A subsea compression system and method wherein a wellstream fluid is flowed through a flow line (12) from a reservoir (10) and into a separation vessel (16) for subsequent compression in a compressor (18; 18′, 18″) prior to export of gas. A recycle line (24; 24′, 24″) is fluidly connected at a first end to the compressed wellstream at the outlet side of the compressor (18; 18′, 18″) and at a second end to the wellstream at a location between the separation vessel (16) and the inlet side of the compressor (18; 18′, 18″), the recycle line being capable of controllably (32) feeding fluid due to surge back to the compressor inlet side and avoiding the need to feed the fluid into the separation vessel, because the re-circulated gas is dry both due to having been separated at seawater temperature, and then being heated during recirculation.