The most crucial region with regard to affecting well productivity is the perforated region. Considerable effort has been directed to study this subject mathematically by many investigators, but they have been mainly focused on single-phase flow, while two-phase flow has received less attention.It has been demonstrated, first by Danesh et al. (1994) and subsequently by other researchers (Henderson et al. 1995;Blom et al. 1997;Ali et al. 1997), that the gas and condensate relative permeability (k r ) can increase significantly by increasing the flow rate, contrary to the common understanding. This effect, known as positive coupling, complicates the flow of gas and condensate near the wellbore even further when it competes with the inertial forces at higher velocities typical of those around perforation tips.The flow of gas and condensate in the perforated region was studied in this work using a finite-element modeling approach. The model allows for changes in fluid properties and accounts for the positive coupling and negative inertial effects using a fractionalflow-based relative-permeability correlation. A sensitivity analysis on the impact of perforation characteristics such as density, phasing, length, and radius as well as that of fluid properties, rock characteristics, wellbore radius, fractional flow, and rate on well productivity was conducted, resulting in some valuable practical guidelines for optimum perforation design.