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Gas resources which are too far from the main markets for transport by pipeline can be processed or converted into liquids to make such transport economically viable. Liquefied Natural Gas (LNG), liquid transportation fuels and methanol are then the options to be considered. LNG and methanol are now well developed, LNG for regasification and in power generation, and methanol .as feedstock in the chemical industry. To broaden the scope of utilization of natural gas Shell has developed since the early 1970's a process in which natural gas is converted mainly into high quality kerosene and gasoil. This process is now known as the Shell Middle Distillate Synthesis process (SMDS) and consists basically of three major steps. In the first step desulphurised natural gas is converted into synthesis gas by partial oxidati.on making use of the Shell Gasification Process (SGP). In the second step the synthesis pipeline and LNG schemes are being studied. However, where such gas is converted into pure, long chain paraffins (no aromatics) via schemes will continue to make an a modernised version of the classical Fischer-Tropsch route. The third step converts these long chain paraffins into very high quality gasoil, kerosene and some naphtha via selective hydrocracking.The products form excellent blending material to upgrade low quality products: the gasoil has a cetane number in excess of 70 and the smoke point of the kerosene can be over 45mm. Moreover, due to the nature of the feedstock the products do not contain any sulphur or nitrogen. With the increasing environmental awareness with respect to particulates emissions, sulphur and aromatic content, the middle distillates from the SMDS process are well placed to find a premium value in the market.This technology will be first applied in the 12,000 bbl/ day SMDS-Malaysia project, now under construction at Bintulu, Sarawak and due for start-up late 1992.