Tunisia says UK firm Petrofac shutting down local operation due to protests

* Tunisia struggling to spur economic growth

* Frustrations over jobs common protest risk

* PM Chahed holds emergency meeting over crisis (Adds government , confirmation, details)

By Tarek Amara

TUNIS, Sept 21 (Reuters) - British oil and gas industry services company Petrofac (Amsterdam: PF6.AS - news) has told Tunisia it has started to shut down its local operations after months of protests disrupted its gas production, the government said on Wednesday.

"Petrofac has officially informed us that they have started the process of closing down," Iyed Dahmeni, the government's spokesman told reporters.

"We will do everything we can to convince them to stay if the young men who are protesting accept the agreements we are proposing."

Prime Minister Youssef Chahed held an emergency meeting with ministers earlier in the day in a bid to end the crisis caused by protests from job seekers and persuade the British company to stay.

Losing Petrofac, whose operations supply around 13 percent of Tunisia's domestic gas needs, would be another financial blow to the country just as Chahed's government promises to take the decisions needed to create jobs, push through economic reforms and bolster growth that were hit by Islamist militant attacks last year.

A source with Petrofac and a government official earlier told Reuters the company had sent a letter officially informing the government of its decision. Petrofac representatives did not immediately reply with a comment after they were asked for a response.

Tunisia has been praised for its political progress to democracy since the 2011 uprising over corruption and official abuses ousted its long-standing leader Zine El-Abidine Ben Ali. But economic progress has not followed, and many young Tunisians are frustrated about the lack of jobs.

Since January, protests by groups of young men have disrupted gas production at the site of the Chergui gas field on the island of Kerkennah in the south, where Petrofac holds a 45 percent share with the rest held by a state-run company.

Government officials say that importing gas from Algeria to make up for the shortfall caused by disruption to Petrofac's production has cost the government about $100 million (£76.4 million) so far this year.

Violent protests erupted in January and the army intervened to protect the gas operations. But since then several attempts to negotiate with local residents seeking jobs have fallen apart and sit-ins have continued.

Tunisia's state-run phosphate companies earlier this month announced an agreement to hire 2,800 new workers after protests over jobs halted production and threatened to stop exports. Disruptions in that industry have cost the government hundreds of millions of dollars in losses in the last five years. (Reporting by Tarek Amara; writing by Patrick Markey; Editing by Greg Mahlich)