In a desert standoff deep in the Sahara, the Algerian army ringed a natural gas complex where Islamist militants hunkered down with dozens of hostages Wednesday night after a rare attack that appeared to be the first violent shock wave from the French intervention in Mali.
A militant group that claimed responsibility said 41 foreigners, including seven Americans, were being held after the assault on one of oil-rich Algeria's energy facilities, 800 miles from the capital of Algiers and 1,000 miles (1,600 kilometres) from the coast. Two foreigners were killed.
The group claiming responsibility said the attack was in revenge for Algeria's support of France's military operation against al-Qaida-linked rebels in neighbouring Mali. The U.S. defence secretary called it a "terrorist act."
The militants appeared to have no escape, with troops surrounding the complex and army helicopters clattering overhead.
The group, called Katibat Moulathamine or the Masked Brigade, phoned a Mauritanian news outlet to say one of its affiliates had carried out the operation at the Ain Amenas gas field, and that France should end its intervention in Mali to ensure the safety of the hostages.
BP, the Norwegian company Statoil and the Algerian state oil company Sonatrach, operate the gas field. A Japanese company, JGC Corp, provides services for the facility as well.
In Rome, U.S. Defence Secretary Leon Panetta declared that the U.S. "will take all necessary and proper steps" to deal with the attack in Algeria. He would not detail what such steps might be but condemned the action as "terrorist attack" and likened it to al-Qaida activities in Pakistan, Afghanistan and in the United States on Sept. 11, 2001.
Algeria's top security official, Interior Minister Daho Ould Kabila, said that security forces have surrounded the area and they have the terrorists cornered in one wing of the complex's living quarters.
He said one Briton and one Algerian were killed in the attack, while a Norwegian and two other Britons were among the six wounded.
"We reject all negotiations with the group, which is holding some 20 hostages from several nationalities," Kabila said on national television, raising the spectre of a possible armed assault to try to free the hostages.
UPDATE: 7:03 PST
Islamic militants have told a Mauritanian news outlet that 35 hostages were killed but seven are still alive after Algerian military helicopters strafed a gas complex deep in the Sahara.
The spokesman for the Masked Brigade, which claimed responsibility for the attack Wednesday on the Algerian gas plant, said Thursday the survivors included three Belgians, two Americans, a Briton and a Japanese citizen.
The information came from the Nouakchott Information Agency, which often carries reports from al-Qaida-linked extremist groups.
The militant spokesman said the kidnappers were attacked by Algerian helicopters as they tried to leave the complex.
Algeria's news agency, citing local police, said four foreign hostages were freed in the operation.
The Algerian government would not immediately comment and the Associated Press could not confirm the information independently.