Otaegui has not made a single bogey over the first 36 holes.
“I think I played very solid from tee to green, didn’t put myself in too much trouble over the last two days,” he said.
Otaegui, a four-time European Tour winner, won at the Real Club Valderrama by a full six shots a year ago.
Daniel Hillier is one shot back, followed by a six more players on 7 under.
U.S. Open champion Wyndham Clark, the only top-10 player in the field, was seven shots back in a tie for 44th, along with Robert Macintyre.
Information from the Associated Press was used in this report.