Oracle cites ‘force majeure’ to shield itself on controversial data centre

Oracle, for its part, has launched a charm offensive in New Mexico to counter the opposition. It remains unclear whether the company will win over the project’s skeptics. Photo by David Paul Morris/Bloomberg

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The technology giant sent the project’s developer, a unit of Blue Owl Capital Inc., a notice citing force majeure, according to people familiar with the situation. Rather than trying to walk away as the site’s main tenant, Oracle is attempting to put off payments should the data centre dubbed Project Jupiter get derailed and fail to come online in 2028 as planned, the people said, asking not to be identified discussing private matters.

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Companies typically invoke force majeure to free themselves from contractual obligations when problems arise beyond their control. In this case, Oracle is seeking to assert its contractual position if the build out is delayed. Still, it’s not certain that such a manoeuvre would free Oracle from its previously agreed financial obligations.

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“Project Jupiter remains on our planned schedule,” a spokesperson for Oracle said without commenting on the notice. “We are fully committed to New Mexico and confident in our path forward.”

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A representative for Blue Owl, which owns the data-centre developer Stack Infrastructure, declined to comment.

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The massive project in southern New Mexico is a major part of the Stargate AI infrastructure build-out that United States President Donald Trump unveiled alongside leaders of Oracle, OpenAI and SoftBank Group Corp., serving as the marquee announcement in a series of U.S. spending commitments that he touted in the early days of his second term. At the time, Trump called it a “tremendous investment” at a scale that “nobody’s really ever seen.”

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Almost two years later, the campus designed to handle 2.45 gigawatts — enough electricity to power roughly 1.8 million homes at any given moment — has hit serious setbacks including the denial of a permit key to its plans for energy resources. It’s becoming a symbol of the growing backlash against the broader AI data centre boom and a political flashpoint ahead of the U.S. midterm elections that threatens to turn races into referendums over the build-out.

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Even if the force majeure notice is intended as a precautionary step to win some wiggle room, it risks alarming lenders backing the project. The debt tied to the development is already trading at stressed levels, below 90 cents on the dollar, according to a person with knowledge of the matter.

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A group of about 20 banks provided an US$18 billion loan to help fund the construction of the data centre campus, one of several mega-debt deals that have helped bankroll the AI infrastructure boom.

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The notice also stands to raise questions yet again about the resilience of data centre leases. Contracts often include a clause allowing customers to back out if service doesn’t begin as scheduled. Earlier this year, Alphabet Inc.’s Google agreed to pay Elon Musk’s SpaceX for computing power through mid-2029, for example, but reserved the right to terminate if it didn’t gain access by a certain date.