System for producing de-watered oil

System for producing de-watered oil from an underground formation to the surface, said system comprising:

• a production well extending downwardly from the surface and having an inlet below the surface;
• a reception well penetrating the underground formation and capable of receiving well fluid there from, wherein the downstream part of the reception well comprises a substantially horizontal or inclined section for primary oil/water separation of the well fluid;
• a water discharge system having an upstream end that is capable of receiving during normal operation a water-rich liquid from the lower region of the downstream part of the reception well;
• and
• a secondary underground oil/water separator, characterized in that the secondary separator has an upstream end that is capable of receiving during normal operation only an oil-rich liquid from the upper region of the downstream part of the reception well, the secondary separator having an outlet for de-watered oil that is in fluid communication with the inlet of the production well and an outlet for a water-enriched component that is in fluid communication with the water discharge system.