Go to Junon and start traveling to the underwater reactor. Once tu are on the long underwater path before tu actually enter the reactor tu will get in somewhat frequent battles with a large barco with a skeleton on the front and it performs an eject mover with it's paddle. Morph it and tu get a book of some sort can't remember the exact name.
Then tu take that book to Kalm and in the, kinda parte superior, arriba right corner there is a house. Go in that house then go up stairs and there will be a guy there. Give him the book, he gives tu the underwater materia. (also give this guy the rose obtained from beating ruby weapon and tu get a oro chocobo but por that time I definitely have one]