Sept 24 (Reuters) - Oracle is seeking to protect itself from potential cost increases related to a large data center project in New Mexico by sending a "force majeure" notice to the project's developer, a unit of Blue Owl, Bloomberg News reported on Thursday.
Shares of the company fell around 4% in morning trading after the report, which cited sources familiar with the matter. Reuters could not independently verify it.
Oracle is attempting to delay payments should the data center dubbed Project Jupiter
get derailed and fail to come online in 2028 as planned, rather than exiting as the main tenant, according to the report.
Companies typically invoke force majeure to free themselves from contractual obligations when problems arise beyond their control, a move that can raise concerns among lenders and investors.
The data center campus has faced multiple infrastructure setbacks, including delays to a planned natural-gas pipeline and legal challenges over water and air-quality permits, according to media reports.
Oracle's reported move highlights the risks facing the massive build-out of AI infrastructure, as developers and technology companies race to secure power, water and other resources needed for data centers. Delays to Project Jupiter, a key part of the Stargate initiative and Oracle's partnership with OpenAI, could raise concerns about the pace and cost of deploying the computing capacity needed to support growing demand for AI services.
"Project Jupiter remains on our planned schedule," Oracle said in response to a Reuters inquiry. The company added that as part of its commitment to New Mexico, it is "reimagining" the project's power plan.
Blue Owl, which owns the data-center developer Stack Infrastructure, said the notice does not change the financial commitments to this multi-year project.
It remains uncertain if such a maneuver would free Oracle from financial obligations, the report said.
The New Mexico data center campus is part of Stargate, an initiative to build AI infrastructure in the US under a $500 billion investment commitment involving OpenAI, SoftBank Group and partners including Oracle.
The 1,400-acre Project Jupiter campus, which secured $18 billion in loans from a consortium of banks, according to media reports, is part of Oracle's broader agreement with OpenAI to provide AI computing capacity.
(Reporting by Jaspreet Singh and additional reporting by Prakhar Srivastava in Bengaluru; Editing by Devika Syamnath and Anil D'Silva)
