Saboteurs blew up a pipeline that runs through Egypt's North Sinai and supplies gas to Israel, state television and other sources reported on Saturday.
State TV quoted an official as saying that the "situation is very dangerous and explosions were continuing from one spot to another" along the pipeline.
"It is a big terrorist operation", a state TV reporter said.
A security source said the Egyptian army closed the main source of gas supplying the pipeline.
"The armed forces and the authorities managed to close the main source of flow and are trying to control the fires," the source said.
Israel's National Infrastructure Ministry said it was looking into the incident.
Egypt is a modest gas exporter, using pipelines to export gas to Israel and also to Jordan and other regional states. It also exports via liquefied natural gas (LNG) facilities on its north coast, but those are not in the Sinai region.
State television said the pipeline that was attacked supplied both the Israeli and Jordanian gas lines.
Israel imports 40% of its natural gas from Egypt, in a deal built on their 1979 peace accord.
The SITE intelligence group, which monitors al Qaeda and other Islamist websites, said some groups had been urging Islamic militants to attack the pipeline to Israel.
"Saboteurs took advantage of the security situation and blew up the gas pipeline," a state television correspondent reported, saying there was a big explosion.
Residents in the area also reported a huge explosion and said flames were raging in an area near the pipeline in the El-Arish area of north Sinai.
"Jihadists suggested that Muslims in Sinai take advantage of Egyptian unrest and strike the Arish-Ashkelon gas pipeline, arguing that it would have a major impact on Israel," SITE said.
Site quoted one Islamist website author as saying: "To our brothers, the Bedouins of Sinai, the heroes of Islam, strike with an iron fist, because this is a chance to stop the supply to the Israelites."
Sinai Bedouins have long grumbled about being neglected and have often sporadically clashed with Egyptian security forces. Many Bedouin were rounded up after a series of explosions in Sinai tourists resorts between 2004 and 2006.