The assessment of the groundwater flow rate around the cavern periphery is a critical requirement for the design of underground water-sealed oil storage caverns and commonly made through seepage analysis, where a reasonable estimation of the hydraulic conductivity of the host rock is the key issue. However, it is a challenge to accurately determine the hydraulic conductivity of natural rock masses owing to their heterogeneous and anisotropic nature. The underground storage cavern project has a unique favorable condition in that there is a water curtain system that can provide considerable hydraulic test data for inferring hydraulic parameters; however, no well-established method has ever been proposed to exploit these data for characterizing heterogeneity in hydraulic conductivity. This study presents a new approach to evaluate the spatial variation of hydraulic conductivity using water curtain borehole data. This approach treats the peripheral region of each borehole as a homogenous unit with a particular equivalent permeability coefficient that can be back-calculated from the measured injection flow rate of the borehole using a numerically established empirical formula. Besides, the impact of curtain gallery drainage, occurring in the construction stage, on the seepage field was investigated while the effect of the rock fracture configuration on hydraulic conductivity assessment was examined. The proposed method enables robust and accurate mapping of heterogeneity in the hydraulic conductivity of host rocks and provides a new idea of effectively utilizing hydro-geological test data to derive the hydraulic conductivity of rock masses surrounding water-sealed storage caverns.