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Members of the Papua New Guinea Defence Force have fired about 100 shots into the Manus Island detention centre, it's claimed, leaving asylum seekers 'extremely frightened'.
Military officers stationed at the Lombrum Naval Base, next to the detention centre, began shooting into the complex between 6.30pm and 7pm while asylum seekers hid in their rooms, Ian Rintoul of the Refugee Action Coalition says.
Security workers and some Australian staff are understood to have fled the compound, and boarded a ship.
Unconfirmed reports suggest a fight broke out between asylum seekers and military officers on the soccer field. When the refugees returned to the compound, their opponents followed to continue the argument.
Mr Rintoul says the attackers were originally armed with rocks and knives, but were not able to gain entry to the compound and used guns instead.
While it is believed the shooting has stopped for now, Mr Rintoul says those living in the compound are frightened escalating tensions could lead to another incident similar to that which resulted in the death of asylum seeker Reza Berati in 2014.
'People are extremely frightened, because this raises the spectre of the kind of attack in 2014 that resulted in the death of Reza Berrati,' Ian Rintoul of the Refugee Action Coalition told Daily Mail Australia.
'It reveals how vulnerable people on Manus are and how tenuous the situation is - even after three and a half years it's an extremely volatile situation.'
A man who has been on Manus Island since 2013 told Daily Mail Australia the fight originated when some drunk Navy officers tried to kick the detainees off the soccer field.
He said it soon turned into a fight with more locals getting involved, and a Sudanese asylum seeker was beaten up. As other detainees realised the man was being hit, they ran in to help him.
When locals began throwing stones, the asylum seekers escaped back to the camp. Locals began throwing stones over the fence, and the asylum seekers threw them back, the man said.
A Navy car driving past stopped so its passengers could talk with people throwing stones, he claimed.
They sped off and soon came back with more people, who were armed with 'guns, machetes and sticks', he said.
The detainee, who wished not to be named, said Wilson Security guards were also under attack during the incident, but when they escaped the Navy officers blocked the road.
'[PNG Navy personnel] tried to break the lock of Oscar camp on the main gate,' he said.
'It was so scary. Some people were so scared and shocked, and some were crying as the locals started shooting.
'But before this happened, they had evacuated all of the staff in the camp, so it was only us.
'That's much scarier – when you see they are all escaping and leaving you behind and at the same time you know you're being attacked.'
The man said officers were shooting for more than 20 minutes, and at times were aiming directly at the fence of the compound.
'If they saw anyone outside, they would aim at them,' he said.