An evaluation of methanol production from natural gas by the conventional synthesis process shows that gas feedstock and capital charges are the dominant components of the methanol cost. Small but significant reductions In product cost can be made by increasing the conversion per pass and heat recovery from the synthesis reactor. However, the overall performance of the process is limited by the high cost and thermal Inefficiencies associated with the steam reforming step used to produce the synthesis gas. Catalytic partial oxidation (CPO) of methane directly to methanol has a potential advantage over the conventional process in that it eliminates the need for steam reforming. However, although considerable research has been conducted on CPO, no commercially viable process has yet been developed. An economic evaluation of a conceptual process for methanol production by CPO has been carried out assuming pure oxygen is used as oxidant. Results show that CPO has potential for reducing the coat of methanol provided the total oxidation of methane to CO2and water Is minimised. On the criteria used In this evaluation, CPO is cheaper than synthesis when less than 23% of the methane is completely oxidised. Further research on CPO is warranted and should concentrate on maximising the selectivity of the reaction towards methanol formation.