Scanty information given by officials and witnesses suggests that the explosion occurred inside a ship at a jetty and then led to fire afterwards.
Ibrahim Farinloye, an official of the National Emergency Management Agency, said a Nigeria-owned oil tank MRS wanted to receive fuel from the ship when the explosion occurred.
He said four people were wounded after the blast and efforts were being made to put off the fire.
Apapa has many jetties where fuel importers bring in their products and later transfer them to tank farms for delivery to vehicles that convey them to different parts of the country.
Nigeria is Africa's largest producer of oil but lacks refineries. It exports crude and then import the refined products from other countries.
Yesterday, fire gutted a part of Lagos where wood houses, mosques, motels and churches are built with wood close to each other giving it the look of a slum.
An eyewitness said the fire at Ebute Metta started in the morning and ravaged houses and damaged electric transformers and poles.
"Viewed from the third mainland bridge, the fire could be seen ravaging a place known as the Slums of Sawmills in Ebute Metta area," the eyewitness said. Residents of the area are mainly very poor people.
Fire occurs frequently in Nigeria during dry season which starts in November and ends around March.
Several incidents of fire have been witnessed since the onset of this dry season including fire outbreaks at the Murtala Muhammed International Airport in Lagos and the residence of former president of the country, Olusegun Obasanjo in southern city of Abeokuta.