(Updates throughout, adds byline, changes dateline)

By David Mercado

YACUIBA, Bolivia, April 18 (Reuters) - Protesters demanding a share of taxes from a large Bolivian natural gas field took more than 40 police officers hostage on Wednesday, a day after one demonstrator was killed and several injured in clashes with police and troops.

The government, which nationalized the energy industry a year ago, said it was deciding on its next move on Wednesday evening, after protesters overwhelmed military and police guards sent in on Monday to protect natural gas operations.

"We have to take action, because we can't allow what is happening ... a group of policemen were ambushed (and then taken hostage), approximately 45," presidential spokesman Alex Contreras told reporters just before President Evo Morales held an urgent cabinet meeting.

Protest leader Jorge Arias told reporters in Yacuiba, the capital of the Gran Chaco district that demonstrators captured 60 police officers, took their weapons away from them, and were holding them in a municipal building.

Government officials said exports of natural gas to Argentina and Brazil, from which the government expects to pocket $2 billion this year, are guaranteed.

But they also acknowledged that the protesters, who come from the Gran Chaco district of Tarija department, far outnumber police and army personnel. Tarija, on the border with Argentina, is home to 85 percent of the country's natural gas reserves.

Gran Chaco and the neighboring O'Connor district both claim the vast Margarita natural gas field, operated by Spain's Repsol YPF <REP.MC>.

Bolivian authorities are working to determine which district has the right to the field and to 45 percent of the approximately $100 million in annual taxes that could come from future exports of Margarita's reserves to Argentina.

On Tuesday protesters overcame dozens of security forces, and seized control of two plants run by Royal Dutch Shell <RDSa.L> local subsidiary Transredes.

A Transredes spokeswoman told Reuters one of the plants had to stop pumping gas to a neighboring city, but the second facility -- known as Yacuiba and that supplies natural gas to neighboring Argentina -- never stopped operating.

The protests continued on Wednesday with hundreds of angry demonstrators gathered outside the plants, the spokeswoman said.

The Margarita field, which is not fully operational yet, holds some 10.5 trillion cubic feet of natural gas, about one fourth of the country's reserves, which are the biggest in South America after Venezuela.

In speeches broadcast by local radio the leaders of both the O'Connor and Gran Chaco districts vowed to step up their protests, while the interior minister called for dialogue in an interview with the state-owned TV channel.

Repsol YPF, Brazil's Petrobras <PETR4.SA> and France's Total <TOTF.PA> operate different natural gas fields in Tarija.

Morales nationalized the energy industry a year ago forcing foreign operators to pay much higher taxes and making the government the owner of energy reserves.

(Additional reporting by Carlos Quiroga)

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