UPDATE 1-OHB beats EADS to Galileo satellite contract -sources

* Contract worth 250 mln euro to build 8 satellites

* EADS Astrium wins separate contract to adapt Ariane 5 rocket (Fixes typo in second paragraph)

BRUSSELS, Feb 1 (Reuters) - The European Union will award Germany’s OHB AG a 250-million-euro ($327 mln) contract on Thursday to build eight satellites for the bloc’s Galileo navigation system, EU officials with knowledge of the decision said.

The satellites will be built by OHB-System, the aerospace engineering division of Bremen-based OHB AG. OHB-System has been closely linked to the Galileo programme for several years.

“OHB will be given the contract to build eight Galileo satellites,” one of the officials said on Wednesday, adding that the total value of the order was 250 million euros.

The award will officially be announced by Antonio Tajani, the European commissioner for industry, in London on Thursday.

OHB beat off competition from a consortium led by EADS Astrium to secure the contract. OHB also secured the last tender in 2010, when it won an order to make the first 14 satellites for Galileo.

Once complete, the programme is expected to have 30 satellites in orbit, providing positioning data for cars, ships, aircraft and mobile phone users. The system will compete with the dominant, U.S.-run Global Positioning System.

Launched in 2003, Galileo has been plagued by funding problems that were only resolved when the EU agreed to foot the entire bill with taxpayers’ money after commercial backers withdrew in 2007.

More than 5 billion euros have already been earmarked, and the European Commission, the EU’s executive, has asked for an extra 1 billion euros annually from 2014-20 to complete the satellite network and pay for its upkeep.

While OHB secured the main contract, EADS Astrium will be awarded a separate contract to adapt the Ariane 5 launcher, developed by France’s Arianespace, to carry four Galileo satellites into orbit at a time.

Tajani will announce both deals and sign a contract with Arianespace for the launch of future Galileo satellites using Ariane 5 in London at 1130 GMT on Thursday. ($1 = 0.7639 euros) (Writing by Charlie Dunmore)