Companies that invest and succeed in finding commercially viable oil or natural gas deposits will have their cash reimbursed.
Companies that fail to find oil won't enjoy the same privilege, however.
Bolivian President Evo Morales offered the incentive amid growing interest in Bolivian energy prospects, not least because of the oil barrel price nudging close to $100 in the international market.
Despite speculative "talked-up" oil quests continuing elsewhere, including the Falkland Islands in the South Atlantic, Bolivia has drawn major players to its oil sector -- but not as much investment as the government hoped.
The latest offer contrasted with an earlier, somewhat intemperate threat to take over the foreign oil companies' assets, which did little to reinforce investor confidence in Bolivia.
The incentive offer represented a step back by Morales, although the government presented it as a brand-new idea that no self-respecting oil investor could afford to ignore.
Analysts say Bolivia is awash in oil and gas and has a major export potential. Estimated oil reserves topped 441 million barrels by the latest estimates and are rated the fifth largest in South America. The natural gas reserves total 27.6 trillion cubic feet, ranking Bolivia behind Venezuela in terms of proven natural gas reserves in South America.
The government argues better exploitation of hydrocarbon resources would help propel impoverished Bolivia into the 21st century but it faces criticism on issues of good governance and transparency that critics say undermine progress.
State-owned energy company Yacimientos Petroliferos Fiscales Bolivianos said its offer had received positive response from companies operating in the country, including Spain's Repsol-YPF, a partner with YPFB in a state-controlled joint venture; Argentina's Pluspetrol; Brazil's Petrobras; French oil major Total; and British Gas.
YPFB President Carlos Villegas said that under the proposal: "The private company will cover the cost of exploration if the results are negative, all the losses will be assumed by the company and YPFB will have no obligations.
"If the results are positive, YPFB pledges through a mixed corporation to return 100 percent of the investment made in the exploration phase."
YPFB is also considering increasing the amount that companies receive per barrel, currently $10 even as international oil prices fetch more than nine times that much.
Renewed moves to attract private investment followed violent protests in December after the government withdrew fuel subsidies. The government restored the subsidies after the riots.