Chinese investors signed a deal Monday with Oman's government to build an industrial city, including an oil refinery, in the southern port town of Duqm, a joint statement said.

The deal would pave the way for investments worth $10.7 billion by 2022 to finance industrial projects in Duqm, on the Arabian Sea, which Oman is developing in a bid to diversify revenues beyond oil, it said.

The industrial zone would include a refinery with a production capacity of 230,000 barrels per day, a complex for petrochemical industries, cement and automobile assembly plants, and a solar power generation facility among other investments.

By the end of last year, Chinese investments in Oman had exceeded $2 billion while trade between both countries surpassed $17.2 billion, according to the statement released at the signing ceremony in Muscat.

The sultanate derives 79 percent of its revenues from oil, of which it produces only about one million barrels per day.

Gulf states have been hit hard by a cash crunch due to a sharp drop in oil prices since June 2014.

Most of them have introduced austerity measures and have decided a series of measures to boost non-oil revenues.