Two oil exploration wells drilled in the southern on-shore part of the Gambier Embayment encountered quantities of Carbon dioxide gas. In Kalangadoo No.1, the gas was found in fractured, dolomitic sandstone of assumed Palaeozoic age and just below the unconformity at the base of the Mesozoic Otway Group. It is in an unconformity type trap. In Caroline No.1 the gas is contained in the Middle Cretaceous Waarre Formation and entrapment is facilitated by doming. The latter well which is capable of producing in excess of 2 MMCF of gas per day, consisting of 98% carbon dioxide, has been completed as a commercial carbon dioxide producer. As this area of the Gambier Embayment features many subrecent volcanoes, some of which were active less than 5,000 years ago, we consider the carbon dioxide to have originated from volcanic and post-volcanic emanations.