The sabotage by unidentified armed men on the pipeline operated by Royal Dutch Shell also caused a major oil spill and fire in the remote southern Niger Delta, the company said on Tuesday.
"The attack was very devastating ... the whole community has been razed down by the explosion. Eight corpses have been recovered so far and many more are still missing," Monwan Etete, chairman of Andoni local government area, said in the Rivers state capital, Port Harcourt.
Shell closed two oilfields to help curb the fire and said that 170,000 barrels per day (bpd) of oil output had been "deferred". The company originally said in a statement that only 170 bpd were affected.
"The fire may have been caused by a dynamite attack carried out by unknown persons," Shell's statement said.
Video footage showed flames as tall as a four-storey building from a slick on the water's surface.
Villagers were seen paddling to safety in dugout canoes.
The pipeline blast followed shortly after two other security incidents at oil and gas installations in the delta, which pumps almost all of Nigeria's 2.4 million bpd, Shell said.
Nigeria pumps 2.4 million barrels
of oil per day
An unknown armed man attacked a security post in the nearby Cawthorne Channel field, and there was another attempted attack on a tugboat servicing the liquefied natural gas plant at Bonny.
A senior oil industry official, asking not to be named said "this seems to suggest coordinated attacks, but it's difficult to be conclusive about it".
The violence could be linked to the downfall of the former governor of neighbouring Bayelsa state, who is due to face money-laundering charges on Wednesday, or to frustration by oil thieves who have seen their activities curtailed by security forces recently, the oil industry official added.
Industry officials estimate that large-scale crude oil theft has dropped from 100,000 bpd earlier this year to about 20,000 bpd recently because of a heavier military presence in the vast wetlands region.
"What is clear is that this was sabotage with malicious intent," the source said.