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The joint venture between InterOil, Merrill Lynch and Clarion Finance has also chosen ConocoPhillip's Optimized Cascade (SM) process technology for the plant design.
"Bechtel clearly demonstrates the knowledge, capacity and ability to do the job and the Liquid Niugini Gas Project is very pleased to have them on board," Liquid Niugini chief executive Jack Hamilton said.
"The combination of Bechtel's execution experience, combined with the proven technology of ConocoPhillips, will give us a world-class LNG outcome."
The company said ConocoPhillips process technology has been applied successfully in 10 LNG projects worldwide.
Hamilton said the concurrent negotiations for the FEED and EPC contracts had shaved around 12 months from the traditional timeframe for such projects.
"It was designed to ensure that in an overheated market, we could secure the services of a leading global player and to meet our ambitious schedule for first gas delivery."
Liquid Niugini's planned LNG plant, to be located near its Napa Napa oil refinery in Port Moresby, will be capable of producing 5 million tonnes of LNG from a single processing train with an option to add a second train.
The plant will source natural gas from InterOil's Elk-Antelope structure, which has current in-place contingent reserves of between 3.5-18.9 trillion cubic feet of gas.
InterOil is focused on drilling a third Elk well and seismic analysis to help establish the size of the reserve.
The FEED award is subject to final shareholder approval which in turn requires the finalisation of a project agreement with the PNG Government.
"While the project is still aggressively pursuing its 2012 schedule, this timeframe is under pressure until the project agreement with the Government is completed," Hamilton said.
Merrill Lynch has agreed to off-take at least the first two trains of production, giving Liquid Niugini Gas a guaranteed market to move the project forward and support financing.
