More than 100 missing feared trapped in PNG ferry

So far, 246 people have been plucked to safety in a joint rescue operation conducted by PNG and neighbouring Australia after the MV Rabaul Queen sank on Thursday morning.

Australia's Maritime Safety Authority (AMSA) said the ship went down about nine nautical miles off the coast and the survivors reached the eastern town of Lae in the early hours of Friday morning.

"Updated reports from the five rescue vessels indicate there were approximately 246 survivors recovered Thursday," AMSA said.

"PNG officials are processing the survivors on arrival in Lae."

It said three merchant vessels remained on the scene searching, assisted by two Australian planes and two local helicopters.

But rescue co-ordinator Captain Nurur Rahman told AFP high winds and big seas were making it difficult.

"The winds have picked up and the seas are rough, making it very hard to see anything other than white-cap waves," he said, but added that the sea temperature was warm "which makes the possible survival times longer".

Another rescue official, Rony Naigu from PNG's National Maritime Safety Authority was quoted by Australian broadcaster ABC as saying about 100 people were thought to have been trapped inside when the ship went down.

He said it was hit by three large waves and quickly sank.

A third maritime official told AFP no new survivors had been found on Friday.

A passenger on board, Philip Batari, updated his Facebook page during the voyage, saying: "Having a rough time at sea on board Rabaul Queen," posting photos showing wild seas.

He last post read: "Bloody experiencing the worse moment of my life." It is not clear what happened to him.

PNG-based Rabaul Shipping, the owner of the vessel, said it lost contact with the MV Rabaul Queen while it was travelling between Kimbe and Lae.

In a statement, it said there were 350 passengers and 12 crew onboard the Japanese-built vessel. Rahman said it was licensed to carry 310.

The passengers were PNG locals, many students studying at Lae, the ship's final destination and home to a large university.

"We are stunned and utterly devastated by what has happened," Rabaul Shipping managing director Peter Sharp said amid reports that the company's office in Kimbe was pelted with rocks by frustrated relatives of passengers.

"We acknowledge that this has caused tremendous suffering. Our condolences go to the loved ones of those affected."

ABC said local staff of the company in Kimbe had to be evacuated by police to a secret location as scenes turned rowdy with no news filtering through on what had happened.

The company said it remained unclear why the ship sank.

"It's understood that the ferry captain had routine radio contact with another vessel not long before sinking," it said.

"There appeared to be no indications of distress during this communication."

It said they became aware something was wrong early Thursday when the ferry failed to appear on a satellite tracking system.

The company alerted AMSA, which coordinated with PNG's National Maritime Safety Authority and vessels in the area were diverted to the ferry's last known position.

The ferry had travelled the route on a weekly basis for 11 years without incident and underwent a dry dock service in November, Rabaul Shipping added.

Before plying routes in PNG, it operated on shorter runs in Japan.

PNG Prime Minister Peter O'Neill has ordered an immediate investigation.