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PROFILE
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Sergey Gugkaev
CHIEF EXECUTIVE, SEA LAUNCH AG
et me say that my first reaction is relief,”
Sea Launch AG Chief Executive Sergey
Gugkaev told a Eutelsat audience after the
company’s successful May 26 launch of the Eutelsat 3B
telecommunications satellite.
Nearly 16 months after a launch failure that destroyed
a highly insured Intelsat satellite, Sea Launch, based in
Switzerland but owned by a Russian company, returned
to flight and wants the commercial market to view it
as back in business.
Between a 2007 failure that helped push the company
into Chapter 11 bankruptcy proceedings in the
United States, the appearance of a new company
— Space International Services (SIS) — claiming
rights to the same Zenit rocket Sea Launch
uses, and then the 2013 failure, it has not
been an easy road for Sea Launch.
It might also be assumed that a company
relying heavily on Ukrainian and Russian
hardware and expertise would be encountering additional difficulties. But Gugkaev
said that beneath an agitated surface,
relations between Sea Launch’s manufacturers, and between those companies
and Sea Launch, have not suffered.
Gugkaev knows enough about launch
anomalies not to gloat over the most recent
failure of Russia’s Proton heavy-lift rocket.
But he acknowledged that in the wake of that
mishap, the sixth Proton anomaly since late
2010, commercial satellite operators are seeking
alternatives and Sea Launch may be in a position
to pick up a customer as early as late this year.
Educated as a lawyer and with a professional background that includes investment banking in Switzerland,
Gugkaev has lived in Geneva for 10 years and is fluent in
French and English in addition to Russian. He recently
spoke with SpaceNews staff writer Peter B. de Selding.
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SEA LAUNCH AG PHOTO
Back in Business
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What is the status of Zenit-3SL rocket hardware now?
Since our bankruptcy action we have invested most of our
equity, and our resources, into the supply chain. We are
ordering our hardware in lots. In our pipeline now we
have a first lot of five rockets, including the one that just
launched Eutelsat 3B. So there are four left, in different
stages in production.
One will leave the factory sometime this summer and
two others in 2015 to support launches for that year.
These suppliers are under firm contract to you?
Yes, it is a commitment. Not all of the funds have been
released. We make payments as certain production milestones are reached. But yes, it is a firm order. For example,
the next Block DM stage for us is already at our home
port in Long Beach [California].
If a customer comes to you with a 5,000-kilogram satellite
and says he wants to launch as soon as possible, what is your
response?
We tell them we can launch late this year or in the first
quarter of 2015, depending on the spacecraft. For example,
if we have launched this kind of spacecraft before, it could
take less time for integration.
in 2015 — so two launches by the end of 2015. That’s
the plan.
You have announced a dual launch of AngolaSat and a satellite
for your majority shareholder, RSC Energia, called Energia 100.
When is that?
That is in 2016.
You have a launch reservation with EchoStar as well. Has that
become firm?
They are building their business case right now.
Is there anybody else who has sought a launch from you in
2015?
We have another customer, but I can’t say too much
about it. They have indicated they would probably want
a launch in 2015.
Is that prospective customer’s satellite construction status
consistent with a 2015 launch?
of Zenit vehicles from Russia’s Baikonur Cosmodrome under
the Land Launch brand name. What is the status of this?
We are now in the middle of a dispute with Space
International Services, and we’re certainly looking
forward to terminating the litigation, which brings no
value to them or to us. Our position is that we have all
exclusive commercial rights to the Zenit launch vehicle,
except for Russian or Ukrainian military or government
launches.
We think this opportunity — Land Launch operating
the Zenit from Baikonur — will have a lot of appeal in
the market. The Land Launch version has appeal for a
lot of satellites, and adding a Land Launch alternative
would enable us to boost the production at the Ukrainian
factory and benefit from economies of scale.
So you would like Sea Launch to take over commercial Zenit
launches from Baikonur?
