There are also seven Americans among the 41 people held hostage in a compound where the al-Qaeda-linked group is threatening to detonate explosives.
Algerian forces have surrounded the kidnappers and negotiations for the release of the hostages are ongoing, an Algerian security official based in the region said.
A British expatriate, a French security guard and an Algerian security guard are also reported to have been killed and several others injured when heavily armed terrorists from a group known as the ‘Blood Battalion’ stormed the In Amenas natural gas field in 4x4 cars.
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Terror: A British man was killed in a firefight with the group, believed to be led by veteran jihadist Mokhtar Belmokhtar
British
workers are among at least eight foreigners abducted today by al-Qaeda
militants from the BP-operated Amenas natural gas field (above) field in
Algeria
Among the injured were believed to be two foreigners, two police officers and two security agents.
Around a dozen Britons in total are mixed up in the incident but the rest are hiding out at the oil facility.
British officials are urging caution on the Algerian military amid fears that they will launch a raid to rescue the hostages, a move that could lead to a bloodbath.
Those held captive could now be used as human bargaining chips in the escalating war in Mali.
There are also rumours that the hostage takers fought off a night-time attack made by Algerian troops who tried to rescue hostages, although there has been no confirmation of this.
A spokesman for the interior ministry in Algiers said: ‘Two people, including a British national, died in the attack. Six others have been wounded and others held hostage.’
Targeted: The group attacked plant around 2am, killing a security guard and kidnapping at least eight people, including English, Norwegian and Japanese nationals (file picture)
A militant group has claimed responsibility for the attack saying it was in revenge for Algeria's support of France's operation in Mali, which is also being backed up by supplies from the UK.
A Downing Street spokeswoman said: 'The Prime Minister has spoken with his Algerian counterpart, Prime Minister Abdelmalek Sellal, and was updated on the latest situation on the ground.
'The Prime Minister expressed his sympathy and support for the Algerian Government. They agreed to keep in touch as the situation progresses.'
All of the victims were on a bus in the south of the country near the town of Ain Amenas, which is in the south east of the former French colony, close to the Libyan border.
A gang of terrorists brandishing machine guns, rocket launchers and grenades opened fire soon after dawn, halting the bus, and then moving into the In Amenas gas installation.
The rebels are holding all the hostages inside the plant, which is now surrounded with mines, with the terrorists threatening to detonate them if security forces intervene, said an Algerian diplomatic source based in Paris. There were some reports last night that semtex explosives were strapped to some of the hostages.
He confirmed that the facility was ‘in the hands of the terrorists’ who had demanded the release of 100 Islamists held in Algeria, and that everything was being done to capture them and to free the hostages.
After dark, ANI quoted a militant source saying fighters had repelled a raid by Algerian troops. He added that the hostage-takers' weaponry included mortars and anti-aircraft missiles.
'We
hold the Algerian government and the French government and the
countries of the hostages fully responsible if our demands are not met
and it is up to them to stop the brutal aggression against our people in
Mali,' read one statement from the group.
The group's claim could not be independently substantiated.
Britain has Special Forces and other military personnel in the region and commanders were drawing-up emergency contingency plans for a potential rescue if the situation worsens.
It is understood that the possibility of military action was discussed by the UK, but Algerian officials made clear that they would prefer to resolve the crisis themselves.
But US Defence Secretary Leon Panetta said America ‘will take all necessary and proper steps’ to deal with the ‘very serious matter’.
Hundreds of Algerians work at the plant and were taken in the attack, but the state news agency reported that they have gradually been released, unharmed and in small groups, by the late afternoon.
Typically there would be fewer than 20 foreign staff members on site on a typical day, along with hundreds of Algerian employees.
Many hostages were believed to have been on their way to Ain Amenas airport, from where there are regular flights to Gatwick airport.
Gatwick-based company Jet Air is among those who have now suspended their flights from the UK to southern Algeria.
The British worker and a French security guard are thought to have died in a fire fight after the Algerian Army deployed troops at the scene.
Among the injured were believed to be two foreigners, two police officers and two security agents.
Around a dozen Britons in total are mixed up in the incident but the rest are hiding out at the oil facility.
British officials are urging caution on the Algerian military amid fears that they will launch a raid to rescue the hostages, a move that could lead to a bloodbath.
There are also rumours that the hostage takers fought off a night-time attack made by Algerian troops who tried to rescue hostages, although there has been no confirmation of this.
A spokesman for the interior ministry in Algiers said: ‘Two people, including a British national, died in the attack. Six others have been wounded and others held hostage.’
