(Adds officials' comments, context, analysis)

MUSCAT, May 11 (Reuters) - Oman plans to sell its first sovereign Islamic bond, an issue of 200 million rials ($520 million) of sukuk, through a private placement and will launch subscriptions soon, an Omani official was quoted as saying on Monday.

Tahir Salim al-Amry, director-general of treasury and accounts at the Ministry of Finance and head of the committee arranging the issue, told the Times of Oman that it had received in-principle regulatory approval and was now in advanced stages of structuring and documentation.

Bank Muscat BMAO.OM , the bank's Islamic banking window Meethaq, and Standard Chartered STAN.L have been appointed to advise the government on the issue, Times of Oman quoted officials as saying.

"The sovereign sukuk issue will be through a private placement process and marketed primarily to Islamic financial institutions, and sophisticated investors with a minimum subscription amount of 500,000 rials," Amry said.

Abdullah al-Salmi, executive president of the Capital Market Authority, told Times of Oman that the sukuk would have a face value of 1 rial and the broad investor community would be able to buy them once they were listed on the Muscat Securities Market.

The officials did not give other details of the sukuk issue such as its tenor and structure.

Sovereign sukuk issuance would boost Oman's fledgling Islamic banking industry, giving it a badly needed liquidity tool as well as a pricing benchmark. Two sharia-compliant banks, Al Izz Islamic Bank BKIZ.OM and Bank Nizwa BKNZ.OM , obtained licences in 2013, and there are half a dozen Islamic windows of conventional banks. The Islamic banks and windows account for about 5 percent of the country's total banking assets.

Starting sukuk issuance would also give the Omani government a valuable new instrument to raise funds. The plunge in oil prices since last year has put its finances under heavy pressure; its state budget plan this year envisages a deficit of 2.5 billion rials, equivalent to about 8 percent of gross domestic product.

Central bank executive president Hamood Sangour al-Zadjali has said Oman will consider in the second half of this year whether to issue an international bond for the first time since 1997. It is not clear whether that issue would be conventional or Islamic.

(Reporting by Fatma Alarimi; Writing by Andrew Torchia; Editing by David French and Olzhas Auyezov) ((andrew.torchia@thomsonreuters.com; +9715 6681 7277; Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))

Keywords: OMAN SUKUK/