Mohammed al-Ajami, a spokesman for the Kuwait National Petroleum Company, said on Saturday that the blast took place at Shuaiba, just south of Kuwait City, at 1.30 p.m. local time (1530 GMT) in an oil pipeline.
He said there were no casualties. But Dubai-based Al Arabiya television had earlier reported that there were some casualties.
The installation was gradually closed down, but the fire, which al-Ajami described as serious, had not been brought under control.
Al-Ajami said terrorism was not believed to be the cause for the blast. He also said that an investigation was under way to determine the reasons for the incident, which are currently believed to be technical.
At the time of the explosion there were more than 800 people at the facility, all of whom have been evacuated since, he said.
Kuwait currently has three refineries at Al-Ahmadi, Mina Abdullah and Shuaiba, which have a combined refining capacity of 915,000 barrels per day (bpd).
Kuwait plans to modernise the first two refineries at an estimated cost of $3 billion and the project is expected to complete in early 2011.
This small state on the western shore of the Persian Gulf pumps around 2.6 million bpd of oil.