Working port on banks of Tarragona lake (7)
I believe the answer is:
ontario
'lake' is the definition.
(I've seen this before)
'working port on banks of tarragona' is the wordplay.
'working' becomes 'on' (on can mean working or activated).
'port' becomes 'rio' (Rio de Janeiro is a port).
'on' is a charade indicator (letters next to each other).
'banks of' means to remove the middle letters (the banks are the sides of the word).
'tarragona' with its middle removed is 'ta'.
'rio' put after 'ta' is 'tario'.
'on'+'tario'='ONTARIO'
(Other definitions for ontario that I've seen before include "Canadian Great lakes province" , "Root in a Great Lake" , "vast lake" , "Most populous Canadian province" , "part of Canada" .)