Synfuels says that compared with existing refining technologies, it can produce clean diesel from a much smaller plant for a fraction of the cost.

WA-based John Read, who represents Synfuels in Australia, Asia and the Middle East, said that a plant with a 25m x 25m footprint and a price tag of less than $60 million might enable small exploration companies to produce refined fuel on site, eliminating the need to transport gas to large refineries owned by multinational third parties.

"If you are hooked one of these refineries up to every flared gas situation around the globe, you would produce about four million barrels of clean fuel a day," Mr Read. "Australia must welcome with open arms new technology that will commercialise its gas reserves."

Perth-based engineering firm Clough has signed a deal with Houston-based S&B Engineering and Constructors that will lead the company to develop the technology in Australia. Oil Search is also known to have investigated the technology.

While Australia is well endowed with natural gas reserves, experts predict that within 10 years Australia may lose the ability to produce enough oil to meet its own needs with the shortfall to be made up by imports.