Southeastern power trade up, problems remain-CEZ

* More traders eye SEE power market

* Regulatory hurdles limiting even more liquidity

By Michael Kahn

VIENNA, Nov 5 (Reuters) - Liquidity in the southeastern Europe electricity market is rising despite regulatory roadblocks that dissuade many traders from coming to the region, CEZ's head of trading for the region said on Thursday.

Export fees, allocation of cross-border capacity and state control over prices are the three main obstacles that governments show no sign of addressing any time soon, Zsolt Bojtos, head of CEZ's southeast Europe portfolio, told Reuters.

"I'm pessimistic these obstacles will be resolved any time soon," he said on the sidelines of conference in Vienna. "In reality, there is not much going on."

Czech-based CEZ (CEZPsp.PR) -- which is a major player in southeastern Europe -- has its eye on a market many agree is poised for fast growth over the coming years as Balkan countries close the economic gap with western Europe.

The region also boasts a high number of shared borders with European Union countries, making it possible to ship power to Greece and power-starved Italy from other regions.

But at the moment, this also represents big risks for traders who must book cross border capacity in different auctions to move power around the region, Bojtos said.

"It is complicated to have all the borders you have to deal with," he said. "But the region is a great opportunity because it is an area that in the long term should grow faster than western Europe."

Another problem for CEZ is in some countries where it owns generation it has to sell some power to the market at prices set by the government, he added.

But there are some encouraging signs. At least two brokers have started clearing Serbian prices, which has brought more liquidity to a market hit hard by the global financial crisis, Bojtos said.

"The amount of tradable volume has dropped but more traders are showing up which means they are bringing more liquidity," he said.

The key, however, remains for governments to to start taking action to sweep aside regulatory obstacles and create a transparent electricity market, he said. This will allow the market to reach its full potential, he added.

Looking farther ahead, Bojtos also predicted that any real recovery in demand will lag other parts of Europe and could take as long as five years. "There are some small signs it will arrive in southeast Europe later," he said. "Hopefully we have hit the bottom already." (Reporting by Michael Kahn, Editing by William Hardy)