, and to connect ports to the GCC as best as we can," Alami said.

Oman, which exports modest amounts of oil and will face challenges in financing its state budget and generating employment for its citizens in coming years, expects the railway network to be fully operational by 2018.

Italferr, the Italian state railways engineering firm, is undertaking the preliminary design of the project, which could help to diversify Oman's economy beyond oil by boosting trade and industry.

Gulf states have embarked on a separate $15.5 billion rail network project that is to link Oman to Kuwait through the UAE, Qatar, Bahrain and Saudi Arabia.-Reuters