Authorities in Bali said two foreign tourists died after an inter-island speed boat exploded on the water.
The Gili Cat 2 boat had just left Padangbai, East Bali, heading to Gili Trawangan, when it exploded.
Karangasem district police chief Sugeng Sudarso said the boat was carrying 40 passengers and crew and about 20 were injured, some seriously.
The dead were thought to be foreign tourists from Germany and Austria.
The cause is still under investigation but a leaking fuel tank or a short circuit in the battery is suspected, Sudarso said.
"Based on the testimony (from passengers) and from what I saw at the scene, the explosion came from the fuel tank," he said.
"Above it was a battery. Maybe there was a short circuit that affected the fuel tank."
"One of the passengers died from bad injuries after being hit by boat debris that also caused injuries to others," he said.
The Gili Cat ticket office in Gili Trawangan where the boat was due to arrive.
The passengers were predominantly foreign tourists from the UK, France, Italy, Portugal, Ireland, Holland, Austria, Germany and Spain.
Gili Cat has so far declined to comment.
Fears have been raised in recent years over safety standards as more operators have entered the market.
Intense competition has seen fares fall by nearly half since the first speed boats began plying the popular sea route nearly a decade ago.
In June 2015, a Wahana Gili Ocean vessel exploded off the coast of Lombok due to a suspected fuel leak injuring several passengers, and earlier this year a boat operated by Marina Srikandi sunk off the east coast of Bali.
