The Neogene of North Kuwait comprises of unconsolidated sandstone reservoir having viscous crude. The field is to be developed by way of injecting steam into the reservoir. The XRD and SEM studies revealed that variety of the detrital clay minerals like Illite, Smectite, Chlorite, and Palygorskite commonly occurring within the formation. An experimental study was carried out to understand the implications of steam injection on the clay bearing formations and to determine temperature-dependent water-oil relative permeability to provide an indication of the recoverable reserves under steam injection. Sensitivity to different pH and salinity were also analyzed.Detailed laboratory study was conducted on nine plugs to determine the effect of hot water and steam injection on the permeability, relative permeability, residual oil saturation and mineralogical changes in the reservoir. The baseline steamflood was carried out to determine the residual oil saturation and evaluate the permeability changes due to clay swelling/dispersion in contact with brine and steam. The other six sensitivity steamfloods were carried out to determine the potential permeability damage resulting from clay swelling/dispersion when contacted with different pH fluid, salt concentrations (TDS) and clay stabilizers. Pre and post XRD and SEM analysis were done to see the effects of each steamflood on the core sample.This paper presents the discussion on results of core flood experiments conducted on nine preserved core samples at reservoir conditions. The results show that clays when contacted with steam induce significant permeability reduction. High salinity and pH control may not be sufficient to eliminate the loss of permeability. However, some clay stabilizers are found to be useful to improve the permeability and recovery.