Correct. We would like to be able to offer customers an
opportunity to launch lighter satellites.
Who makes the final determination of this?
It is under construction right now. It could be ready for
fourth quarter of 2015 or early 2016.
Swedish law governs this arbitration. The place of the
arbitration is to be decided soon.
Yes, we would have some homework.
So for now you have only one firm slot available in 2015, with a
second possible but still pending a decision by the unidentified
customer. When will this customer say something definitive?
Does the dispute with SIS/Land Launch relate specifically to
one or two rockets, or is it centered on future commercial
launch management?
But it could be done by the first quarter of 2015 in any event?
Very soon, I believe.
Yes. Of course it’s difficult to predict the geopolitical
situation, but aside from that the production is going
well for the time being and the small delay we had in the
Eutelsat launch following a technical issue meant we had
to have an urgent shipment of one piece of hardware from
Ukraine. This was done very fast. So we see that on this
point, things are going well.
The Russian government has indicated it may wish to make use
of Sea Launch, with a possible change of home port and ocean
launch-site location. This could give you access to a broader
market. What is the status of these discussions?
It started during our bankruptcy and is related to the
nonrefund of advance payments for rockets by SIS that
Sea Launch paid to ensure AsiaSat and SES missions.
I was thinking of a Boeing satellite, just to pick a platform.
The most recent Proton failure comes at a time of a strong
manifest for both commercial and government launches on
Proton. Is this an opportunity for you?
We definitely see there are a lot of concerns and a lot of
nervous customers because of this. Does that mean these
customers will change their contracts? That is another
question, and it is something we are talking to them about.
Have the political tensions between Russia, the Ukraine and
the West caused any hiccups for you in hardware production or
delivery, or license approval?
For the time being, there have been no problems in
terms of customs or production. We have an open export
license from Russia to Ukraine. There are no issues in
terms of shipping from Ukraine to the United States.
The production licenses we have to the end of the year
should have no problems.
Assuming you find a customer for the late 2014-early 2015
launch slot, how many other rockets could be made available
for later next year?
The hardware should be ready to support another launch
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As a first step, and to make Russian government authorities
more comfortable with us, we are targeting the launch
of Russian commercial satellites, from RSCC [Russian
Satellite Communications Co.] and Gazprom. This would
get us a foot in the door. We have never been considered
a launch option by these companies.
But things are changing inside both companies, and
in the federal space program. RSCC is going their own
way with the Ministry of Communications, so they now
have more opportunities to organize open tenders and
to choose their suppliers.
They could choose alternatives to Proton?
Let me say that they are seeking to reduce their reliance
on a monopoly, both in launch service providers and in
satellite builders.
Would you need to move Sea Launch’s home port from Long
Beach to accommodate RSCC launches?
No, there is no need to do that. Both Russian commercial
satellite fleet operators are already ordering Western
satellites — from Airbus Defence and Space, and from
Thales Alenia Space — so they would not have a problem
with our operating from Long Beach.
You have been in litigation with SIS over commercial launches
European launch services provider Arianespace is feeling
competitive pressure from Space Exploration Technologies
Corp., particularly for the smaller geostationary satellites that
launch in the lower position on the Ariane 5 rocket on most of
its missions, and adjusting its prices accordingly. Do you need
to react to SpaceX as well?
All launch providers will have to change their mentality
to adapt to this disruption in the market. Our changes in
this case would include more quality oversight.
How much flexibility do you have in your pricing? Can you move
as the market shifts and still remain viable financially?
Yes, especially when we offer dual launch capabilities,
where we stack one satellite on top of another. This will
give us more flexibility.
Are there ways to cut production or operating costs?
Yes, and we have begun looking at that with Energia and
our key suppliers. There are procedures that were put
into place many years ago and that survive today only
because it’s they way things have always been done since
the Soviet era.
It will be a difficult process for all concerned, but we
need to adapt to the market.
Twitter: @pbdes
Email: [email protected]
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