Both Sweden and Finland signed on to the new northern natural gas pipeline from Russia to Europe, meaning that in 2012, Ukraine will no longer be the only way for Russian gas to make it to Europe.

This means that gas transit fees to the Ukraine, and the price of natural gas sold to the Ukraine, as well as the gas that is “lost in transmission” (stolen) are all likely to decrease.

In the short term, it means that the Russians want to make sure not to honk off anyone with short term gas disruptions, hence the recent agreement between the two government to waive penalties for Ukraine buying less gas than agreed to in their contract, because they don’t need to when they are an IMF economic disaster zone.

I think that the new pipeline may be why the Azeris are talking about selling their gas to Asia, particularly the Chinese, rather than Europe right now too.

They realize that the Ukrainian pipeline is likely decreasing utility in the future, and they can hook into the Russian system in fairly quickly once the northern pipeline is completed, so having the option to selling to Asian markets is a plus.