PARIS - French Space Agency (CNES) and engine maker Snecma signed a contract worth 7.6 million euros ($10.9 million) for work on Europe's next generation rocket-launcher, Ariane 6, at the Paris Air Show Wednesday.

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"This contract covers the implementation of demonstrator projects for rocket engines using hydrogen and oxygen liquid, aiming for a cost reduction of about 20 percent on the entire propulsion system," CNES said in a statement.

The European Space Agency (ESA) started developing the successor to its flagship launcher Ariane 5 in 2010 with a scheduled completion date of 2025. Total cost of the program is estimated at between 3.5 billion and 8 billion euros ($5-11.5 billion).

France has an active role in the European aerospace industry. CNES is the contracting authority for the Ariane 6 development and Snecma is a subsidiary of leading French engine maker Safran.

During a visit to the French space industry at the end of 2010, French President Nicolas Sarkozy endorsed a Memorandum of Understanding allocating 82.5 million euros ($118.7 million) to carry out preparatory work for Ariane 6.

"Contracts to prepare technologies linking Ariane 6 in the fields of solid propulsion and avionics will be signed soon," the CNES statement said.