The 35-year-old South African reeled off five birdies in glorious afternoon sunshine at Loch Lomond to finish six strokes behind surprise leader Maarten Lafeber of the Netherlands.
Lafeber shot a best-of-the-week 63 for a total of 12-under 130. Argentina's Angel Cabrera, co-leader overnight after an opening 64, was second on 131 following a 67.
"That was a good round of golf," Els told reporters. "I didn't hit it in any trouble and I managed to get the ball up and down when I needed to.
"I've got to shoot low over the weekend if the weather stays like this but it's on.
"The way I'm playing, I can do it," added the three-times major winner, who triumphed here in 2000 and 2003.
Ryder Cup player Darren Clarke, who birdied the last four holes for a 65, was tied for third at 10 under, level with fellow Britons Alastair Forsyth (64) and Jonathan Lomas (65).
South African Richard Sterne carded a 68 to share sixth place at nine under alongside Greg Owen (66), Gary Orr (65) and South Africa's Tim Clark (66).
Lafeber, Dutch Open champion in 2003, paid tribute to Belgian sports psychologist Jos Vanstiphout after he restored his confidence on the eve of the tournament.
"I saw Jos on Wednesday afternoon and told him I had played solid all year but that the mental side was really letting me down," said Lafeber, who can book a place at next week's British Open by finishing as the highest non-exempt player here.
"He started working with me and I got positive really quick. Yesterday and this morning I felt really comfortable, so it's paying off very quickly," added the Dutchman, who produced eight birdies in a flawless second-round display.
Clarke, joint-fourth at the European Open in Ireland on Sunday after taking a month off to be with his wife Heather who is fighting cancer, said his putting had rescued a poor ball-striking round.
"I got off to a bad start this morning with a few very indifferent shots to say the least," he said.
"Some decent things happened at the end but more work and a few hours on the range will hopefully clear up those bad shots tomorrow.
"I'm scoring very well but my ball striking is not very good," added the 36-year-old. "Having 22 putts helps, though."
World number four Phil Mickelson failed to take advantage of the near-perfect conditions, returning a 72 to finish nine strokes off the pace at three-under 139.
The American left-hander, winner of last year's U.S. Masters, put himself in early contention with an opening 67 but lost ground after dropping three shots in four holes round the turn.
"It was a great day to go low but I just didn't do it," he said. "I have got to shoot low tomorrow but there is a seven or an eight-under-par round out there."
Of the other big names, seven-times European number one Colin Montgomerie carded a 69 to finish at five under while double U.S. Open winner Retief Goosen, who had battled to an opening 71, improved with a 67.
The cut was made at two-under 140 with European Ryder Cup captain Ian Woosnam (144) and Britain's Justin Rose (145) among the casualties.