There have been no reports of any deaths at the Malm Orstad premises, located beside the regional milking plant of dairy producers Tine.
“It was chaos there,” witness Magnar Larsen told VG Nett.
“Some were in shock, while others ran around screaming.”
The mid-morning fire hit the mechanical parts factory for a key supplier to Norway’s oil and gas industry, much of which is headquartered in Stavanger.
The company’s web site suggests a new welding machine had just been in “full swing” and an order had come in for the offshore oilfield Katla.
Apart from welding, which uses the explosive gas acetylene, the company also fabricates a wealth of specialist equipment and parts for energy companies and their suppliers.
According to local newspaper Stavanger Aftenbladet, Malm Orstad staff were testing equipment when the explosion occurred.