OpenAI and Australian data centre operator NextDC have signed a Memorandum of Understanding to develop a large-scale AI infrastructure campus in Western Sydney, marking one of the country’s most significant investments in sovereign compute to date. The partners plan to build a hyperscale AI facility and GPU supercluster at NextDC’s planned 650MW S7 campus in Eastern Creek.
NextDC told the market the project forms part of the “OpenAI for Australia” programme, which will see OpenAI act as an initial offtaker with the option to scale its use of the site over time. The announcement sent NextDC’s share price higher on Friday. According to NextDC, S7 will be engineered as a sovereign AI campus aligned with Australia’s Security of Critical Infrastructure (SOCI) framework, targeting customers in sectors including government, financial services, defence, education, healthcare and research.
The company said the first phase will include closed-loop, high-density liquid cooling systems designed to support ultra-dense GPU deployments without relying on potable water for ongoing operations. Subject to approvals, the first stage is expected to be delivered in the second half of 2027.
OpenAI office for Sydney
OpenAI said the project would give Australia access to sovereign compute capacity for sensitive and mission-critical workloads. It is launching its first Australian office as part of a broader regional expansion and is already working with local enterprises including Commonwealth Bank, Canva, Atlassian, Virgin Australia, Coles, UNSW and La Trobe University.
The Australian government welcomed the announcement as part of its recently released National AI Plan. Treasurer Jim Chalmers called the deal “a terrific outcome for our economy and our thriving tech sector,” saying it demonstrates that Australia has “the talent, clean energy potential, trade partnerships, and policy settings needed to be one of the big winners when it comes to AI.”
Industry and innovation minister Tim Ayres said clear policy settings were crucial to attracting major private investment, arguing that the partnership would create construction, engineering, technical and manufacturing roles. Assistant minister Andrew Charlton said the investment aligns with the government’s focus on “responsible growth” in AI.
The government said the project is expected to generate thousands of direct and indirect jobs during construction and ongoing technical roles once operational. It highlighted a sustainability strategy based on long-term renewable energy power purchase agreements and cooling systems designed to avoid the use of drinking water.
Alongside the infrastructure initiative, OpenAI announced partnerships with Australian businesses including Coles, Wesfarmers, Commonwealth Bank and the NRL to deliver skills and training programmes, as well as a founder initiative for local startups.