Saudi Arabia will reportedly hold bidding among foreign engineering firms in order to dig a huge canal that will separate it from Qatar and basically turn the neighboring state into an island, a local paper reports.

Five companies have expressed a desire to participate in the tender, which is scheduled to take place on June 25, sources told Saudi Makkah newspaper. The winner of the bidding, which will be announced within three months, will start construction of the canal immediately, the paper wrote.

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Riyadh plans for the so-called Salwa Canal to be dug within a year in order to create a water barrier between itself and Qatar as relations between the two nations continue to deteriorate.

According to the sources, the new waterway along the Qatari border in eastern Saudi Arabia will be 60 kilometers in length and 200 meters wide. The estimated cost of the project is 2.8 billion Saudi riyals (around $746 million), they added.

Saudi media earlier reported that the canal will be built at a distance of between one and five kilometers from the country’s border with Qatar, with the remaining land to be assigned to the needs of the military and border guards.

Luxurious hotels and private villas with piers for yachts will be built on the shore, as well as other infrastructure for leisure and water sports. The 15-to-20-meter-deep canal is also expected to host three seaports, capable of accepting large cruise liners.

If the move is implemented, Qatar, which is located on a peninsula and only has a land border with Saudi Arabia, will effectively be turned into an island state.

A year ago, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt accused Qatar of “supporting terrorism,” meddling in the affairs of other nations in the region and allying itself with Riyadh’s archrival, Iran. Diplomatic relations have been cut, with the Arab nations imposing a trade blockade against Doha.

READ MORE: Blockade blowback: Qatar bans Saudi imports as it eyes closer economic ties with Turkey, Iran

The Saudis and their allies also issued an ultimatum, threatening to maintain the economic pressure until Qatar agrees to shut down its state broadcaster Al Jazeera, expels Turkish troops from its territory, scales back ties with Iran and curbs relations with Egypt’s Muslim Brotherhood movement. However, Doha rejected the demands as “unrealistic” and continues seeking closer relations with Tehran and Ankara.

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