The project will increase China's pipeline gas transmission capacity from 12 billion cubic meters a year to 17 billion cubic meters. It will help meet China's huge demand for natural gas.

The tariff for the transit of 1,000 cubic meters of gas has been raised from $1.09 to $1.6 for every 100 kilometers.

For the first five days of this week, Ukraine siphoned off nearly 400 million cubic meters of gas. This is a very large volume, which is comparable to our supplies for Germany for three days.

Expanding the gas flow in the pipeline requires the installation of a relatively large number of units that have to be put into operation starting from the middle of next year.

So with gas prices going up about a buck since last year, that means about $1.5 billion more in taxes. Having said that, that same money would have likely gone into other taxable goods and services.

There's much less capacity than there was a year ago and as capacity narrows, prices increase.