GAMESA, the Spanish renewables company said to have rejected Dundee harbour as an offshore wind manufacturing base last month, in fact missed out when Forth Ports signed up a rival first.

When Gamesa announced last month that Dundee was no longer suitable, the company claimed that the city could not "accommodate [its] foreseen offshore requirements in terms of timescale and scope".

But the Sunday Herald can reveal that harbour owner Forth Ports had reached an agreement with Scottish and Southern Energy (SSE) to make the land available to other manufacturers in a move that will create around 700 jobs.

As well as the fact that they are both Scottish companies, SSE and Forth Ports already had close corporate ties through their joint ownership of Forth Energy, a venture to build four major biomass stations around the country.

Gamesa has since substituted Leith docks, also owned by Forth Ports, in its shortlist of possible UK manufacturing sites along with Hartlepool, but the Dundee deal with Scottish and Southern Energy may have increased the likelihood that the Spanish will go to England instead.

With negotiations between Forth Ports and Gamesa said to be at a particularly sensitive stage, the group is looking to create between 800 and 1000 jobs for the manufacture of blades and parts, and for the assembly of the entire turbines. It intends to make a decision within the next couple of months.

Various sources agreed that Gamesa withdrew from Dundee because the space was no longer available although different versions exist of why Forth Ports chose to go elsewhere for a deal. The Spaniards appear to believe that they were gazumped through no fault of their own and had broadly stuck to their original requirement, although other sources claim the requirement had become too big for Dundee harbour and that the prevarication went on too long.

One source said: "Gamesa did not reject Dundee. It was the other way around ... Gamesa changed their minds several times on what they wanted, and by the time they got to the boat, the boat had already sailed."

The unravelling of the negotiations between Gamesa and Forth Ports is likely to have frustrated Scottish Power, which is closely linked to Gamesa through its Spanish parent company Iberdrola, owner of a 20% stake in the renewables group. Its Glasgow-based executives were known to be keen for a deal to take place in Dundee. Losing out to leading rival SSE will have been particularly disappointing, especially as the Sunday Herald understands that Scottish Power took no part in the discussions.

Gamesa and Iberdrola/Scottish Power have a strategic agreement to co-develop wind power in various countries. Partly as a result of this, Gamesa has already set up a research and development centre near Glasgow with 60 engineers, set to increase during the year.

The deal with SSE will be more attractive to Forth Ports since its strategic partner is a wind farm developer and can therefore guarantee its own manufacturing requirement.

However, it means that deals still need to be finalised with two renewables manufacturers: Mitsubishi and an Asian specialist in network equipment that is closely linked to Siemens. Sources were not clear about the timing of these deals, but said they would be in the "near future".

Kevin Keenan, the leader of the Labour opposition at Dundee City Council, said: "We are hoping that the signing of the memorandum of understanding will mean jobs. Clearly on the jobs front, Dundee is extremely bad at the moment."

Peter Pantlin, the chief corporate officer for Gamesa in the UK, said: "Dundee became no longer an option for us. Since that announcement, we have been closely looking at Leith as well as Hartlepool."

A spokesman for Forth Ports said: "We are confident that the configuration and land available at Leith is better suited to Gamesa's needs and we are pursuing this with them currently."