When Anthony Albanese landed in Papua New Guinea for celebrations marking 50 years of independence this week, he was expecting to sign a landmark mutual defence agreement and designate the one-time colony as a formal ally of Australia.

Instead, despite insisting the text of the agreement had been approved, the prime minister left Port Moresby on Wednesday with only a 300-word joint communique signed with his counterpart, James Marape.

Exactly why the defence agreement, known as a Pukpuk treaty, fell over with Marape’s cabinet isn’t clear.

Ministers reportedly have concerns about PNG’s sovereignty under provisions in the deal, and China’s expansionist approach is shifting relationships across the Pacific region. The PNG defence minister, Billy Joseph, suggested external players were trying to crash the agreement this week.

Even the promise of a PNG rugby league team competing from 2028 was not enough to close the deal.

Both prime ministers will be racing to save the agreement, a week after a similar plan with Vanuatu was delayed because ministers there want the power to sign infrastructure deals with Beijing.

But, whatever the hold up, the latest blow to the government’s Pacific strategy might not be the serious foreign policy embarrassment the Coalition claims.

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The Lowy Institute’s Pacific Islands program director, Mihai Sora, said the situation might be more complex than Albanese anticipated but a deal could still be reached. He told Guardian Australia that exclusivity requirements in security and critical infrastructure would always be sensitive for newly independent Pacific countries.

“Both Prime Minister Marape in Papua New Guinea and Prime Minister Jotham Napat in Vanuatu were fully intending to sign these finalised agreements. They’ve both been telegraphing for the better part of a year that momentum was behind signing the deal,” he said.

“They’re all onboard, but not necessarily everybody within their political system is with them. It looks like Prime Minister Marape was as blind-sided by the last-minute lack of endorsement as Prime Minister Albanese was.”

Sora said Albanese, with the assistance of the foreign minister, Penny Wong, should continue to press the case, especially since Marape clearly stated Australia remained PNG’s security partner of choice.

“I think the reality is that until you get that final signature on the final document, everything is still under negotiation.”

Marape was at pains to point out PNG had sought the agreement with Australia, not the other way round. He revealed he goes to sleep at night worrying he could not defend his citizens in the event of a military attack.

Albanese stressed that unlike under authoritarian regimes, democracies run on proper process and things take time.

The former US deputy secretary of state Kurt Campbell has warned China is out to frustrate and sabotage Australia’s Pacific efforts, including blocking initiatives like joint agreements.

“The politics of the Pacific are increasingly contested, and the great game is afoot,” he told the National Press Club in Canberra this week.

“What Australia has done in a comprehensive fashion in PNG, beginning with sport, looking at training, and then also focusing on security, I think is ingenious and important.”

The Pacific minister, Pat Conroy, was calm about the delay on Wednesday. Respected by governments across the region, Conroy stressed ministers in Port Moresby knew the value of a formal alliance with Australia.

Currently only the US and New Zealand share that status.

“We have been open and transparent. We hit a logistical delay,” he said.

The Australian National University Pacific fellow Henry Ivarature said he did not expect the deal to be completed before the end of 2025, but the situation was a long way from a foreign policy disaster.

“In Australia we tend to rush things, but when you’re dealing with Melanesian states, negotiators from Australia should always keep in mind that there will be delays.

“But we keep on talking. I think once they get across the line, they’ll be very successful in dealing with Pacific Islanders.”

Tom McIlroy is Guardian Australia’s political editor