MUSCAT, March 23 (Reuters) - Oman is close to cutting state subsidies for liquefied petroleum gas (LPG) that keep a lid on domestic prices of the fuel, Salim al-Aufi, undersecretary at the Ministry of Oil and Gas, told Reuters on Wednesday.

"We are studying lifting the subsidy for LPG for both commercial and industrial entities very soon. But individuals will not be affected by it," Aufi said, giving no details on the timing or the size of the cuts.

Low oil prices have saddled Oman with a big state budget deficit relative to the size of its economy, and it is looking for ways to cut its deficit to 3.3 billion rials ($8.6 billion) this year from 4.5 billion rials last year.

LPG is used in heating appliances, cooking equipment and vehicles, and cutting the subsidies would likely raise costs for industry. Oman spent $7.3 billion on all forms of energy subsidies last year, the International Monetary Fund estimated.

(Reporting by Fatma Alarimi; Writing by Andrew Torchia; Editing by Tom Hogue) ((andrew.torchia@thomsonreuters.com; +9715 6681 7277; Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))

Keywords: OMAN LPG/