In the city of Lagos, people saw thick black smoke rising from the site of the blast at the oil pipeline not far away.
It is thought the victims were stealing fuel from the pipeline
Resident Trevor Ward told the BBC news website the smoke looked like a "dark rain cloud".
"I could see the smoke rising, black as black, from what I guessed was an oil fire somewhere," he said
On Atlas Creek Island, where the pipeline crossed the beach, all that was left were charred corpses, ash and bones.
The explosion incinerated everything within a 20m radius. Only skulls and bones remained of the five people closest to the blast.
Officials described scores of blackened, unidentifiable corpses.
"Some are burnt to ash. Others are remnants," Lagos State Police Commissioner Emmanuel Adebayo said.
French journalist Emmanuel Goujon told the BBC's Newshour programme it was a terrible scene.
"There were dozens of bodies burnt beyond recognition, some of them completely burnt. You can just see the skull of the head, that's all," he said.
Reports described bodies floating in the water, some underneath a boat which had also been destroyed in the explosion. The sand was said to be steaming hot.
"From what I have seen offshore when I was coming in, it is very, very bad, it is disastrous," one eyewitness said.
Rescue workers lifted bodies out of the water and put them on makeshift stretchers as they took them up the beach to a shallow grave.
Search for injured
The Secretary General of the Nigerian Red Cross, Abiodun Orebiyi, told the AFP news agency they had not found any people injured in the blast.
Government and rescue officials arrived at the site of the blasts
They were appealing for people who might be hiding to seek help, he said.
"We have combed through the bushes and nearby creeks to see if we can find those injured so that we give them medical assistance," he said.
One witness, Harrison, told the BBC news website he arrived at the scene about four hours after the explosion.
"The whole place was littered with charred remains of humans," he said. "I'd never seen something like that my entire life.
"This is another national disaster that will leave an indelible mark in the minds of relatives of the victims. My heart goes out to them."