Availability of gases at the field level makes attractive to water-alternating-gas (WAG) process for low viscosity and light oils carbonate reservoir. However, impact of reservoir heterogeneity on WAG performance is crucial before field application. In general, ramp carbonates have heterogeneity due to variation of permeability and porosity. However, WAG performance significantly affected by permeability variations. This article investigates merits and demerits of WAG displacement due to permeability heterogeneities such as permeability anisotropy, high permeability streaks (HKS), matrix permeability, dolomite and thin dense stylolite layers. High-resolution compositional simulations with tuned equation of state (EoS) were carried out using 2D and 3D sector models. The study focuses on WAG performance in terms of oil recovery, vertical sweep, solvent utilization, gas oil ratio (GOR), water cut (WCT), WAG response time, gravity override, hysteresis, un-contacted oil saturation and economics. The results of simulation show that the heterogeneous reservoir provides initially faster WAG response, lower expected ultimate recovery (EUR), faster gas breakthrough, higher GOR and WCT production compared to homogeneous reservoir. The gas gravity override at smaller wells spacing is less in homogeneous reservoir as compared to heterogeneous reservoir, but it is reverse in case of larger well spacing. In heterogeneous reservoir, the HKS shows significant gas override resulting in poor vertical sweep due to capillary holding, and the high permeability dolomite layer shows early water breakthrough. This reservoir has higher solvent utilization in initial stage, and then, it becomes nearly equal to homogeneous reservoir. Simulation in both reservoirs overestimates incremental recovery of 2–3% OOIP at one pore volume injection because of not involving un-contacted oil saturation as predicted in core flood. The findings of this study will help to understand WAG performance and design in highly heterogeneous reservoirs for field applications.Graphical abstract