"There was an explosion around 8:45 a.m. (0745 GMT) and a fire", a police spokesman said. This hit is most painful for Italy, where market prices have already more than doubled, but the market reverberations are keenly felt in the United Kingdom, where gas prices have surged to more than 90p a therm from just over 57p last week.
Gas Connect Austria, which operates the Baumgarten site in the east of the country, said the blaze had been brought under control.
The state criminal investigation said a technical defect could be the cause of the tragedy.
Images showed huge flames rising out of the plant - situated 31 miles northeast of the Austrian capital Vienna - which were visible for miles around.
Emergency services attended the gas explosion in Austria, including more than 200 firefighters who tackled the blaze.
Gas Connect Austria said deliveries to Austria's southern and south-eastern borders would be affected until further notice.
The explosion killed one person and injured at least 18 others, prompting Italy to declare a state of emergency as flows from the strategic site were cut off.
Energy Minister Carlo Calenda said that the incident exposed "a serious supply problem".
Slovakia's main gas transit route to Austria was closed following the explosion. Natural gas from Russia, Norway and other countries is taken over there, measured, tested and compressed for onward transport.
The Baumgarten station, Austria's largest entry point for natural gas, receives the product from Russian Federation and Norway for inspection and compression, and then sends it to Austrian and other pipelines.
The Italian wholesale day-ahead price surged 97% to a record high of €47 per megawatt-hour.