Abstract: A downhole liquid and gas separator system has a pump, a separator and a motor, and a shroud around the pump, separator and motor. The shroud has a lower impermeable portion with a closed lower end and an upper porous portion. The upper end of the impermeable portion is above the inlet port for the separator so that production fluid flows upwards between the well casing and the shroud, over the upper end of the impermeable portion and downwards to the inlet port, generating a pressure drop and releasing gas before the production fluid enters the separator.