Algiers, Algeria (CNN) -- Algerian authorities confirmed an "ongoing operation" to deal with the seizing of foreign hostages at a gas installation in Algeria, the British Foreign Office told CNN Thursday.

But the Algerian government rejected a demand from the Islamist militants who seized Westerners at the plant for safe passage to nearby Libya, as fallout from the French offensive in neighboring Mali reverberates globally.

"The authorities do not negotiate, no negotiations," Algerian Interior Minister Diho Weld Qabliyeh said on state television after confirming the demands Wednesday night.

"We have received their demands, but we didn't respond to them."

The BP gas field is 60 kilometers (40 miles) west of the Libyan border and 1,300 kilometers from the Algerian capital, Algiers.

The militants said they carried out the operation because Algeria allowed French forces to use its air space in attacking Islamist militants in Mali. Media in the region reported that the attackers issued a statement demanding an end to "brutal aggression on our people in Mali" and cited "blatant intervention of the French crusader forces in Mali."

The fallout escalated after rebels kidnapped the Westerners, dragging governments beyond Africa into the region's conflicts and insecurity.

During the attack on the gas plant in the desert, kidnappers killed two people -- an Algerian and a British national, the Algerian Press Service reported. Hostages included Americans, Japanese and Britons, according to officials from those nations, who did not provide the number of people seized. The group kidnapped Algerians as well, but they were all released Wednesday, the interior minister told state media.

"The situation on site remains unresolved and fragile," BP said in a statement. "Armed groups still occupy the site and hold a number of site personnel. "

The rush of events sent governments scrambling to account for workers in the region.

Japan and the United Kingdom sent officials to Algeria to get the latest information. Ireland said there were reports that one of its citizens was involved. French President Francois Hollande confirmed the presence of French citizens at the site but would not say if any of them were hostages.

"I will not give any precision on the number of French citizens who could be held hostage. What counts now is to allow the Algerians to free them," Hollande said.

The U.S. State Department said it is still working to determine how many citizens were involved. American hostages could be as few as three, two U.S. officials said Wednesday.

A U.S. rescue attempt would require the permission of the Algerian government, and it has not yet made a request for American help, a U.S. official told CNN Thursday.

So far, the crisis is viewed as an "internal situation for Algeria," said the official, who emphasized that Algerian security forces have successfully handled internal threats.

The United States has been working through the Algerians to help resolve the crisis. There is not yet enough information to understand the situation on the ground, the official said.

"It's too early for us to do anything," he said, adding that more solid information is needed on the situation.

Algeria's state media reported that all its nationals who had been held hostage were free: some had fled, while others were released.

All the hostages still detained are foreigners, the interior minister said.

The man behind the group claiming responsibility for the attack and kidnappings is a veteran jihadist known for seizing hostages.

Moktar Belmoktar, an Algerian who lost an eye while fighting in Afghanistan in his teens, has long been a target of French counter-terrorism forces. Libyan sources said he spent several months in Libya in 2011, exploring cooperation with local jihadist groups and securing weapons.

The attackers put the number of hostages at "more than 40," including seven Americans, two French, two British and other Europeans. Another Islamist group told the Mauritanian News Agency there were 41 "Westerners."

However, the Algerian Press Service reported that "a little more than 20 foreign nationals are held hostage."

U.S. Defense Secretary Leon Panetta, in Europe meeting with NATO allies, called the incident in Algeria "a terrorist attack."

As world powers scramble to limit the fallout, the United States is reviewing requests for support from the French in their operation in Mali, but no decisions have been made on specifics, said State Department spokeswoman Victoria Nuland.

Last week, French troops and warplanes joined Malian government forces to battle Islamist militants, who have seized most of the African nation's northern region.

France, the former colonial power in Mali, said it has committed about 1,700 troops to Operation Serval, including about 800 on the ground there.

Europe's largest powers appeared united in their goal of removing al Qaeda-linked militants from the West African nation, where Islamist rebels are fighting to form their own territory in the north.

Nations have pledged to contribute transport planes, including Germany, Belgium and Canada. Others, such as Italy, are promising "logistical support" for the operation.

European Union foreign ministers Thursday agreed on a mission to train Mali's army, the EU said. It will include instructors, support staff and force protection over a 15-month period. The agency has said about 450 non-combat troops will be launched, hopefully by next month. The mission was established after Malian authorities requested help.

Hollande has said it was a "necessary decision" to go into the country.

"The fight against terrorism has no borders, it affects us all. What we are doing in Mali is not simply linked to this country. There are terrorist networks which, following what happened in Libya last year, have installed themselves in a large part of West Africa and are trying to destabilize the area and are involved in trafficking. Our duty is to put an end to this and France assumes its responsibility," he said Thursday.

Hollande stressed that France was in Mali at the request of its government and within the framework of international law.

Mali was one of the most successful democracies in Africa until a coup toppled the president last year, leading the Islamists to capitalize on the chaos to establish themselves in the north.

In the quest to establish Sharia law, they have killed and mutilated residents who disobeyed them, leading the International Criminal Court to launch a war-crimes investigation.

Mali's government asked the U.N. tribunal to investigate in July, after Islamists seized much of the country, the court said.Militants Take Hostages, Demand Safety