time the carrier fluid water which also contains finer oil droplets of varying size is made to move in a downward direction through the annulus chamber created by the outer body 17 and inner sleeve 16 the velocity of this downward movement between outer body 17 and sleeve 16 is such that remaining larger oil droplets being of a lighter specific gravity than the carrier fluid water coalesce together and invert and begin to move up against the downward flow of the carrier fluid water thus further separation takes place in chamber 5 the larger oil droplets that have coalesced together and are rising eventually merge with the previously separated oil at free oil zone 4 carrier fluid water with finer oil droplets that are being carried in a downward direction reach the bottom of the annulus chamber 5 and are turned in an upward direction into annulus chamber 7 between sleeve 16 and sleeve 18 here the finer oil droplets are rising with the carrier fluid water and these finer oil droplets coalesce on their vertical movement through annulus area 7 to form larger oil droplets these larger oil droplets impinge on baffle plate 8 at the top of annulus chamber 7 and due to the difference in specific gravity between the oil and the carrier fluid water small coalesced oil droplets rise vertically through one or more outlet pipes 9 and up into the oil collection area free oil zone 4 carrier fluid water which is now more or less oil free.