A system and method for dehydrating crude oil on a floating production storage and offloading installation include a separator vessel to receive an incoming produced water stream, followed by a flash vessel, a treatment block, a crude oil storage tank, and an electrostatic treater. The treatment block includes a low pressure degasser followed by a compact electrostatic separator pre-treater or a compact electrostatic separator pre-treater followed by a low pressure degasser. The flash vessel and/or the low pressure degasser may employ an inlet cyclonic distributor and demisting cyclones, while the electrostatic treater may employ DUAL FREQUENCY® technology. The separator vessel may be a single horizontal two-phase separator/degasser or two vertical two-phase separator/degassers that operate in parallel with each receiving approximately 50 percent of the incoming produced water stream. The final outlet stream preferably contains no more than 0.5 BS&W and 285 milligrams per liter salt.