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Clarification on the Enron Oil Future

darianlam

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Sorry, but I was a little bit confused by the Enron Oil Future example, where they disguised borrowing as oil futures contract.
So essentially, if I am not mistaken, is they borrowed money and said it was an oil futures contract where they:
At t_0: delivered oil, got N cash
and at expiration: They were supposed to buy back the oil at N price but did not deliver.

However, from what I knew of future contract, it was agreeing to buy/sell something at expiration, but there is no upfront initial costs. Is the future at this scenario just an agreement to buy back the oil and they did not honor it? or is the initial delivery of oil and getting cash for it part of the future?
 
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