CNOOC, PTT PCL, ENI, and Osaka Gas are among companies that submitted indicative bids for a 20 to 35 percent stake in InterOil's liquefied natural gas project in Papua New Guinea, sources said.

Bids of about $500 million were submitted earlier this month, one of the sources with knowledge of the situation said.

Canada's InterOil, and its project partner, Pacific LNG Operations Ltd, hope to sell a stake of between 20 and 35 percent in the project, as well as stakes in upstream gas assets, InterOil chief executive Phil Mulacek told Reuters in May.

There will be a deal done -- on the buy side there's plenty of interest that's genuine and ready to do a deal, and on the sell side you've got a ready vendor, one of the sources with knowledge of the auction told Reuters.

France's Total, Japan's Mitsui & Co and Mitsubishi Corporation, as well as a major U.S. energy company have also placed indicative bids, one of the sources said.

China's PetroChina was also rumoured to be planning a bid for the stake, according to media reports late last month.

The indicative bids account for an 'upfront payment', and do not represent the full value of the asset over time, which could surpass $2 billion, one of the sources added.

In March, InterOil said the project would cost about $4.5 billion with targeted production of about 3.5 million tonnes per year, with shipments due to start in 2014.

The deal is expected to close before the end of the year, the sources said. The sources declined to be identified as they were not authorised to speak publicly about the matter.

InterOil currently holds an 87 percent stake in the project, while privately-owned Pacific LNG Operations has 13 percent.

People who want to have a strategic interest in Asia and who want to be LNG operators have been knocking on our door, Mulacek told Reuters in a telephone interview from the PNG capital Port Moresby in May.

We've got a premium quality onshore asset, so a lot of the conventional LNG players and offtakers are interested in investing in this project.

(Reporting by Joseph Chaney; Editing by Chris Lewis)