Larrazabal was one of just five players in the 156-man field to break 70 at Leopard Creek, a 69 leaving the 36-year-old on nine under par, three shots ahead of home favourite Branden Grace and overnight leader Wil Besseling.
Scotland’s David Drysdale and Grant Forrest, who began the day three shots off the lead, struggled to rounds of 77 and 79 respectively but made the halfway cut which fell at three over par.
Larrazabal said: “It was a good job. It wasn’t an easy day, the wind was swirling around and gusting so on this golf course, as tight as the targets are, it was tough.
“We’re used to the heat and the wind helped to control the heat a little bit,” added Larrazabal who again declined the option to play in shorts due to the conditions.
“The golf course wasn’t playing easy. To take the right club today was very tricky and the greens are drying.”
Seeking a fifth European Tour title and a first since 2015, Larrazabal double bogeyed the par-three seventh after hitting his tee shot into the water, but started the back nine with four-straight birdies, including from 80 feet on the 12th.
“I did a big mistake on the seventh, I didn’t trust what my game plan was and made a double bogey, but I thought I’m playing well enough to start making birdies again so that’s what I did,” Larrazabal added.
“I had a lot of patience out there. I know I am playing good, I know I am playing aggressive enough to make birdies and get in a run and if I am patient, the putts are going to drop.”
England’s Marcus Armitage, who regained his playing rights via the qualifying school recently, is five shots off the lead after a second-consecutive 70 left him four under par alongside compatriot Jack Singh Brar and South Africa’s Thomas Aiken.
On the Ladies European Tour, America’s Christina Kim remained in contention for the Andalucia Costa Del Sol Open de Espana Femenino thanks to a spectacular finish to her second round.
Kim was four over par for the day with four holes left at Aloha Golf Club, but covered them in five under par with birdies on the 15th and 16th, a hole-in-one on the 17th and another birdie on the last. She said: “It’s always great to have an ace, especially as I think my last ace was in a Ladies European Tour tournament as well.”
The resulting 71 left Kim on six under par, two shots behind leader Karolin Lampert of Germany, who carded a second consecutive 68.
Scotland’s Kylie Henry is in a tie for 27th place after following her fine opening 69 with a disappointing 75.