A British national is reported to have been killed after armed Islamist militants stormed a natural gas field in Algeria.
A number of foreign workers are said to have been taken hostage in the dawn attack on the facility part-operated by BP.
Algerian forces are surrounding the hostage-takers and negotiating for the release of their captives, according to local security officials.
An Islamist group claimed it was holding 41 westerners - including seven Americans - in retaliation for the French military intervention against al Qaida-backed rebels in neighbouring Mali.
The Irish government said a 36-year-old Irishman was among the hostages. It is understood the 36-year-old married man, from Northern Ireland, is unharmed.
Prime Minister David Cameron chaired a 45 minute meeting of Whitehall's Cobra emergency committee to discuss the emerging crisis.
The Foreign Office was unable to confirm a report by the Algeria state news agency that a British national was among two people killed in the attack on the In Amenas gas facility close to the Libyan border.
Six others are said to have been wounded, including two foreigners, two police officers and two security agents.
Mr Cameron's official spokesman said: "The ongoing incident has involved various nationalities, including several British nationals. We are working with BP to support the families of staff and provide consular assistance."
The Algerian interior ministry said the attack began when three vehicles carrying heavily-armed-militants ambushed a bus carrying employees from the gas plant to the nearby airport.