PARIS — Europe’s Galileo satellite-navigation project is facing new obstacles: a commercial and strategic challenge from China and a fresh series of technical setbacks that are all but certain to cause further program delays, according to European government and industry officials.

European Union ministers of transport, who are responsible for managing the system and for part of its financing, are scheduled to meet Dec. 11-12 in Brussels to be briefed by the European Commission on Galileo’s current status.

It is unclear whether the transport ministers will ask detailed questions. But if they do, government and industry officials say, here are some of the answers they will receive:

  • China, which has invested in Galileo and is seeking still-closer association with it, is moving forward on its own satellite-navigation system, called Compass, whose proposed signals will overlay the signals planned for Galileo’s encrypted, government-only Public Regulated Service (PRS).

European government officials say China has been unwilling to negotiate Compass details with European authorities unless China is permitted access to Europe’s PRS signals. Some European officials are now concerned that China’s Compass will be in orbit before Galileo, presenting a commercial as well as a strategic challenge.

  • Europe’s Giove-B satellite, which had been scheduled for launch in 2005, then 2006, is now unlikely to be launched until 2008 as a result of avionics glitches found during testing by its manufacturer, the Galileo Industries S.A. consortium. Giove-B is supposed to provide in-orbit testing of several key Galileo systems that are not on board the Giove-A spacecraft launched in December 2005 to secure Galileo’s radio frequency reservations.
  • The first four Galileo satellites, already under contract with Galileo Industries, have encountered numerous technical issues that may require a wholesale design review, making it less likely that these satellites will launch as scheduled in 2009.
  • The consortium negotiating the 20-year Galileo operations concession has won tentative approval from the European Commission for an arrangement in which the commission will co-sign the concession’s loan of about 2.25 billion euros ($3 billion), meaning that the commission will be financially liable if the concession defaults on its Galileo loans. Government and industry officials say the commission has never before co-signed a loan and had not foreseen doing so when it approved Galileo.

Paul Verhoef, head of the European Commission’s Galileo unit, said Dec. 8 that the commission remains adamant that Galileo’s technical performance will not be compromised, even if that forces significant delays in the system’s deployment.

Verhoef conceded that the work of Galileo Industries on Giove-B and the first four Galileo operational spacecraft has been unsatisfactory, but he said it is only natural that this same company be the sole bidder for the contract to build the full 30-satellite system.

“We have begun discussions with the European Space Agency on this issue and I am certain that the members of Galileo Industries know of our concerns,” Verhoef said. “We are concerned about this, and we expect industry to clean up its act. ESA is going to try to find a solution. But in terms of the satellite procurement contract, it is only natural that you go to the people that are most familiar with the design.”

ESA is managing Galileo’s early technical design and is co-financing, with the commission, the design and early testing of Galileo. ESA officials in the past have threatened to break up the Galileo Industries consortium, made up of companies that normally compete with each other, if the consortium’s performance did not improve.

The deployment of Galileo’s full 30-satellite constellation and the annual operations and maintenance costs are expected to be two-thirds paid by industry and one-third by the European Commission.

Negotiations over the basic terms of the concession were supposed to have been completed this month. Industry officials say they will now stretch into 2008. Verhoef said he could not set a date for when this first document, called Heads of Terms, will be completed.

China is one of several nations that have asked for access to Europe’s PRS signal as part of their membership and investment in Galileo. Israel, Norway and Switzerland have made similar requests.

One of the issues the transport ministers will debate at their Dec. 11-12 meeting is how to respond to these requests. Government officials say privately that China will not be permitted PRS access, which from the beginning was intended as a service reserved for European governments.

China’s Compass system has added a new dimension to the debate. In a Dec. 5 document circulated to European governments and read to Space News, the commission says China has rebuffed European requests that the Compass signal structure — specifically its proposed PRS signal overlay — be discussed.

The commission has estimated that, if China persists in deploying Compass over the PRS radio frequencies, Europe may need to rethink at least part of the Galileo design, a move that would end up costing more than the 200 million euros China has agreed to invest in Galileo. Almost all of China’s investment is being spent in China . Chinese companies have been selected to provide the search-and-rescue payload on the Galileo satellites.

Verhoef acknowledged the Dec. 5 document but declined to discuss its details.