\documentclass{minimal}
\usepackage{tikz}
\usepackage{pgfplots}
\begin{document}
\centering
\newcommand{\Lw}{2}
\newcommand{\Ew}{2}
\newcommand{\Tw}{2}
\newcommand{\Lo}{2}
\newcommand{\Eo}{2}
\newcommand{\To}{2}
\newcommand{\Korw}{0.6}

\begin{tikzpicture}
  \begin{axis}[height=5cm,width=5cm,
    xmin=0,xmax=1,ymin=0,ymax=1,samples=200,
    xlabel=$S_{wn}$, ylabel=$K_r$,
    scale only axis,axis y line=left]
  \end{axis}
  \begin{axis}
    [height=5cm,width=5cm,
    xmin=0,xmax=1,ymin=0,ymax=1,
    scale only axis,axis y line=right,
    axis x line=none,samples=200,grid=both]

    % water curve
    \addplot[thick,blue] {\Korw*x^\Lw/(x^\Lw + \Ew*(1-x)^\Tw)};

    % oil curve
    \addplot[thick,red] {(1-x)^\Lo/((1-x)^\Lo+\Eo*x^\To)};

    \node[name=Krwo,yshift=10pt] at (axis cs:0.85,\Korw) {$K_{rw}^o$};
    \draw[thick,->] (Krwo) -- (axis cs:0.98,\Korw);
    %\legend{$K_{rw} = K_{rw}^o S_{wn}^2$, $K_{row}=(1-S_{wn})^2$}
  \end{axis}
\end{tikzpicture}
\end{document}