From what I have seen and read, the significance of this pipeline has not registered in a major way in the Ukrainian media, but this EDM article has certainly picked up on it. Here's a quote:
"The South Stream pipeline is a hugely...complicated project in technical terms, but the most obvious question about it is where the gas would come from. Neither Russia nor Central Asia has the 30 billion cubic meters a year that would be needed in the next 5-7 years, so the only logical answer is that Moscow plans to reduce its gas transit through Ukraine. The same logic applies to the Nord Stream line to be built across the Baltic Sea, and these two pipelines would leave Ukraine with transporting only about a quarter of Russia’s export to Europe compared with the three-quarters flowing before the gas war of early 2006. The Ukrainian leadership is acutely aware that its leverage is going to shrink, so the government of Yulia Tymoshenko is now desperately trying to negotiate a better deal by cutting out the ignoble intermediary RosUkrEnergo."
Everybody knows that Gazprom are struggling to maintain current gas production rates, and they need all the cash they can get their hands on to do this.
Here's a quote from Nadejda Victor's superbly detailed January 2008 Stanford University paper "Gazprom: Gas Giant Under Strain":
"Huge investments are needed to replace Russia’s dwindling supply of natural gas, and all the options for new production will prove costly and difficult. New fields in the far north and east of the country are distant from most of the Russian people and from export markets, requiring wholly new transport systems such as pipelines. Moreover, most of these new fields are located in extremely harsh environments where it is technically and financially difficult to operate. Gazprom controls neither the capital nor the technology needed for the task. The state-controlled company is already highly indebted and faces many expensive obligations that drain its coffers, such as supplying Russia and its friends with cheap gas."
The paper also gives details of the dreadful wastage of gas in Russia due to grossly inefficient electric generation plants, flaring off of billions of cu.m. of gas at oil fields, and absence of what most would consider normal housekeeping measures by domestic suppliers and consumers.
Constructing the two massive South and North Stream underwater pipelines means even less cash will be available to Gazprom to develop new Siberian and Arctic shelf gas fields and to improve efficiency. And someone's gas transit system will be running half empty. It's all quite depressing really.