LONDON (Reuters) - Britain told the European Union on Thursday it will demand the repayment of up to 1 billion pounds if the bloc restricts its access to the Galileo satellite navigation system, Europe’s version of GPS.

FILE PHOTO: The Russian Soyuz VS01 rocket, carrying the first two satellites of Europe's Galileo navigation system, blasts off from its launchpad at the Guiana Space Center in Sinnamary, French Guiana, October 21, 2011. REUTERS/Benoit Tessier/File Photo

A senior EU official quickly dismissed the threat, saying there was no basis to any such demands. The person said the bloc was keen to go on working with Britain on Galileo after Brexit but under new rules, including those preventing third countries obtaining access to critical security information for the EU.

A row over Galileo has become the latest flashpoint in Brexit negotiations after London accused the EU of shutting British businesses out of the project before Britain’s exit in a year’s time. The EU has said it is honouring the existing laws.

But, once Britain leaves the bloc, the executive European Commission says London can no longer be trusted with sensitive data providing a secure back-up for the new satellite system, even though it was heavily involved in its development.

Britain for the first time formally set out its conditions for participating in the Galileo project after it leaves the EU on Thursday, making unrestricted access a condition for future a broader security collaboration.

The Brexit ministry published a paper raising the prospect of the government recovering its investment. It said that without British help the project would take three years longer and cost an extra 1 billion euros to complete.

Britain wants an “urgent resolution” to keep open “the possibility of future UK participation in Galileo,” the document said. “Should the UK’s future access be restricted, the UK’s past contribution to the financing of space assets should be discussed.”

Millions of consumer devices globally use the global positioning system (GPS) developed and controlled by the United States. Europe has been building on its own rival version for 15 years, due for completion by 2020.

The EU has said Britain will be able to continue to use Galileo’s open signal, but that Britain’s military could be denied access to the encrypted version when the satellite becomes operational. Britain is demanding unrestricted security and industrial access to secure elements of the project.

The government is also demanding that Brussels reopen tenders to British companies for the most secure work on the project and revise requirements that all related work be done from EU member states.

But the senior EU official, involved in Brexit talks that the Commission is carrying out on behalf of the remaining 27 member states in the bloc, dismissed Britain’s demands as “fantasy” thinking and “quite a big ask” of the EU.

“The United Kingdom would like to transform Galileo from an EU programme to a joint EU-UK programme,” the person said, stressing that would not fly as it was Britain’s decision to leave the bloc and London should hence accept consequences.

The person said that, while the EU was ready to keep Britain close to Galileo after Brexit, London’s demands of continued unrestricted access would in practice mean that, as a third country, it would in the future have the ability to turn the signal off for the whole bloc, or have access to sensitive information that not all members of the bloc even get.

In heavy and cutting criticism of Britain’s record so far in the negotiations, the person said the EU was not shutting London out of Galileo but drew clear limits of what sort of cooperation was possible after Brexit materialises.

London, on the other hand, has signalled its determination to press ahead with the development of its own satellite navigation system if the EU continues to insist that it will be barred from the secure elements of the project.

Experts say a rival British satellite navigation system could cost about 3 billion pounds and Britain has said its exclusion from Galileo would undermine talks on a proposed future security partnership with the EU.

“Future UK participation in Galileo is a strategic choice which will have a permanent effect on our future defence and defence industrial collaboration,” the British government said.

The row is further souring Brexit negotiations ahead of the next meeting of all EU leaders due in a month.

While the plan had been to mark another milestone in the unprecedented divorce talks that are aimed at agreeing this autumn a new cooperation scheme for the EU and Britain after Brexit, the bloc has been sounding alarm that talks were going slowly and often deriding London’s approach is completely unrealistic.