The explosion burnt everything within a 20-metre radius.
"You can see the corpses. Some are burnt to ash. Others are remnants ... The estimated number of people who died is between 150 and 200.... The people who died in the inferno are suspected to be pipeline vandals," Lagos police chief Emmanuel Adebayo told reporters.
Silas Mamalgwe, a deputy superintendent of the Nigerian Security and Civil Defence Corps, put the death toll at over 200. "Our team of 25 people arrived the scene at 7.30 am local time (0630 GMT). We have so far not found any survivors. More than 200 people died in the explosion."
Local government workers wearing rubber gloves hauled rigid corpses out of the water and used a makeshift stretcher to carry them up the beach to a shallow mass grave a short distance away.
The pipeline, which belongs to state-run Nigerian National Petroleum Corporation, runs just under the surface of Inagbe Beach, a stretch of sand on one of many islands that dot the Atlantic coast around Lagos. It carries petrol from a large tanker jetty to a distribution depot inland.
Residents in the nearby Nigerian capital, Lagos, said they saw a huge column of thick black smoke rising into the air from the vicinity.
Search for survivors
The Red Cross, at the scene, said the blast did not appear to have left any survivors, "We have been unable to recover any injured person," Secretary General Abiodun Orebiyi told AFP.
"We have combed through the bushes and nearby creeks to see if we can find those injured so that we give them medical assistance.”We have seen none yet. We are appealing to those who may be in hiding to come out for medical attention," he added.
Officials said the positions of the some of the charred bodies indicated frantic attempts to flee the scene before they were engulfed by the flames, its thought that the bodies of victims nearest the pipeline were either turned to ashes or were reduced to skeletal remains.
Fuel thieves
Authorities believe that the victims were siphoning off fuel from the pipeline when it exploded. An AFP correspondent at the scene reported that the unearthed metal pipe had three holes visible, believed to have been used for extracting the fuel.
Red Cross workers also found evidence of theft, "We found at the scene of the explosion about 500 jerrycans which we suspect were used to steal fuel from the pipeline," Mr Orebiyi said.
"The dead were mainly men, for us there is not a lot of doubt, that it was traffickers," Mr Mamalgwe said.
Theft of petrol and crude oil from pipelines is common in Nigeria, Africa's top oil producer where the vast majority of people live in poverty. A police post is situated nearby the site, indicating that the victims may have been siphoning off fuel openly and without police intervention.
"This is caused by hunger and greed. If you've got no job and you're hungry you take advantage of anything to feed your family. Anyone who takes this kind of risk is desperate," said Olanrewaju Saka-Shenayon, a Lagos State government official.
Others speculate that the victims were members of a skilled petrol-theft gang, who know the location of vulnerable pipelines and hire local thugs or police to protect them while they siphon fuel in the dead of night, Saka-Shenayon said.
"The first people to arrive at the scene saw uniformed policemen among the dead. The gangs come with guns and drive away the local community," he said.
History of flames
Pipeline explosions are not uncommon in Nigeria, where close to 2,000 people have died in more than a dozen blasts across the country between 1998 and 2003, according to figures established by AFP.
In the worst single recorded incident in October 1998, 1,082 people thought to have been siphoning off fuel died in Jesse after a pipeline erupted.
A few weeks ago, a community on the northern outskirts of Lagos narrowly averted disaster after petrol gushed freely out of a vandalised pipeline for four days before it was repaired.