Australia is loaning $95 million towards the upgrade of Port Kimbe in the country's New Britain Provence to boost freight services and protect the area from climate change.
It is the country's third-largest port and the broader area known for its palm oil production.
The loan will finance upgrades to existing facilities along with the demolition and reconstruction wharfs.
It is part of $621m worth of broader port upgrades financed by the Australian Infrastructure Financing Facility.
Minister for International Development and the Pacific Pat Conroy said the government is working to shape a peaceful, stable and prosperous Indo-Pacific.
"With more than 90 per cent of internationally traded goods in Papua New Guinea transported by sea, maritime infrastructure is critical," he said.
"Pacific countries look to us first to support their development and economic needs".
In December 2024, PNG signed a deal keeping Australia as its primary policing and security partner and not break "strategic trust", which locks China out of establishing a security or policing presence.
It came at the same time as Australia committed $600 million over a decade towards an unnamed PNG rugby league team set to take to the field in 2028.
The Pacific nation will celebrate 50 years of independence in September.
The port loan announcement comes days after a Chinese jet dropped flares within 30m of an Australian RAAF aircraft flying over the South China Sea during daylight.
Foreign Affairs minister Penny Wong said the entire Pacific, including the relationship with Papua New Guinea, was a priority for the government.
"Through this project, and the broader Ports Program, we are responding to PNG priorities, and helping our neighbour become more economically resilient and secure," she said.
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