Petrobras Says Finds 'Good Quality' Oil in Franco Well

SAO PAULO, Nov 19 (Reuters) - Brazil's state-led oil company, Petrobras, said on Tuesday it has finished a test well that confirms the presence of "good quality" oil in an offshore field that officials say may rival the giant Libra field auctioned off last month.

The drilling revealed a 396-meter column of oil at 28 degrees on the American Petroleum Institute (API) scale in the Franco field in the South Atlantic Ocean, about 200 kilometers southeast of Rio de Janeiro. The prospect is part of an oil-rich area known as the Santos Basin that Brazil hopes will make it a major energy power in coming years.

Last week, the head of oil regulator ANP called Franco a "gigantic opportunity," saying it could be as big or bigger than the Libra field, which was awarded to an international consortium led by Petrobras in October.

Libra is Brazil's largest oil find confirmed to date, with 8 billion to 12 billion barrels of recoverable oil, according to both the ANP and Dallas-based Degolyer & MacNaugton.

Brazil's government swapped 5 billion barrels of oil from Franco and a handful of other fields in 2010 in a deal to increase its stake in Petrobras, which is also known as Petróleo Brasileiro SA.

Any additional recoverable oil beyond the 5 billion barrels ceded to Petrobras in the swap belongs to the government and will likely be auctioned off in the future.

Petrobras expects to begin oil production at the Franco field in December 2016 after it is declared commercially viable. Libra is not due to enter production until 2020.

(Reporting by Brad Haynes; Editing by Peter Galloway)