Balgee Oil Pty Ltd, based in Ballarat, was yesterday placed on a two-year bond after contaminating groundwater and sewer lines.

The company pleaded guilty in Geelong Magistrate's Court to causing an environmental hazard through the storage or handling of a toxic or flammable substance.

The court heard Balgee's Apollo Bay Petrol Station leaked an unknown quantity of super from a 20,000 litre compartment of a steel storage tank between May and August 1999.

Environment Protection Authority prosecutor Gerry Purcell said the company detected unacceptable fuel losses in May and replaced the tank, which was found to have four small holes.

Mr Purcell said the leaked petrol entered the groundwater in a shallow aquifer around the service station and later the sewer system.

The EPA did not become aware of the problem until a year later, when residents started to complain of petrol fumes coming from their toilets.

Mr Purcell said Workcover shut one building site because of the odours.

He said in September a manhole at the visitors' centre recorded a high risk of fire explosion.

Some of the petrol had since been recovered, but regular environmental monitoring was ongoing.

In a written statement, neighbours of the service station, the Kennedy's, described the period as "the worst weeks of our lives".

Ross Ray, QC, for Balgee Oil, said the company, which had distributed 1.52 billion litres of fuel in in 1987, had no prior convictions.

He said it acted immediately once detecting the leaking tank and believed it had solved the problem by replacing it and excavating surrounding sand.

The company, which was now in administration, had since paid almost $770,000 in improvement works and monitoring, with $340,000 outstanding on a neighbouring property.

As part of the bond, the company must comply with EPA notices and pay $12,000 to the Apollo Bay/Kennett River Reserves Management Committee, as well as $18,689 in costs.