There have been no immediate reports on any casualties caused by the blast.
A large number of security personnel were deployed at the scene of the explosion, cordoning off the area and searching for possible explosives that had not been detonated.
Egypt has been fighting Islamist militants in Sinai for several months now. The collapse of the former Egyptian regime and the deterioration of security conditions in Egypt have created a security vacuum in the desert peninsula exploited by armed militants seeking to launch attacks both against Egyptian and Israeli forces.
Moscow: A powerful explosion on the Egyptian side of the town of Rafah divided between Egypt and the Gaza Strip destroyed a part of a building used by Egyptian intelligence, Al Arabiya reported Sunday.
First Published: Sunday, November 25, 2012, 15:53