Algeria has been in talks for the last 24 hours with France and the US, trying to decide whether they need foreign military help to resolve a hostage crisis where al-Qaeda affiliated terrorists kidnapped up to 41 westerners at a natural gas complex.

The exact number of hostages is unknown. It is believe that a sizable number slipped away and escaped, but that the terrorists still hold at least 25.

Associated Press:

The government was in talks throughout the night with the U.S. and France over whether international forces could help against the militants, who have 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. Two foreigners, one of them a Briton, were killed.

The official, who was not authorized to speak publicly about the attack, said Algerian officials also contacted tribal elders among Algerian Tuaregs, who are believed to have close ties with Islamist militants linked to al-Qaida. The official said the government hoped the Tuaregs might help negotiate an end to the standoff.

The group claiming responsibility - called Katibat Moulathamine or the Masked Brigade - said the attack Wednesday was in revenge for Algeria's support of France's military operation against al-Qaida-linked rebels in neighboring Mali. Militants 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.

But the militants themselves appeared to have no escape, cut off by surrounding troops and army helicopters overhead. Algerian Interior Minister Daho Ould Kabila said it seemed the militants were hoping to negotiate their departure from the area - a notion he rejected. He also dismissed theories that the militants had come from Libya, a mere 60 miles (100 kilometers) away, or from Mali, more than 600 miles (1,000 kilometers) away.

This is the law of unintended consequences writ large. The Mali conflict is a direct result of al-Qaeda terrorists being armed when they fought as rebels in the Libya civil war and then moving into northern Mali where another civil war was already underway. They quickly brushed aside the Tuareg tribesmen fighting the government and established themselves as the major opposition. Their goal: carve out an independent state from where they can strike at the heart of west Africa's economic interests.

France intervened and now as a consequence, al-Qaeda is striking back at western interests in the region - including the gas complex in Algeria. One wonders if we are repeating our Libya mistake in Syria - with possible fallout for Iraq, Jordan, and especially Lebanon and Israel in the offing.

Thomas Lifson adds:

Algeria is vitally dependent on facilities like the In Amenis complex of nearly 50 gas fields, production facilities, pipeline, and housing complex. It is the fourth largest gas production facility in Algeria. Adam Nossiter and Scott Sayare in the New York Times tell us that "a third of the country's gross domestic product, over 95 percent of its export earnings and 60 percent of government financial receipts" come from oil and gas. 

Targeting these facilities could cripple Algeria.

Stuck out in the desert, such complexes are vulnerable to attack, banditry, and abductions, and in fact, according to the Times, the abductions "doubled, at least, the number of non-African hostages that Islamist militants in northern and western Africa have been using as bargaining chips to finance themselves in recent years through ransoms that have totaled millions of dollars."

The gangs roaming the desert that combine jihad and criminality in varying proportions have, in other words, been receiving protection money, but now jihad is taking over, with this larger and more lethal geopolitical move.

UPDATE

AP is reporting that an attack by an Algerian helicopter on a vehicle being used by the terrorists in the gas complex has resulted in the deaths of 35 hostages and 15 terrorists:

The hostage situation in an Algerian natural gas complex appeared to reach a dangerous crescendo Thursday, with Islamic militants claiming that Algerian helicopter attacks left 35 hostages and 15 captors dead, according to the Associated Press.

Islamists with the Masked Brigade, who have been speaking through a Mauritanian news outlet, said according to the AP that seven hostages were still alive Thursday, including three Belgians, two Americans, a Briton and a Japanese citizen.

There was no official confirmation from U.S. or other governments involved on the reported deaths. The British Foreign Office did confirm that they were aware of an "ongoing military operation."

A diplomatic source confirmed to CBS News that the Algerian military had a plan to retake the facility and that there had been casualties among both the terrorists and hostages, including multiple deaths.

A British security source, citing a contact close to the scene, told CBS News "that the Algerians were firing from helicopters at anything that moved," but could not confirm any deaths.

A spokesman for the Masked Brigade said according to the AP that the Algerians opened fire as the militants tried to leave the vast energy complex with their hostages a day after seizing the installation deep in the desert.

The militant spokesman said the leader of the kidnappers, Abou El Baraa, was among those killed. He said the militants would blow up the remaining hostages if the Algeria army approached.