Thirteen under par at halfway and one ahead of Spaniard Pablo Larrazabal, the Welshman sliced his opening drive into the trees.
His approach then went over the green, but from there he found the hole and made Larrazabal sink a 12 footer for a matching three.
To his credit the former Open de France champion did so, but failing to get up and down from left of the green at the short second dropped him two behind and alongside Austrian Markus Brier, who birdied the first and third.
Ross Fisher maintained his bid for a first win since the Volvo World Match Play last November by picking up shots on the third and fifth and went joint fourth with English-born Irishman Simon Thornton and Scot Peter Whiteford.
Brier took over as the closest challenger to Dredge when he also birdied the fourth, but a triple bogey seven followed.
So when Dredge pitched to within three feet of the flag on the third and made a 15 foot putt two holes later for his third birdie he was suddenly four clear of the field at 16 under.
Larrazabal and Whiteford were joint second and Fisher joint fourth with Thornton and ex-Ryder Cup Spaniard Ignacio Garrido.