Hi 976bar,
I think it is important to use plenty of oil in the first place, I use about 500ml to which I add the spices and fry for a couple of minutes before adding in all the onions and veg and water. I simmered for an hour then blended. I then simmered for another 2 - 3 hours. I didn't notice very much separation for the first 2 hours, then it came through quite well. I still only probably got 100ml back but this was more than enough to cook with.
I hope this helps.