China has withdrawn an oil rig from contested waters a month earlier than initially expected after its presence set off deadly protests in Vietnam -- a move welcomed in Washington.

The energy company behind the project however said that it had finished the drilling "as planned" and China reiterated its claims in the South China Sea.

China's official news agency Xinhua said the giant rig would be withdrawn to the area of Hainan island.

Relations between Vietnam and China plummeted when the rig was moved near the Paracel Islands in the South China Sea in May.

Beijing and Hanoi are embroiled in a bitter territorial dispute over claims in the area. There have been repeated skirmishes between dozens of Chinese and Vietnamese vessels since the rig was deployed, along with a wave of deadly anti-Chinese riots in Vietnam.

"The mission has been completed smoothly as planned, and oil and gas has been discovered," said a statement from China National Petroleum Corp posted on its website late Tuesday.

"The data collected will be analysed and a decision made on the next step."

The statement did not give any indication of the quality of the reserves or how they could be exploited. China previously said the drilling would continue until August 15.

Beijing's claim to almost all of the South China Sea is disputed by several of its Southeast Asian neighbours.

Foreign ministry spokesman Hong Lei on Wednesday reiterated Beijing's stance that the project had taken place within China's "inherent territory".

"China strongly opposes Vietnam's irrational disruptions and has taken necessary security measures to ensure the operation," he added.

Vietnam's foreign ministry spokesman Le Hai Binh hit back, labelling the project as "completely illegal".

"Vietnam wants to use friendly negotiations to resolve disputes in the East Sea," he told AFP, referring to the South China Sea by its Vietnamese name.

"To create a peaceful, stable environment in the East Sea, Vietnam requests that China not bring the (rig) -- or any other oil rig -- back to this area or into any other part of Vietnam's territorial waters."

The United States, which has repeatedly voiced concern over rising maritime tension in Asia, described China's step as a move forward.

"We welcome China's announcement," State Department spokeswoman Jen Psaki told reporters.

"We support relevant parties adopting a voluntary freeze on provocative unilateral actions," she said.

Secretary of State John Kerry had called for a freeze on moves that contribute to tensions during talks earlier this month in Beijing.

Psaki stopped short of linking China's move to US diplomacy but said that Kerry had voiced his concerns to Beijing on the rig.

Meanwhile, Chinese state media reported that 13 Vietnamese fishermen detained in late June and earlier this month had been "deported" back to their home country.

CNPC wraps up work in waters disputed with Vietnam
Beijing (UPI) Jul 16, 2013 - China National Petroleum Corp. said it's completed a drilling and exploration operation in waters of the South China Sea disputed with Vietnam.

"The petroleum drilling and exploration operation of Zhongjiannan Project was smoothly completed on schedule on July 15th with the oil and gas shows found," the company said in a statement.

CNPC dispatched a drilling rig to an offshore area claimed by both the Chinese and Vietnamese governments.

Both sides met last month in Hanoi to discuss the situation, though each side blamed the other for the lingering tensions. Vietnam says its vessels in the region were harassed by Chinese patrol ships, though Beijing said Vietnam was painting itself as the victim in the dispute.

CNPC said it's been conducting seismic surveys in the region to get a better understanding of the reserve potential there since 2004.

"In accordance with the work procedures of deep-sea petroleum exploration and development, a comprehensive assessment of hydrocarbon horizons is to be implemented based on the geological and analytical data collected through the drilling and exploration operation," the company said. "Next phase arrangements are subject to the aforesaid comprehensive assessment."

For the sake of regional peace, Vietnamese Foreign Ministry spokesman Le Hai Binh called on China to avoid sending any rigs back to the contested waters.