Oracle has taken a legal step to protect its position in a major artificial intelligence data center project in New Mexico after concerns about delays in securing power for the site.
The company has issued a “force majeure” notice linked to Project Jupiter, a huge data center campus being developed by a unit of Blue Owl. Oracle says the project remains on schedule, but the notice could affect when some payments begin if the facility is delayed.
What happened with Oracle’s data center project
Project Jupiter is a large data center campus in southern New Mexico that is being developed for AI computing needs. Oracle is expected to be the main tenant, with the project connected to its broader work with OpenAI.
The campus is planned for about 2.45 gigawatts of power capacity. That makes access to a steady supply of energy one of the most important parts of the project.
Oracle has now issued a force majeure notice to the developer because of potential problems securing the power needed for the facility. A person familiar with the project said providing power to the site is Oracle’s responsibility under the contract.
The notice does not mean Oracle is abandoning the project. Oracle has said Project Jupiter remains on its planned schedule, while Blue Owl has said the notice does not change the financial commitments connected with the multi-year project.
What “force majeure” means in this case
Force majeure is a contract term used when events outside a company’s control make it difficult or impossible to meet certain obligations.
In large construction and infrastructure projects, these clauses can protect companies when unexpected problems cause major delays. They do not automatically cancel a contract or allow a company to walk away from a project.
In Oracle’s case, the notice is mainly connected with the financial consequences of a possible delay.
According to a person familiar with the contract, Oracle cannot simply terminate the lease. Instead, the company is seeking protection if the data center does not become operational as planned.
Why power supply has become a problem
Project Jupiter has faced several challenges connected with the infrastructure needed to operate the site.
One important issue involves a natural gas pipeline that is expected to provide fuel for the gas-powered fuel cells planned for the campus. The pipeline has faced permitting problems and its expected service date has been pushed back to February 1, 2027. A separate air-quality permit for the fuel cell system is also still pending.
The key issues include:
- Delays involving the planned natural gas pipeline
- Questions over permits needed for the site’s energy system
- The need to secure enough reliable power for the large campus
- Other legal and regulatory challenges involving the project
These issues matter because an AI data center cannot begin normal operations without a dependable power supply. Delays in one part of the energy system can therefore affect construction and the date when the facility can start serving customers.
Oracle is not walking away from the project
Despite the force majeure notice, Oracle has not said that it plans to leave Project Jupiter.
The company has stated that the project remains on its planned schedule and that it remains committed to New Mexico. Blue Owl has also said the notice does not change its financial commitments to the project.
The difference is important. The notice is being used to protect Oracle’s contractual position if circumstances outside its control cause the project to miss its expected operating date.
Under the reported contract terms, a delay could allow Oracle to postpone the start of higher lease payments. The company would still remain responsible for other costs, and the higher rent would still apply for the agreed lease period once the relevant payment period begins.
Project Jupiter involves billions of dollars
The New Mexico campus is one of the major projects connected with the rapid growth of AI computing.
Reports indicate that a group of banks provided about $18 billion in loans for the project. Blue Owl has also put about $3 billion of its own equity into the development, according to people familiar with the project’s financial structure.
That makes any delay important not only for Oracle and the developer but also for the lenders and investors supporting the project.
The project is also part of the wider Stargate AI infrastructure effort involving Oracle, OpenAI and SoftBank. The wider initiative was announced with plans for very large investments in US AI infrastructure.
What the delay could mean for the AI industry
The situation highlights a growing problem facing large AI data centers: building the computing equipment is only one part of the job.
Companies also need land, electricity, fuel, water, permits, transmission or other energy infrastructure, financing and local approval. If any one of these pieces takes longer than expected, the entire project can face delays.
The Oracle situation is also attracting attention from lenders and investors because it shows how contracts can deal with unexpected delays.
Reuters reported that the development has prompted additional questions in the wider AI infrastructure financing market about how risks should be divided between technology companies, data center developers and lenders.
What happens next
For now, Oracle says Project Jupiter remains on schedule. The force majeure notice should therefore not be treated as confirmation that the data center has been cancelled or that a delay has definitely occurred.
The immediate issue is whether the project can secure the power and other approvals needed to keep construction moving toward its planned launch.
If the power problems are resolved without a major delay, the force majeure notice may have limited practical impact. If the project does miss its planned timeline, however, the contractual protection could become much more important because it may affect when higher lease payments begin.
The project shows how difficult the next stage of the AI boom can be. Huge amounts of money are being committed to AI computing, but those facilities still depend on basic infrastructure such as reliable power, fuel and permits.
For Oracle, Project Jupiter remains an important part of its AI infrastructure plans. The company is continuing to say that the project is moving forward, while the force majeure notice gives it additional protection if power-related problems eventually affect the agreed timeline.
