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Private equity firms CVC and GIP each own a further 20 per cent, at a combined value of almost 9 billion euros. TAQA said it is in talks with the pair regarding the possible acquisition of the stakes.

Spanish rules require a mandatory tender offer when a buyer wants to acquire more than 30 per cent of a publicly traded company, which could lead to one of the largest European acquisitions by a UAE-based company.

Thanks to the European Union’s largest fleet of import terminals, Spain has become an important regional hub for liquefied natural gas (LNG) as the bloc pivots away from Russian pipeline gas supplies.

With Naturgy, TAQA – a power and water utility founded in 2005 – would acquire Spain’s largest gas firm, with key contracts with Algeria and also a long-term contract to import some 3 billion cubic metres (bcm) of Russian LNG every year.

It is also in talks with Criteria over a possible partnership agreement, it said, adding that no conclusion has yet been reached in the talks with any of the parties.

There is no guarantee a deal will happen and, if it were to, under what terms, TAQA said, adding that it had not approached Naturgy directly.

Any deal would need the approval of the Spanish government.

Spain’s economy ministry declined to comment. However, a government source said that TAQA’s interest “shows Spain’s international investment appeal”.

Naturgy, CVC and GIP declined to comment, as did Australian fund IFM which holds a 15 per cent stake in Naturgy. Criteria declined to comment beyond a Tuesday statement where it said it was in discussions with an investor group.

Naturgy’s shares were up almost 6 per cent by 1115 GMT.

The company is also expanding its renewable energy business, reaching some 6.5 GW of installed capacity at the end of last year.

Relationships between Madrid and Abu Dhabi were strengthened two years ago, when the two governments agreed to create a strategic partnership.

TAQA operates in about 10 other countries besides the UAE. A unit of Abu Dhabi sovereign wealth fund ADQ owns just over 90 per cent of the company. Gas accounted for over half of TAQA’s production mix last year.