At 12.46am on Tuesday, security cameras at the Sky Garden nightclub in Kuta captured the 18-year-old casually walking up to two security guards who were stationed at the front of the club.

The Perth resident raises his arms slightly, so one of the guards can pat him down.

It was a routine body check, the nightclub management said in a statement, but what allegedly followed was far from ordinary.

In the footage, Mr Murphy appears to unzip the bumbag he is wearing so the security guard can search it.

The guard appears to pull an object from the bag and show it to Mr Murphy, before another security guard joins them.

Mr Murphy is shown gesturing with his arms, before he is led away.

In a statement to Fairfax Media, Sky Garden management said the security guards discovered a white plastic bag containing a white powder that they suspected contained narcotics.

"Our security escorted the western male to meet the security chief on the second level; the security chief then instructed our security staff to bring him to the mobile police station located at the Bali Monument."

That mobile police station is less than 50 metres from the nightclub, and staff walked him there.

"Upon arriving at the mobile police station, our security were ordered to reenact the sequence of events that had transpired; at this time news media were already stationed [at the location]."

Mr Murphy was then taken to a nearby police station for further questioning, according to the statement.

"Our policy is to inspect all guests for weapons and drugs, in order to prevent anyone from passing them on to innocent [or] unsuspecting victims," the club's management said.

"On a final note, we are deeply saddened by last night's events and we want to ensure all the parents at home in Australia that their children's safety is our top concern.

"We have faith that the local police will conduct a fair investigation.

"We hope for a quick and peaceful resolution to this matter."

Kuta Police Chief Commissioner Wayan Sumara said officials were yet to confirm what the white powder was.

"The evidence is still being tested," Mr Wayan said.

Foreign Affairs Minister Julie Bishop said Mr Murphy could be held for three days while an investigation took place and another three days while a decision was made about whether or not to arrest him.

Australian consulate staff visited Mr Murphy for about 20 minutes on Wednesday morning. They made no comment.

Mr Murphy's parents are expected to land in Bali at 11.35am local time (2.30pm AEDT).