Major hydrocarbon discoveries have been made in eastern and westernmost New Guinea, and there is great potential for additional discoveries. Although the island is a type locality for arc-continent collision during the Cenozoic, the age, number, and plate kinematics of the events that formed the island are vigorously argued. The northern part of the island is underlain by rocks with oceanic island arc affinities, and the southern part is underlain by the Australian continental crust. Based on regional sedimentation patterns, it is argued herein that the Cenozoic tectonic history of the island involves two distinct collisional orogenic events.

The first Cenozoic event, the Peninsular orogeny of Oligocene age (35–30 Ma), was restricted to easternmost New Guinea. Emergent uplifts that shed abundant detritus resulted from the subduction of the northeastern corner of the Australian continent beneath part of the Inner Melanesian arc. This collision uplifted the Papuan ophiolite and formed the associated mountainous uplift that was the primary source of siliciclastic sediments that largely filled the Aure trough. Between the Oligocene and Miocene, the paleogeography of the region was similar to present-day New Caledonia. The continental crust under central and western New Guinea remained a passive margin.

The second event, the Central Range orogeny, began in the latest middle Miocene, when the bulldozing of Australian passive-margin strata first created emergent uplifts above a north-dipping subduction zone beneath the western part of the Outer Melanesian arc. The cessation of carbonate shelf sedimentation and widespread initiation of siliciclastic sedimentation on top of the Australian continental basement is dated at about 12 Ma. This collision emplaced the Irian ophiolite and created the present mountainous topography forming the spine of the island.