Karangasem police chief Bambang Sudarso says Thursday that the "Gili Cat 2" fast boat had more than 40 people including crew on board. He says all the passengers have been evacuated from the boat.
He says the explosion occurred about 200 meters (220 yards) from the port of departure and was preceded by smoke billowing from the engine.
Aside from Germany, the passengers were foreign tourists from Australia, Britain, France and South Korea.
Police are questioning the boat's captain.
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