Oracle Invokes Force Majeure on New Mexico Data Centre Project

Oracle Corp. invoked force majeure on its Project Jupiter data centre in New Mexico, seeking to delay payments if the facility fails to come online in 2028 as planned, according to people familiar with the matter. The notice went to the project's developer, a unit of Blue Owl Capital Inc.

“Force-majeure notices are commonplace in developments of this scale and are often used to preserve contractual rights,” an Oracle spokesperson said. “They do not, by themselves, establish a project delay or change delivery expectations.”

A Blue Owl spokesman said the notice does not alter financial commitments. “This notice does not change the financial commitments to this multiyear project,” he said. The parties remain “fully aligned on Project Jupiter.”

If both sides agree a force majeure event tied to power commitments has occurred, Oracle could win a three-year rent delay once payments begin, one of the people said. The company would still pay other costs in the interim and owe the full lease-term rent when payments start.

The 2.45-gigawatt campus, part of the Stargate AI infrastructure build-out announced by President Donald Trump alongside Oracle, OpenAI and SoftBank Group Corp., has hit serious setbacks. A key natural gas pipeline project from Energy Transfer LP that was to begin service this month was delayed by nearly six months to Feb. 1, 2027, following repeated permit denials from the New Mexico State Land Office. The facility is designed to be powered by Bloom Energy Corp. fuel cells.

The debt tied to the development is already trading below 90 cents on the dollar, according to a person with knowledge of the matter. A group of about 20 banks provided an $18 billion loan to fund construction. Oracle's stock fell 4.4% at 12:38 p.m. in New York, bringing its year-to-date slide to 29%. Blue Owl shares dropped 3.7%. A gauge of Oracle's credit risk hit a record high Thursday.

Oracle holds an Alpha Score of 48 out of 100, labelled Mixed.

The notice does not constitute an event of default on the financing agreement, one of the people said. Force majeure provisions are becoming more common in data centre developments, according to a June client alert from Quinn Emanuel Urquhart & Sullivan LLP. “In AI data center projects, force majeure is no longer a back-end boilerplate provision,” the alert said. “It is a core litigation and risk-allocation tool that can determine whether a delay remains isolated, or cascades through the project’s construction, customer, power, insurance, and financing documents.”

OpenAI signed a $400 billion deal with Oracle and SoftBank last year to support five US data centres including the New Mexico site. Stack Infrastructure, a Blue Owl portfolio company, is developing the facility. Oracle has launched a charm offensive in New Mexico to counter opposition. “We are fully committed to New Mexico and confident in our path forward,” the Oracle spokesperson said.