A violent 7.1-magnitude earthquake struck Papua New Guinea Wednesday, shaking buildings and prompting residents to run into the streets and causing panic in the highlands.

The quake, initially rated at 7.3, hit at a depth of 115 kilometres (71 miles) southwest of the coastal city of Lae and 223 kilometres from the capital Port Moresby, the US Geological Survey said.

Macklyn Timbun, who works as a receptionist at the Lae International Hotel, said she was sitting on a bus when the quake hit and it was so large the driver ran away and the vehicle almost rolled in the upheaval.

"I was like 'Oh my god what's happening?' Everybody started running, people were trying to jump out of the windows, it was the biggest earthquake," she told AFP.

"Outside the hotel everyone was running out of the building because most of the time we never experience such earthquakes in Lae."

Geoscience Australia put the quake at a magnitude 7.2 at 0504 GMT, but said it was not expected to create a tsunami because it was not an undersea rupture.

"That's the assessment on the basis that it's about 20 kilometres inshore and also it's about 120 kilometres deep and that's too deep really to cause any tsunami problems," said seismologist Clive Collins.

Papua New Guinea's earthquake observatory said there were no reports yet of damage but Collins said the tremor could have caused problems for the nearest large town Wau, about 20 kilometres from the epicentre, as well as Lae.

"It's in a mountainous area so there may be issues of landslides and things like that, that's what's the main problem in that particular part of Papua New Guinea," Collins said.

In Wau, a gold mining centre located between Port Moresby and Lae, US missionary Jim Bloom described the quake as "quite a good one".

"The floor started sort of bouncing around a little bit like when a big truck passes nearby, and then the whole building really started shaking and rattling," he said, adding he was not aware of any damage in his area.

"Just a lot of shaking and a lot of noise from the buildings, but we very seldom have damage because most of our buildings are made from timber and steel and so they're very flexible. But the water tanks were sloshing around for about five minutes or six minutes or so afterwards."

Another Lae witness, reached by telephone, said there was no major destruction evident.

"I was standing outside and the buildings shook, the ground shook," he said, adding the quake likely lasted more than a minute.

"We have quakes here regularly but not like this."

Papua New Guinea is regularly rocked by quakes due to its proximity to the so-called "Pacific Ring of Fire", a hotspot for seismic activity due to friction between tectonic plates.

Collins said the impoverished but sparsely populated nation of 6.6 million would likely face aftershocks in the coming hours.

"I'm sure there will be aftershocks with something that big, whether they will be significant or not... it's unknown really," he said.