Targeted: The group attacked plant around 2am, killing a security guard and kidnapping at least eight people, including English, Norwegian and Japanese nationals (file picture)
A militant group has claimed responsibility for the attack saying it was in revenge for Algeria's support of France's operation in Mali, which is also being backed up by supplies from the UK.
A Downing Street spokeswoman said: 'The Prime Minister has spoken with his Algerian counterpart, Prime Minister Abdelmalek Sellal, and was updated on the latest situation on the ground.
'The Prime Minister expressed his sympathy and support for the Algerian Government. They agreed to keep in touch as the situation progresses.'
All of the victims were on a bus in the south of the country near the town of Ain Amenas, which is in the south east of the former French colony, close to the Libyan border.
A gang of terrorists brandishing machine guns, rocket launchers and grenades opened fire soon after dawn, halting the bus, and then moving into the In Amenas gas installation.
The rebels are holding all the hostages inside the plant, which is now surrounded with mines, with the terrorists threatening to detonate them if security forces intervene, said an Algerian diplomatic source based in Paris. There were some reports last night that semtex explosives were strapped to some of the hostages.
He confirmed that the facility was ‘in the hands of the terrorists’ who had demanded the release of 100 Islamists held in Algeria, and that everything was being done to capture them and to free the hostages.
A road sign indicating In Amenas, about 100 km (60 miles) from the Algerian and Libyan border
A
group called the Katibat Moulathamine, or the Masked Brigade, called
ANI, a Mauritanian news outlet, to say one of its subsidiaries had
carried out the operation on the Ain Amenas gas field.After dark, ANI quoted a militant source saying fighters had repelled a raid by Algerian troops. He added that the hostage-takers' weaponry included mortars and anti-aircraft missiles.
HAGUE: SITUATION IS 'EXTREMELY DANGEROUS'
Foreign
Secretary William Hague said the crisis was 'extremely dangerous' and
the Government would be working around the clock to resolve it.
'A number of people are held hostage. This does include a number of British nationals. This is therefore an extremely dangerous situation,' he said.
'We are in close touch with the Algerian government, the Algerian military have deployed to the area and the prime minister has spoken to the prime minister of Algeria.
'We are liaising very closely with all levels of the Algerian government.'
He said that a rapid deployment team had been sent from the Foreign Office to reinforce British embassy and consular staff in Algeria.
The Government's emergency response committee Cobra would continue to meet.
'We will give more details as it becomes possible to do so but obviously it is a very dangerous situation and we cannot give out details very lightly. We will keep people informed,' he said.
Mr Hague said BP was doing 'a good job' keeping the loved ones and families of those involved in the incident up to date.
'The safety of those involved and their co-workers is our absolute priority and we will work around the clock to resolve this crisis,' he added.
'A number of people are held hostage. This does include a number of British nationals. This is therefore an extremely dangerous situation,' he said.
'We are in close touch with the Algerian government, the Algerian military have deployed to the area and the prime minister has spoken to the prime minister of Algeria.
'We are liaising very closely with all levels of the Algerian government.'
He said that a rapid deployment team had been sent from the Foreign Office to reinforce British embassy and consular staff in Algeria.
The Government's emergency response committee Cobra would continue to meet.
'We will give more details as it becomes possible to do so but obviously it is a very dangerous situation and we cannot give out details very lightly. We will keep people informed,' he said.
Mr Hague said BP was doing 'a good job' keeping the loved ones and families of those involved in the incident up to date.
'The safety of those involved and their co-workers is our absolute priority and we will work around the clock to resolve this crisis,' he added.
The group's claim could not be independently substantiated.
Britain has Special Forces and other military personnel in the region and commanders were drawing-up emergency contingency plans for a potential rescue if the situation worsens.
It is understood that the possibility of military action was discussed by the UK, but Algerian officials made clear that they would prefer to resolve the crisis themselves.
But US Defence Secretary Leon Panetta said America ‘will take all necessary and proper steps’ to deal with the ‘very serious matter’.
Hundreds of Algerians work at the plant and were taken in the attack, but the state news agency reported that they have gradually been released, unharmed and in small groups, by the late afternoon.
Typically there would be fewer than 20 foreign staff members on site on a typical day, along with hundreds of Algerian employees.
Many hostages were believed to have been on their way to Ain Amenas airport, from where there are regular flights to Gatwick airport.
Gatwick-based company Jet Air is among those who have now suspended their flights from the UK to southern Algeria.
The British worker and a French security guard are thought to have died in a fire fight after the Algerian Army deployed troops at the scene.
Unfolding:
Lars Christian Bacher, director for international affairs at Norwegian
oil firm Statoil, gives a news conference in Stavanger, Norway today
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