Iranian President Hassan Rouhani is expected in Muscat for a two-day visit starting Wednesday during which he will discuss with Oman's leader bilateral cooperation and regional tensions, Tehran's envoy announced.

Tehran enjoys good relations with Muscat but is locked in a decades-long rivalry with Saudi Arabia while other Gulf states are wary of the ambitions of their neighbour across the water.

In his first visit to a Gulf Arab state since his election last year, Rouhani will discuss "means of strengthening bilateral relations" as well as "security and stability" in the region, Tehran's ambassador in Muscat, Ali Akbar Sibeveih, said on Monday.

He will also discuss the "Syrian crisis and ways of peacefully resolving it," he added.

Rouhani's visit comes against a backdrop of mounting internal tension among members of the Gulf Cooperation Council, which includes Oman.

Saudi Arabia, Bahrain, and the United Arab Emirates last week withdrew their envoys from Doha, accusing the gas-rich emirate of meddling in their internal affairs and backing Islamists.

Sibeveih declined to comment on the row, telling reporters in Muscat that "these are internal GCC affairs".

"We hope people and countries in the region can live together in peace, security, and consensus," he said.

Oman has so far not reacted to the latest developments in the Gulf.

Sultan Qaboos, who maintains historically good relations with Tehran, visited Iran in August for a visit focused on economic and diplomatic issues.

Qaboos has acted as an intermediary between Western countries and the Islamic republic.

The sultanate is reported to have hosted secret talks between Iran and the United States ahead of the signing in Geneva last November of an accord between world powers and Iran on its nuclear programme.

World powers along with Arab states in the Gulf and Israel suspect Tehran's nuclear ambitions include acquiring a nuclear weapon, a charge it vehemently denies.

Rouhani is the second Iranian leader to visit Oman since the 1979 Islamic Revolution. His hardline predecessor Mahmoud Ahmadinejad visited the sultanate in 2007.

On the economic front, Oman and Iran are seeking to expand trade, which reached $1 billion last year, as well as bilateral investments which they expect will top $10 billion by the end of this year, according to the ambassador.

Iran is planning to invest $4 billion in Oman's Duqm port on the Arabian Sea, in projects that include the establishment of 100 large oil and gas tanks and an iron-smelting plant, among other projects.

It will invest a further $2 billion in two other ports -- Sohar and Salalah, according to the diplomat.

Meanwhile, Oman will invest in petrochemical, education, and oil exploitation projects in Iran worth $4 billion.

In 2009, Oman and Iran signed an agreement for the construction of a 200-kilometre (124-mile) undersea gas pipeline linking the two countries. The project will be finalised within two years, the ambassador said.

Oman and Iran are also discussing building a causeway link over the Strait of Hormuz, Sibeveih said, without giving details.