It is estimated that 50 percent of world s oil and gas reserves are held in naturally fractured carbonate reservoirs. One of the biggest challenges in this type of formation is its heterogeneous nature. Besides the presence of fractures that longitudinally connect the porous medium, vugs at different scales and distributions are scattered throughout the porous matrix. These cavities cause fluid flow characteristics to significantly differ from those of conventional homogeneous pore structure reservoirs and bring the need to evaluate equivalent petrophysical properties of the heterogeneous medium. In this study, a microfluidic approach is used to determine the water and oil relative permeability curves and phase distribution profiles in 2D micromodels of vugular porous media. Steady-state water-oil injection experiments were performed in these devices at different fractional flows, while monitoring the dynamics of the pressure drop and visualizing the fluid displacement at the pore scale. Live-image acquisition through fluorescence microscopy made it possible to examine the evolution of the saturation of water and oil phases. The direct comparison between the relative permeability curves of well-characterized vugular porous media and their porous matrix showed that the incorporation of vugs leads to (i) higher equivalent absolute permeability, especially with longer cavities and higher vug density, (ii) increased oil occupancy in the porous matrix, due to less efficient water invasion into the porous matrix, and (iii) higher relative permeability to water, which flows preferentially through the vugular space. These results are consistent with the oil-wet nature of micromodels, since the vugs are offering less capillary resistance to the flow of the non-wetting phase. Our low-cost microfluidic approach will likely allow us to systematically study more complex vugular-fractured systems.