A senior Saudi Arabian official discussed buying Spain's Leopard 2E tanks here Tuesday but no deal was signed for a contract reportedly worth up to three billion euros, a Spanish government official said.

Visiting Prince Khaled bin Sultan, the Saudi assistant defence minister, discussed the possible contract in a meeting with Prime Minister Jose Luis Rodriguez Zapatero, the official told AFP.

Saudi Arabia "showed interest in the acquisition of battle tanks and Spain believes it has the tanks Saudi Arabia needs in terms of quality and competitive price," the official said.

No decision on the contract would be taken during this visit, however, the official said.

"We hope that the Spanish military industry can meet Saudi Arabia's needs but other countries are interested (in the Saudi contract)," the official added.

Spain was working to conclude a deal and negotiations could last weeks or months, the source said, adding that another Saudi delegation would visit to assess the tanks' technical specifications.

Prince Khaled arrived in Spain Monday and met with King Juan Carlos before seeing the Spanish prime minister Tuesday. He is making the trip in place of his father, Saudi Defence Minister and Crown Prince Sultan bin Abdel Aziz, who diplomats say is unwell.

The daily El Pais said last week that the talks could lead to Spain's biggest-ever military export deal.

El Pais underlined however that signing the contract would be conditional on approval from Germany's Kraus-Maffei and Rheinmetall group, which holds the patents for the Leopard.

A defence industry union official told AFP last week there was a possibility of a deal on the tanks but nothing concrete yet.

Raul Alvarez, who is in charge of the defence industry sector of the major union Comisiones Obreras, said any sale could involve around 200 of the 2E combat tanks, a variant of Germany's Leopard adapted by the Spanish army and built in Spain by General Dynamics-Santa Barbara.

The Saudis signed a military cooperation agreement with Spain in 2008, which up to now has mainly been limited to training Saudi pilots on the Eurofighter at its southern air base of Moron.