U.S. officials told ABC News that at least one American has been killed in the hostage standoff at an Algerian gas plant, and the family of the deceased American has been notified.
An al Qaeda-linked group called the Masked Brigade and led by the one-eyed jihadi Mokhtar Belmokhtar raided the BP joint venture facility in In Amenas on Wednesday, taking an undetermined number of hostages from more than half a dozen nations, including at least two Americans.
On Friday, the group demanded the release of two convicted terrorists held in U.S. prisons, including the "blind sheikh" who helped plan the first attack on New York's World Trade Center, in exchange for the freedom of two American hostages, according to an African news service.
The terror group reportedly contacted a Mauritanian news service with the offer. In addition to the release of Omar Abdel-Rahman, who planned the 1993 World Trade Center bombing, they demanded the release of Aifia Siddiqui, a Pakistani scientist who shot at two U.S. soldiers in Afghanistan in 2008.
Asked about the unconfirmed report of a proposed swap, State Department spokeswoman Victoria Nuland said firmly, "The United States does not negotiate with terrorists." She repeated the statement again when questioned further. She also said she was not prepared to get into any details about the status of Americans in "an ongoing hostage situation."
At least three Americans were being held hostage by the militants when the Algerian military mounted a rescue operation at the facility Thursday that reportedly resulted in casualties.
Five other Americans who were at the facility when it was attacked by the terrorists are now safe and believed to have left the country, according to U.S. officials.
Reports that dozens of hostages were killed during the Algerian military's attempt to retake the compound have not been confirmed, though Algeria's information minister has confirmed that there were casualties. It's known by U.S. and foreign officials that multiple British, Japanese and Norwegian hostages were killed.
According to an unconfirmed report by an African news outlet, the militants said seven hostages survived the attack, including two Americans, one Briton, three Belgians and a Japanese national. U.S. officials monitoring the case had no information indicating any Americans have been injured or killed, but said the situation is fluid and casualties cannot be ruled out.
On Friday, a U.S. military plane evacuated between 10 and 20 people in need of medical attention, none of them American, from In Amenas and took them to an American medical facility in Europe. A second U.S. plane is preparing to evacuate additional passengers in need of medical attention.
British Prime Minister David Cameron told parliament today that the terror attack "appears to have been a large, well coordinated and heavily armed assault and it is probable that it had been pre-planned."
"The terrorist group is believed to have been operating under Mokhtar Belmokhtar, a criminal terrorist and smuggler who has been operating in Mali and in the region for a number of years," said Cameron.
Cameron said Algerian security forces are still in action at the facility. On Thursday, he said that the situation was "very bad … A number of British citizens have been taken hostage. Already, we know of one who has died. ... I think we should be prepared for the possibility for further bad news, very difficult news in this extremely difficult situation."
The kidnappers had earlier released a statement saying there are "more than 40 crusaders" held "including 7 Americans."
U.S. officials had previously confirmed to ABC News that there were at least three Americans held hostage at the natural gas facility jointly owned by BP, the Algerian national oil company and a Norwegian firm at In Amenas, Algeria.
"I want to assure the American people that the United States will take all necessary and proper steps that are required to deal with this situation," said Panetta. "I don't think there's any question that [this was] a terrorist act and that the terrorists have affiliation with al Qaeda."
He said the precise motivation of the kidnappers was unknown.
"They are terrorists, and they will do terrorist acts," he said.