Three big investment banks have been overseeing its formal process since October.
InterOil said it was pleased with how it was going and the number of bidders involved.
"Selection of the preferred LNG operator is targeted for the second quarter of 2012," InterOil said.
It said the project agreement - presumably the agreement with the PNG government - stipulated the final investment decision must be reached by June 2013 for the 7.6 million tonne per annum Gulf LNG project.
The big upstream player of PNG's Gulf province further said the front-end engineering and design packages for the project facilities were "mostly completed".
"We understand the government's desire to have an internationally recognized LNG operator join the project and we trust that our LNG bid process will fully satisfy that requirement,"InterOil chief executive officer Phil Mulacek said.
"We welcome the continued support of both the prime minister and the minister for petroleum who endorse an LNG project in the Gulf which complies with the LNG project agreement."
The update from InterOil followed reports in PNG's press earlier this week that the government had rejected the Gulf LNG project.
The Post-Courier used sources "who have interest in this project" for a report yesterday.
The sources claimed the government was considering a termination of the project agreement it struck in late 2009.
The newspaper "understood" a review of InterOil's licences has been initiated by the PNG government.
One source reportedly said InterOil was being misleading as no work had been done on FEED.
However, an industry source told PNGIndustryNews.net the Post-Courier journalist behind the recent spate of its negative stories on InterOil is possibly a "wantok" for Petromin.
It is not unusual for agendas to be pushed in PNG's press.
Back in 2008, Petromin regularly discussed its views to the country's newspapers at a time the government was considering the best option for the state nominee of the PNG LNG project.
The media campaign failed, with rival state-owned enterprise Independent Public Business Corporation winning the role.
In any case, the outcome of InterOil's project operator hunt will significantly shape how the government views the Gulf LNG project.
Petroleum and Energy Minister William Duma made it clear he supported the involvement of Royal Dutch Shell for the project.
Shell has a strategic alliance with the government's state nominee for the Gulf LNG project, Petromin.
The Gulf LNG project is targeting 5Mtpa in 2014, with 3Mtpa from an Energy World Corporation-designed onshore modular LNG plant and the rest from a floating LNG facility.
There is also a proposed ramp-up aiming to hit up to 8Mtpa from the total project through 2015 and 2016.
Notably, these plans do differ from InterOil's project agreement with the government in late 2009, which was based on an onshore 6-9Mtpa LNG plant adjacent to InterOil's oil refinery at Napa Napa.