It aims to establish a framework where technical and scientific information can be shared to further geoscientific research, and covers areas like air transport arrangements, worker exchange, education and training, along with petroleum and energy.
The MOU was signed by PNG's Mineral Resources Authority (MRA) and Indonesia's Geological Agency in Bandung West Java, and will be in effect for five years.
MRA managing director Philip Samar said he was excited about working with his Indonesian counterparts.
"Our countries are hosts to some of the largest untapped mineral resources in the world," he said.
"By cooperating with each other and sharing knowledge, skills and geodata, we can transform these resources into tangible benefits for our respective countries."
Geological Agency head Dr Surono said the broadening geoscientific relationship with PNG would promote mineral wealth of both countries.
Under the MOU, there would be the exchange of scientific information and technical staff, participating in joint research, the provision of training for research fellows, as well as joint workshops, conferences, lectures and other collaborative activities.
Areas such as geological mapping methodology and application, geophysical research, hazard and environmental studies and capacity building have been initially identified as fields in which both PNG and Indonesia would engage in.