Oracle cites ‘force majeure’ to shield itself on data center, Bloomberg News reports
Oracle has issued a "force majeure" notice to Blue Owl, the developer of its large Project Jupiter data center in New Mexico, citing potential delays in securing power for the facility. This move aims to delay payments if the project, which has faced infrastructure setbacks including legal challenges over water and air-quality permits, doesn't come online by 2028. Despite Oracle's action, Blue Owl states the notice does not alter financial commitments to the multi-year project.
Oracle has invoked a "force majeure" clause with Blue Owl, the developer behind its Project Jupiter data center in New Mexico, over concerns about securing power for the site. The force majeure, as reported by Bloomberg News, is an attempt by Oracle to delay payments should the data center fail to launch by its planned 2028 date, rather than terminate its lease. Securing power is Oracle's contractual responsibility.
The 1,400-acre Project Jupiter campus, part of a $500 billion Stargate initiative involving OpenAI, SoftBank Group, and Oracle to build AI infrastructure, has reportedly encountered several infrastructure hurdles. These include delays to a natural-gas pipeline and legal challenges concerning water and air-quality permits. Public opposition to data centers is also growing due to their significant demand for energy, water, and other natural resources.
Alternative asset manager Blue Owl, which holds about $3 billion in equity in the project and owns data center developer Stack Infrastructure, stated that Oracle's force majeure notice does not impact its financial commitments. While Oracle seeks to pay a lower development-stage rent for an extended period, Blue Owl expects to receive the originally planned higher rent, albeit with a delayed start. Brokerage William Blair noted the news intensifies worries about regulatory and power-related delays in AI deployments but anticipates minimal short-term financial impact on Oracle.