From the middle of next month, Bougainville will be entitled to hold a vote on breaking from Papua New Guinea and becoming a nation on its own. There is a bloody history. A separatist conflict in the 1990s saw as many as 20,000 people killed. But a peace deal that put off a decision on independence for a decade is fast running out.

Port Moresby is becoming acutely sensitive about it, demonstrated by an ugly spat with the Abbott government this month that saw Australians banned from the island.

Here are four things to watch in the months ahead as Bougainville decides its future.

Cocktails in Buka?

Foreign Minister Julie Bishop has made two trips to Bougainville, and revealed this month in the federal budget plans for Australia to open a new diplomatic post at Buka, the capital of the province. Trouble is, it seemed no one thought to tell the government in Port Moresby.

PNG's leaders quickly branded Australia's plans "outrageous" and "mischievous", then retaliated by banning Australians, including diplomats, from visiting the island.

Bougainville isn't exactly a tourist destination, so the ban had little practical effect. It also appeared doubly unfair, because Bishop insisted Australia did consult with Port Moresby before going public.

The two countries agreed at the weekend there was a communications "misunderstanding" and have agreed to move on.

The proof will be if Australia does actually send in more diplomats

Back to the future

Australia has good reason to want to pay close attention. Bougainville won the right to govern its own affairs within PNG under the terms of a 2001 peace deal. But that wasn't the end.

The deal also included a clause for Bougainville's people to vote on eventual independence no sooner than 10 years after the first autonomous government was elected.

That happened on June 15, 2005 – which means from next month the decade-long wait will be over.

That doesn't necessarily mean a decision right away. But under the explicit terms of the peace deal, a five-year countdown will now begin where the people of Bougainville must be give the chance to vote for independence.

The vote veto?

But here is the sting. The national parliament in Port Moresby has the final say, regardless of the referendum outcome.

The peace deal includes a clause for "ratification" and PNG's Prime Minister Peter O'Neill insists Bougainville is an essential part of his country.

At one time the massive Panguna copper mine on Bougainville made up almost 20 per cent of the nation's income. Rio Tinto ran Panguna in the 1980s and mismanagement of the mine was the major source of strife on the island. The future of the mine is still hotly contested, with some seeing a potential boon for a newly independent nation, while plenty of locals are opposed.

PNG has since gained other sources of income, but O'Neill has effectively declared Bougainville will never be independent on his watch.

Australia climbs off the fence?

Any veto of the referendum might lead Bougainville to make a unilateral declaration of independence, and no one quite knows where that might lead.

The moral power of a "yes" vote would be impossible to ignore.

Which brings Australia back into the picture. Having just ended a decade-long, $2.6 billion intervention in neighbouring Solomon Islands, Australia won't welcome the prospect of another tiny and fragile nation on the doorstep. And by relying on PNG to resettle refugees, the Abbott government doesn't want to get Port Moresby offside.

But Australia is also backing a peace process that could well see Bougainville chose to become independent. Some time soon Australia will have to declare a hand.

This issue looms as a big test for Julie Bishop, the hard part only just beginning. She once stirred Kevin Rudd during Labor's leadership wars by asking in question time when he would "return to Bougainville".

She might find herself spending a fair bit of time there, too.