Oracle Cites Force Majeure on Controversial New Mexico Data Center

Oracle has issued a "force majeure" notice to a Blue Owl unit, the developer of a large data center in New Mexico, citing potential delays in securing power for the project, a person familiar with the matter told Reuters on Thursday.

Oracle shares fell about 4%. According to the source, securing power for the site is Oracle's responsibility under the contract.

What the notice means

Companies typically invoke force majeure to free themselves from contractual obligations when problems arise beyond their control, a step that can raise concerns among lenders and investors.

The source said Oracle cannot terminate the lease under any circumstances. Blue Owl has about $3 billion in equity in the project, with Oracle responsible for paying the debt costs.

Bloomberg News first reported the development. Rather than exiting as the main tenant, Oracle is attempting to delay payments should the campus, dubbed Project Jupiter, fail to come online in 2028 as planned.

Oracle did not immediately respond to a Reuters request for comment. "Project Jupiter remains on our planned schedule," it said earlier in the day. Blue Owl, which owns the developer Stack Infrastructure, said the notice does not change the financial commitments to the project.

By invoking force majeure, Oracle extends the period during which it pays the lower development-stage rent. Blue Owl will still receive the higher rent for the originally planned duration, but its start will be delayed.

Project Jupiter and Stargate

The 1,400-acre campus secured $18 billion in loans from a consortium of banks, media reports say. It is part of Oracle's broader agreement with OpenAI to provide AI computing capacity.

The site has faced setbacks including delays to a planned natural-gas pipeline and legal challenges over water and air-quality permits. The project is part of Stargate, a $500 billion initiative involving OpenAI, SoftBank Group and partners including Oracle to build AI infrastructure in the US.

Why it matters

Developers are racing to secure power, water and other resources while managing the enormous costs of deploying computing capacity for partners such as OpenAI, and growing public opposition has made data centers a political flashpoint.

Brokerage William Blair said the news intensifies worries about regulatory and power-related delays affecting AI deployments, but expects minimal short-term impact on Oracle. "Practically, fiscal 2027 should not be affected, since Jupiter contributes no revenue this year."