Oracle has confirmed it will continue making payments to investors on a large data centre project in New Mexico even if it fails to secure electrical power before the facility becomes operational, according to individuals familiar with the matter. The company issued a force majeure notice concerning power supply issues to the project developer, a unit of Blue Owl Capital, following permitting delays compounded by local opposition.
The data centre, known as "Project Jupiter," is situated on a 1,400-acre site in Doña Ana County and forms a key part of Oracle’s $300 billion contract to supply computing resources to OpenAI. This initiative is central to Oracle’s broader ambition to become a major operator of artificial intelligence data centres.
Despite the force majeure notice, which is a contractual provision typically invoked to excuse nonperformance due to unforeseen events, Oracle remains obligated under the contract to cover certain costs. If the project is not ready for its first operational phase by the first half of next year, the company would still be liable to pay a "carry cost"—a fee paid in place of rent—for up to three years. This carry cost is designed to cover interest payments to debtholders and provide a minimum return to equity investors, which includes billions of dollars invested by Blue Owl funds.
One source familiar with the details noted that the risk associated with power delivery lies with Oracle, not with the investors. Another highlighted that there is some legal debate over whether the force majeure clause can be triggered prior to the scheduled completion date of the facility.
Construction is currently underway, but without a confirmed power hookup, Oracle could be responsible for significant carrying costs on a site that cannot yet operate. A consortium of over 20 banks—including BNP Paribas, Goldman Sachs, MUFG, and SMBC—provided $18 billion in construction debt for the project last year. However, attempts to transfer portions of this debt to institutional investors have faltered amid concerns about Oracle’s creditworthiness following an aggressive borrowing campaign. Some of these loans have been trading below par, under 90 cents on the dollar, reflecting market unease.
Representatives from BNP Paribas, Goldman Sachs, and SMBC declined to comment. MUFG did not respond to requests for comment.
Oracle stated that issuing the force majeure notices does not indicate a delay in the project or a change in its delivery expectations. “Project Jupiter remains on our planned schedule. We are committed to New Mexico and confident in our path forward,” the company said. Blue Owl similarly emphasized that the notice does not alter its financial commitments to the multi-year project.