This paper presents a study of immiscible compressible two-phase, such as water and gas, flow through highly heterogeneous porous media with periodic microstructure. Such models appear in gas migration through engineered and geological barriers for a deep repository for radioactive waste. We will consider a domain made up of several zones with different characteristics: porosity, absolute permeability, relative permeabilities and capillary pressure curves. Consequently, the model involves highly oscillatory characteristics and internal nonlinear interface conditions. The microscopic model is written in terms of the phase formulation, i.e. where the wetting (water) saturation phase and the non-wetting (gas) pressure phase are primary unknowns. This formulation leads to a coupled system consisting of a nonlinear parabolic equation for the gas pressure and a nonlinear degenerate parabolic diffusion-convection equation for the water saturation, subject to appropriate transmission, boundary and initial conditions. The major difficulties related to this model are in the nonlinear degenerate structure of the equations, as well as in the coupling in the system. Moreover, the transmission conditions are nonlinear and the saturation is discontinuous at interfaces separating different media. Under some realistic assumptions on the data, we obtain a nonlinear homogenized coupled system with effective coefficients which are computed via a cell problem and give a rigorous mathematical derivation of the upscaled model by means of the two-scale convergence.