System having non-intrusive fluid sensor

A technique facilitates nonintrusive monitoring of a fluid constituent within an overall fluid flow. The system and methodology may be used downhole to monitor, e.g., the volume fraction of water in produced well fluid. The system comprises a sensor system combined with a component, e.g. a well component, having a flow passage for receiving a fluid flow. At least a portion of the fluid flow moves through the sensor system which may comprise a main electrode, a guard electrode, and an insulator to isolate the main electrode and the guard electrode. The main electrode and the guard electrode are oriented circumferentially around the fluid flow to obtain capacitance data on the fluid flowing through the sensor system. The capacitance data may be processed to determine the fraction of a specific constituent within the fluid flow, e.g. to determine the volume fraction of water in a well fluid flow.