Natural gas is reacted with steam, to generate carbon monoxide and hydrogen in a first catalytic reactor; the resulting gas mixture is used to perform Fischer-Tropsch synthesis in a second catalytic reactor. After performing Fischer-Tropsch synthesis, the remaining hydrogen is separated from a hydrocarbon-rich stream using a hydrogen-permeable membrane, and the hydrocarbon-rich stream is returned to be subjected to steam reforming. Preferably the hydrogen-rich stream is supplied to a combustion channel to provide heat for the endothermic steam-reforming reaction. The overall process converts natural gas to longer-chain hydrocarbons and can provide a carbon conversion of more than 80%.