The blast happened just before 4.30pm in Baldrans near Tui in the province of Pontevedra in Galicia, north west Spain.
Seven children are among the casualties - and it's feared some of those injured could be serious.
The blast is said to have shattered windows of properties in a 2.5 mile radius, destroying several homes.
Police explosives experts have been sent to the scene to try to avert any more explosions.
Distressing TV footage showed plumes of smoke rising into the air and locals running around in panic among debris scattered over the ground. Firemen were checking the area house by house to look for people hurt or killed in the incident, emergency services said.
One local known only as Sonia told radio station Radio Galega: “It was horrible. We were watching the TV and suddenly I heard a really loud noise.
“The house came down on top of us. I didn’t know whether to help my son or my daughter first but then I saw the girl’s hair and shirt was on fire.”
Carmen Alen, whose house in Paramos near Tui was also virtually destroyed, told a local paper: “We thought it was the end of the world. Everything began to burn.”
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