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, located 800 miles (1,300 kilometers) south of Algiers, the Algerian capital, and that France must cease its intervention in Mali to ensure the safety of the hostages.
BP, together with the Norwegian company Statoil and the Algerian state oil company Sonatrach, operates the gas field. A Japanese company, JGC Corp, provides services for the facility as well.
In Rome, U.S. Defense 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 cornered the terrorists, who are 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 specter of a possible armed assault to try to free the hostages.
The head of a catering company working on the base told the French Journal de Dimanche that helicopters were flying over the complex and the army waited outside. There were even reports of clashes between the two sides and a member of the militant group told the Mauritanian news outlet they had already repelled one assault by Algerian soldiers late Wednesday night.
It was not immediately possible to rectify the discrepancies in the number of reported hostages. Their identities were also unclear, but Ireland announced that they included a 36-year-old married Irish man and Japan, Britain and the U.S. said their citizens were involved as well. A Norwegian woman said her husband called her saying that he had been taken hostage.
Hundreds of Algerians work at the plant and were also taken hostage in the Islamist attack, but the Algerian state news agency reported they were gradually released unharmed Wednesday in small groups.
The Algerian minister said the militants appeared to be hoping to negotiate their departure from the area, something he rejected. He also dismissed theories that the militants came from across the border in Libya, which is just 60 miles (100 kilometers) away, or from Mali, more than 600 miles (1,000 kilometers) away.
Kabila said the roughly 20 well armed gunmen were from Algeria itself, operating under orders from Moktar Belmoktar, al-Qaida's strongman in the Sahara.
In Washington, U.S. State Department spokeswoman Victoria Nuland confirmed that "U.S. citizens were among the hostages."
The caller to the Nouakchott Information Agency, which often carries announcements from extremist groups, said the kidnapping was carried out by "Those Who Signed in Blood," a group created to attack the countries participating in the offensive against Islamist groups in Mali.
The Masked Brigade was formed by Belmoktar, a one-eyed Algerian who recently declared he was leaving the terror network's Algerian branch, Al-Qaida in the Islamic Maghreb, to create his own group. He said at the time he would still maintain ties with the central organization based in Afghanistan and Pakistan.
The name of his group could be a reference to the nomadic Tuareg inhabitants of the Sahara, known for masking their faces with blue veils.
A close associate of Belmoktar blamed the West for France's recent air and ground intervention against Islamist fighters in Mali.
"It's the United Nations that gave the green light to this intervention and all Western countries are now going to pay a price. We are now globalizing our conflict," Oumar Ould Hamaha told The Associated Press by telephone Wednesday night from an undisclosed location.
French President Francois Hollande launched the surprise operation in Mali, a former French colony in West Africa, on Friday, hoping to stop the al-Qaida-linked and other Islamist extremists whom he believes pose a danger to the world.
Further kidnappings could well be on the horizon, warned Sajjan Gohel, the international security director for the Asia-Pacific Foundation.
"The chances are that this may not be a one-off event, that there could be other attempts in Africa especially north and western Africa to directly target foreign interests," he said. "It's unclear as to what fate these individuals may meet, whether these terrorists are going to want a ransom or whether they'll utilize this for propaganda purposes."
Wednesday's attack in Algeria began with an ambush on a bus carrying employees from the massive gas plant to the nearby airport but the attackers were driven off, according to the Algerian government, which said three vehicles of heavily armed men were involved.
"After their failed attempt, the terrorist group headed to the complex's living quarters and took a number of workers with foreign nationalities hostage," the government said in a statement.
Attacks on oil-rich Algeria's hydrocarbon facilities are very rare, despite decades of fighting an Islamist insurgency, mostly in northern Algeria.
In the last several years, however, al-Qaida's influence in the poorly patrolled desert of southern Algeria and northern Mali and Niger has grown and the group operates smuggling and kidnapping networks throughout the area. Militant groups that seized control of a vast section of northern Mali last year already hold seven French hostages as well as four Algerian diplomats.
Prime Minister David Cameron's office said "several British nationals" were involved, while Japanese news agencies, citing unnamed government officials, said there are three Japanese hostages.
Late Wednesday, Statoil said five employees four Norwegians and a Canadian were safe at an Algerian military camp and two of them had suffered minor injuries. It said 12 employees were unaccounted for.
The Norwegian newspaper Bergens Tidende said a 55-year-old Norwegian working on the site called his wife to say he had been abducted.
Algeria had long warned against any military intervention against the rebels in northern Mali, fearing the violence could spill over its own long and porous border. Though its position softened slightly after Hollande visited Algiers in December, Algerian authorities remain skeptical about the operation and worried about its consequences on the region.
Algeria, Africa's biggest country, has been an ally of the U.S. and France in fighting terrorism for years. But its relationship with France has been fraught with lingering resentment over colonialism and the bloody war for independence that left Algeria a free country 50 years ago.
Algeria's strong security forces have struggled for years against Islamist extremists, and have in recent years managed to nearly snuff out violence by al-Qaida in the Islamic Maghreb around its home base in northern Algeria. In the meantime, AQIM moved its focus southward.
AQIM has made tens of millions of dollars off kidnapping in the region, abducting Algerian businessmen or politicians, and sometimes foreigners, for ransom.
Paul Schemm reported from Rabat, Morocco. Associated Press writers Mari Yamaguchi in Tokyo, Rukmini Callimachi in Bamako, Mali, Bradley Klapper in Washington, Jill Lawless in London, Elaine Ganely in Paris, Jan Olsen in Copenhagen, Denmark, and Shawn Pogatchnik in Dublin contributed to this report.