By Beatrice Khadige
ALGIERS, Jan 17, 2013 (AFP) -- Algerian troops surrounded Islamists holding foreign hostages at a gas field Thursday, a day after a deadly attack the gunmen said was in reprisal for Algeria's cooperation in French operations in Mali.
Algerian Interior Minister Dahou Ould Kablia, speaking on national television, insisted Algiers would not negotiate with the "terrorists", who he said were surrounded by the army and security services.
The Islamists told Mauritanian media they were holding 41 Westerners at the In Amenas gas field in eastern Algeria near the Libyan border.
Their captives included French, British and Japanese citizens, as well as seven Americans, they said, adding that the action was in response to Algeria's opening of its air space to French warplanes involved in an assault on Islamists in neighbouring Mali.
Kablia said the attackers were "around 20 men from the region", denying reports they had come from either Mali or Libya. The group was led by veteran Islamist fighter Mokhtar Belmokhtar, he added.
One Briton and an Algerian were killed when the Islamists launched their attack at dawn on Wednesday, Kablia said. Six people were wounded: another Briton, a Norwegian and a Scot, as well as an Algerian security agent and two policemen.
French news channel France 24 reported that Malaysian and Filipino nationals were also among the hostages.
Condemning the attack as "cold-blooded murder", British Foreign Secretary William Hague expressed scepticism about claims the raid was retaliation for France's offensive in Mali.
"That is a convenient excuse, but usually operations like this take longer to plan.
"Whatever excuse is being used by terrorists and murderers, there is no excuse. This is the cold-blooded murder of people going about their business," he said during a visit to Australia.
A group calling itself the "Signatories for Blood" claimed responsibility in a statement published by the Mauritanian website Alakhbar.
"Algeria was chosen for this operation to teach (President Abdelaziz) Bouteflika that we will never accept the humiliation of the Algerian people's honour... by opening Algerian airspace to French planes," it said.
The group called for an end to the French offensive.
Belmokhtar was until recently one of the leaders of Al-Qaeda in the Islamic Maghreb (AQIM) but was pushed out of the group towards the end of last year.
Known as "The One-Eyed" -- he wears an eyepatch since losing an eye -- Belmokhtar has been blamed for previous abductions and the killings of both Algerians and foreigners.
The In Amenas gas field, in eastern Algeria near the Libyan border, is jointly operated by British oil giant BP, Norway's Statoil and state-run Algerian energy firm Sonatrach.
A worker at the scene told AFP by phone that the armed group was demanding freedom for 100 Islamists held in Algeria in exchange for the Western hostages.
"The assailants have demanded that these Islamists be taken to northern Mali," he said.
The attack took place at dawn on Wednesday, when armed Islamists targeted a bus carrying oil workers to the In Amenas airport, the interior ministry said. Fought off by security escorts, they took hostages at the gas field's residential compound.
BP confirmed that the gas complex had been attacked at around 0500 GMT.
A Statoil official said 12 employees, including nine Norwegians, had been "implicated" in the hostage-taking, without elaborating. The company said it had just under 20 staff members at the facility.
Statoil said chief executive Helge Lund would give a news conference in Norway Thursday morning.
-- 'Many lives at stake' --
A French catering company said 150 of its Algerian employees were being held at the complex.
"The information I have is that a group of around 60 terrorists from neighbouring countries attacked the base overnight," said CIS Catering's executive director Regis Arnoux.
"They took all the expatriates hostage, regardless of nationality, and tied them up. The Algerian staff are being held inside the site," he told French newspaper the Journal du Dimanche.
The attackers were well armed and well equipped, he added.
Algerian news agency APS said some Algerian hostages had been freed in small groups, but did not say how many. Japanese engineering firm JGC said five Japanese workers were believed to have been seized.
The US State Department confirmed that American citizens were being held and the White House said it was "closely monitoring" the situation.
France launched a major offensive against the Islamists in Mali on January 11 to prevent them from advancing on the capital Bamako.
On Sunday Paris said Algiers had authorised overflights by France-based Rafale fighter jets for the operation there.
Algeria announced on Tuesday it had closed its border with Mali but the 2,000-kilometre (1,200-mile) desert frontier is almost impossible to seal.