Oracle is obliged to make payments to the investors of the 'Jupiter Project' in New Mexico, despite not having an electricity supply. The company has notified a force majeure situation, but this does not exempt it from its contractual obligations.
Oracle is committed to making payments to the investors of its data centre project in New Mexico, despite not having electricity before the operational start deadline, according to expansion.com.
The company notified a force majeure situation related to the electricity supply to the project's promoter, which is a division of Blue Owl Capital, after facing delays in obtaining permits due to local opposition.
According to the contract terms, Oracle must pay a “maintenance cost” instead of rent payments for a period of up to three years if the project is not ready for the first phase, scheduled for the first half of 2027.
Although construction has already begun on the 566-acre complex in Doña Ana County, Oracle could face the obligation to pay for facilities without electricity if it does not secure the grid connection in time. “The risk of the electricity supply falls on Oracle, not on the investors,” said a source familiar with the matter.
The 'Jupiter Project' is part of a 300 billion dollar contract from Oracle to provide computing capacity to OpenAI, being crucial for the company's strategy in the artificial intelligence data centre sector.
Despite the force majeure notification, Oracle has stated that this does not alter the project's delivery expectations. A spokesperson for Blue Owl also confirmed that the notice “does not change the financial commitments for this multi-year project.”
A consortium of over 20 banks, led by BNP Paribas, Goldman Sachs, MUFG, and SMBC, provided 18 billion dollars in debt financing for the construction of the project, although the debt has faced pressure in the market.
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