How is 400 USD/mcm consistent with market? At current FX rates this translates to 27-28 EUR/MWh which is about 20% *over* western european prices for the next 3 years.

400 USD/cm = 294 EUR/cm /10.4 = 28.3 EUR/MWh

Cal 10 TTF ~22.60
Cal 11 ~ 24

Can someone explain how this is "at market?"

I got my figures from platts
"... Last year Ukraine paid Russia around $179.50/1,000 cubic meters for gas supplies, compared with an average price for European importers of around $400/1,000 cu m. Gazprom had offered to supply gas to Ukraine at a price of $250/1,000 cu m in the first quarter of this year in last-minute negotiations at the end of 2008, but this was rejected by Naftogaz. Dubyna {the head of Ukraine's state oil and gas company Naftogaz Ukrayiny} said part of the dispute centered on how much money Ukraine receives for its services as a transit country.

Ukraine consumes around 6.4 Bcm/year of gas to maintain pressure in the transit pipelines, he said, which would become more costly if Ukraine has to pay Russia a higher price for its gas.
..."

Sounds like a lot of gas just to maintain pressure, maybe they're not stealing the gas it's just leaking :-)

Here's a free article
http://www.platts.com/Magazines/Insight/2008/dec/2e0qZ08120812BS0sQ92P0_...

Wouldn't it be nice if all the prices for gas were quoted using the same measure rather than say (USD/MMBtu UK: GBp/therm, Alberta: CAD/Gj) from upstream, $179.50/1,000 cubic meters ... I suppose that's the beauty of standards, there's so many to choose from:-)

One of the problems is that the whole russia/ukraine deal is murky involving third parties, so who knows what is being creamed off. I would like to hope that Putin is cleaning up after the criminal years of Yeltsin, but who really knows?

There's a good schematic map on the FT site that shows gas movements - principally from Russia and Norway - with production, consumption and transit figures for every country in Europe.

http://www.ft.com/cms/s/0/ceba9530-dcef-11dd-a2a9-000077b07658.html

Obviously Europe should not be reliant on one shaky source for a critical portion of its energy. After a few days of cold even the Germans might be in favour of some nukes, everybody will be willing to pay more for e.g. wind power, home solar water, European electricity grid linked to North Africa...