The nightmare in Bali is over for Perth teenager Jamie Murphy as he walks free from jail.

The nightmare is over for Australian teenager Jamie Murphy who has been released from a Bali police station after the suspicious white powder he was found carrying proved to be nothing more than painkillers.

The 18-year-old Perth school leaver was arrested in the early hours of Monday morning at Sky Garden nightclub in Kuta after the substance he was said to be carrying was confirmed as nothing more than a mix of painkillers, cough medicine and caffeine.

Blood and urine tests on Murphy also came back negative for illicit drugs.

Sky Garden Management has now apologised for their handling of the teenager’s arrest and reprimanded one of their security officers — who was photographed aggressively grabbing Murphy’s face while holding him by the neck — for using ‘excessive force’.

The nightclub has apologised for security using 'excessive force'. Source: Nine News

"We would like to extend a sincere apology to Jamie, his family and friends. Our company procedure is to hand over suspects peacefully to police if we feel they’ve committed a crime at Sky Garden," they wrote in a statement.

"We have reprimanded the security in question and he will not be permitted to come back to work until he has completed and passed another round of police security training."

They added that in the officer's defence he had been ordered to hold the young man's face up by police.

"We feel he used too much ‘excessive force’ which is clearly unacceptable under the circumstances," they said.

The statement ended by wishing everyone a "safe and trouble-free 2016 Schoolies Celebration".

Murphy has now been released from the Bali police custody and reunited with his worried mum and dad who flew to be with him overnight.

As he left the police station after two nights he was asked if he was happy the ordeal was over, he simply said "yep".

If the drugs had proved to be heroin or cocaine he faced up to 12 years in an Indonesia prison.