Workers were dismantling an oil tanker in Gadani when a gas cylinder exploded, causing the ship to catch fire.
Some 59 workers were badly burned and many people reportedly jumped overboard to escape the blaze.
“We have recovered at least 11 bodies so far,” senior local official Zulfiqar Ali Shah told the AFP news agency.
Emergency services are struggling to contain the fire and it is feared that the death toll will rise further. It is unclear how many people were aboard the ship when the explosion occurred.
Prime Minister Nawaz Sharif has expressed “deep sorrow” over the incident.