The Time Is Coming for Commercial Space Exploration

From Mark Reiff <markreiff@xxxxxxxxxxxxx>
Date Wed, 13 Apr 2005 23:43:37 -0500


"The Time Is Coming for Commercial Space Exploration"
Russian Information Agency

: In a market economy everyone has to make money how they can, and
: Russia's space- rocket industry, which had expected to make money
: from tourist flights to the International Space Station (ISS), is
: no exception. But it has not been able to realize these plans.

: A few years ago, Russia abandoned its "Mir" space station and
: transferred space research to the ISS. At the time the Russian
: space industry was confident that space tourism would cover the
: country's spending on building the Russian segment of the ISS and
: even make a considerable profit. This did not happen. Tourist
: flights to the ISS were suspended following the Columbia shuttle
: crash, while Russia's expenditure on the space station increased.

: In one sense Russia has been compensated for this expenditure.
: Before the Columbia crash the Americans owned 78% of the ISS, while
: Russia owned 7%, and Canada, Japan and the European Space Agency
: (ESA) controlled the remaining 15%. Now Russia owns 5% more and the
: United States 5% less.

: While this is of course to be welcomed, Russia still needs money to
: complete the construction of the Russian segment of the space
: station. It also needs funds to increase its orbital group, restore
: the space navigation system and launch weather satellites and space
: vehicles for monitoring the Earth from space. However, Russia has
: no choice but to use its limited space budget to service the ISS,
: even though the need for the station is not clear. The Russian
: space program is faced with a lack of funding.

: How can the Russian space industry make money? It had been
: anticipated that providing foreign clients with satellite launch
: services using Russian carrier rockets would be a good source of
: income. However, expectations were too high. The market is flooded
: with carrier rockets: there are at least twice as many carrier
: rockets as there are satellites to launch. Russia fought to
: increase its launch quota, but by the time it succeeded in doing
: so, there was no longer a demand for launch services.

: If in the late 1990s the global launch services market was worth
: about $1.6 billion, it is now only worth $0.6 billion. Competition
: has increased sharply. Clients used to pay about $70 million for a
: Proton launch (the Proton is the most reliable heavy rocket in the
: world). Now the price has come down to little more than the cost of
: the rocket itself (estimated at $40 million).

: However even at this price it is still worth doing. . Regular
: launches not only generate income, but also allow production to
: continue and space centers to be maintained.

: Military rockets converted to civilian use are widely used on the
: launch services market. These are rockets that are being
: decommissioned under the offensive weapons reduction agreement and
: are earmarked for destruction. Doing this through space launches
: has two advantages: firstly, the condition of a rocket that is to
: remain in service for a few more years can be ascertained from the
: launch, and secondly, foreign clients are paying for satellite
: launches.

: The new Soyuz-2 rocket may prove profitable for Russia. The Federal
: Space Agency and the ESA plan to carry out joint Soyuz-2 commercial
: launches from the Kourou spaceport in French Guiana. The people
: responsible for marketing the Soyuz launches are promising to bring
: in contracts worth up to ˆ1 billion - that is about 40 launches in
: the next 10 years at ˆ25 million each.

: But this may reduce the number of commercial Proton rocket launches
: from Baikonur, as when the Soyuz-2 is launched from near-equatorial
: Kourou its payload capacity will be comparable to that of the
: Proton. Russia will be competing with itself.

: A possible solution is to diversify the Russian space business.
: Until recently the space industry manufactured rockets and
: satellites for an exclusive client - the state. But today we are
: seeing the dawn of commercial space exploration. The space industry
: has started setting up facilities for private Russian companies to
: produce "products" (services) for the consumer market.

: The Yamal satellite communication system is an example of this.
: This system was built to provide commercial telecommunication
: services. This was the first time that a national space industry
: project was not state-funded. The project was paid for by Gazprom
: and its subsidiaries, and also with loans extended by Gazprombank,
: Vneshtorgbank and a number of foreign banks. Many sectors of the
: economy use external investment and credit to fund their projects,
: but this was the first time that the space sector had used this
: funding mechanism, and it continues to use it today.

: The company Gazkom has already announced that it is building a
: system for remote sensing of the Earth. "The project, which is
: being privately funded and is expected to pay for itself, will cost
: 300 to 400 million dollars," Gazkom chief Nikolai Sevastyanov
: announced. "The company expects to invest 30% of the required funds
: and to borrow the other 70%." The new system, which is being
: developed under the working name "Strelka", is to be used primarily
: to conduct all-weather damage monitoring of oil pipelines, to
: control land use, to prospect for new oil fields, monitor emergency
: situations, and assess environmental damage caused by industrial
: accidents and natural disasters. The launch of the first two space
: vehicles is scheduled for 2007. As more satellites are built, the
: services will be offered to other large corporations and state
: bodies. The system is expected to have covered its outlays in three
: to five years.

: There are currently three "Yamal" satellites. By 2010 there should
: be eight, and four satellites will have also been launched for
: direct digital radio broadcasting and mobile communications
: (Project Polar Star). Ultimately Yamal and Strelka will provide an
: effective space information system. And there are other possible
: commercial uses of space, such as energy intensive production in
: space, extensive use of solar energy for making products with
: unique properties, and the commercial use of the Moon's resources.
: And this would of course require the commercial production of the
: rockets and space vehicles.

: All this will support the Russian space rocket industry, its unique
: scientific and production capability and Russia's continuing lead
: in many areas of space exploration.

Mark Reiff <markreiff@xxxxxxxxxxxxx>

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