A European Union decision to block Russia's Gazprom from taking a stake in the Central European Gas Hub was a mistake because it hurt efforts to boost liquidity, the Vienna-based hub's chief executive Gottfried Steiner said on Friday.

In the past year the European Union blocked Gazprom from buying a 50% share of the hub that is the first entry point for Russian supplies to Western Europe.

Steiner said he hoped talks between Gazprom and EU officials would clear hurdles that have blocked the Russian company from taking a stake in the trading platform looking to build on growing volumes.

"I would love to have Gazprom as a shareholder," Steiner said in an interview in his Vienna office. "It would send a fantastic signal to the market."

"I think it was a mistake to block this and we are still hoping for a solution from both sides."

An EU spokeswoman declined comment, while a Gazprom representative said there have been talks but no decisions yet.

The Central European Gas Hub provides the trading platform for Austria's natural gas hub at Baumgarten, which is the first entry point for imports to Western Europe from Russia, and potentially central Asia.

Its shareholders, Austrian energy company OMV and the Vienna stock exchange, hope the hub could become a key European gas trading centre, comparable to TTF in the Netherlands, for Europe's gas trading benchmark.

Steiner said he is pushing to draw more traders to the platform uniquely located between liquid Western markets and illiquid - but potentially fast-growing - ones in central and southeastern Europe.

Last year, 40 billion cubic metres (bcm) of gas - equivalent to around 40% of demand in Britain, which is Europe's biggest gas consumer - were traded at the hub and Steiner expects a rise in gas trading across the continent, along with increasingly deregulated markets in the central and southeastern European region, to drive that amount even higher in 2012.

A virtual trading hub set to open January 1, 2013 will provide one entry and exit point in Austria that will further boost liquidity by making it easier for physical traders - as well as banks - to access Baumgarten, Steiner said.

"The change to a virtual trading hub will be a bit bumpy as a lot of the rules and regulations are not ready," Steiner said.

"We will publish our own general terms and conditions over the next few weeks after receiving the final market rules from the Austrian regulator. But a lot of the regulation is not there yet."

Another initiative aimed at boosting liquidity is a plan to connect the Czech, Slovak and Austrian gas trading markets, Steiner said. Officials will soon launch a study to see if things like interconnectors and regulations are sufficient to combine the three into one gas trading area, he added.

"Currently what you have is not a lot of liquidity in the smaller countries," Steiner said. "It is hard to build up liquidity if a national market is not big. What you end up with is local markets. To have sufficient liquidity you should combine those markets."

One important issue that will impact liquidity of the Central European Gas Hub is whether the consortium in charge of the Shah Deniz 2 gas field in Azerbaijan will decide to pump its supplies to Italy or Austria.

The Shah Deniz 2 gas field - operated by Norway's Statoil and Britain's BP - plans to pump 10 bcm of gas per year to the European Union from 2017 or 2018 with another 6 bcm remaining in Turkey.

A decision to ship it to Baumgarten would provide a surge of supplies that would rapidly transform trading in the region by creating enough trading volumes to quickly create a large, single market, Steiner said.

"This would be a game-changer," Steiner said. "You could make one big market right away. All the benefits would push countries to open up their markets."