Conversion of natural gas to liquid fuels is a challenging issue. In SMDS process natural gas is first partially oxidized with pure oxygen to synthesis gas (a mixture of H-2 and CO) which is then converted to high quality liquid transportation fuels by utilizing a modernized version of the Fischer-Tropsch reaction. This paper presents a computer simulation of the first stage of the process, i.e. the synthesis gas production from natural gas, ASPEN PLUS equipped with a combustion databank was used for calculations. Concentrations of over 30 combustion species and radicals expected in the synthesis gas have been calculated at equilibrium and several non-equilibrium conditions, Using a sensitivity analysis tool, the relative feed flow rates and reactor parameters have been varied searching to maximize the CO/O-2 yield as well as to minimize the undesired nitrogen compounds in the product stream. The optimum reactor temperature for maximizing the CO mole fraction in the synthesis gas was also calculated.