Mexico spent $1.172 billion to buy oil hedges for 2010, covering a possible revenue shortfall if production falls for the sixth straight year and prices don’t recover from about a five-year low.

Mexico purchased put options that give it the option, not the obligation, to sell its oil for $57 a barrel next year, the Finance Ministry said in an e-mail statement today.

“We want this as an insurance policy,” Finance Minister Agustin Carstens said in New York today. “If we don’t collect any resources from this transaction it’s OK because that means oil would have been above $57 a barrel.” – bloomberg.com