The oil industry has become increasingly aware;that reservoirs exhibit complex variations of reservoir continuity,; in particular, of pore space-related properties such as porosity, permeability, and capillary pressure. These variations reflect the original depositional process, and subsequent diagenetic and tectonic changes. Simple models are often inadequate for predicting reservoir performance and designing a field production management program that optimizes recovery. It is evident to reservoir engineers that optimization depends on the quality of the reservoir undergoing water injection, where the recovery factor is very sensitive to reservoir heterogeieity. Therefore, an accurate knowledge of vertical and lateral permeability distribution is essential. This paper represents results of a research project aimed at determining vertical permeability from in situ horizontal permeability in shaly reservoirs. This is accomplished by considering the microscopic and macroscopic features, such as the type of shale (Kaolinite, Chlorite; and Illite)and grain size. In situ vertical permeability correlations are derived by using various water saturation correlations for Shaly-Sand formations. Several vertical permeability relationships were obtained as a: function of horizontal permeability, hydraulic mean radius grain size, and. the amount and/or type of shale Generalized models were developed, and were applied to real oilfield data for calculating vertical and horizontal permeabilities.