Methane is produced by reacting a feed gas containing carbon oxides and hydrogen catalytically at an outlet temperature in the range 250-450.degree.C in heat exchange with boiling water generating steam at high pressure or in co-current heat exchange with coal feed gas, whereby heat is continuously removed from the process. By operating such a process in conjunction with a process of reacting hydrocarbons of higher molecular weight than methane with steam a natural gas substitute can be produced very economically.