LONDON, Sept 7 (Reuters) - Qatar wants to become the biggest shareholder in Royal Dutch Shell RDSa.L by raising its stake to 7 percent to strengthen its ties with the oil company and further invest its wealth in western assets, a report said on Friday.

The Middle East Economic Survey (MEES) said Qatar's sovereign wealth fund, the Qatar Investment Authority, was looking to raise its stake from below 3 percent, which would make it the biggest shareholder, above Blackrock's 5 percent.

Shell declined to comment on the report.

In May, MEES reported that Qatar was looking to buy 3-5 percent of Shell. Shell confirmed at the time that Qatar had bought a large stake.

British stock market rules require any party to disclose a holding of over 3 percent in a listed company. Qatar has not made such a disclosure.

QIA has been the most active of the region's sovereign wealth funds in recent years, deploying profit from its natural gas riches into assets ranging from German sportscar maker Porsche PSHG_p.DE to British bank Barclays BARC.L .

A senior executive of the Qatari fund said in April the financial crisis had restricted investment in commodities and he expected a supply-demand gap to emerge by 2016 or 2017.

Apart from Shell, QIA has bought stakes in French oil major Total TOTF.PA and European utilities Energias de Portugal and Iberdrola IBE.MC .

The fund has also been buying into Xstrata XTA.L , amassing a stake of 12.3 percent and blocking the London-listed miner's merger with trader Glencore GLEN.L . ID:nL6E8K722I

Shell operates multi-billion dollar natural gas projects in Qatar.

(Reporting by Dmitry Zhdannikov; Editing by Dan Lalor)

((Dmitri.Zhdannikov@thomsonreuters.com))

Keywords: SHELL QATAR/