A thick plume of black smoke could be seen rising from the fire from kilometres away on Thursday night, said our reporter.
Houses and cars were already burning and the flames were about to engulf two schools, he said.
Residents of the neighbourhood were clearing out their houses, desperately trying to save some possessions before the fire spread to their homes, says our correspondent.
Nigeria is one of the world's major oil producers and pipelines cut through many residential areas, both in cities such as Lagos and in oil-producing areas.
Several of these have exploded, often when local people cut holes in them to steal oil.
The Nigerian National Petroleum Corporation (NNPC) says there at least 400 acts of vandalism on its pipelines each year, reports the AP news agency.
At least 40 people were killed in a pipeline explosion in December in Lagos last year.
In 2006, some 400 people were killed in two blasts in Lagos.
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