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In the auditorium of Tripoli's Corinthia Hotel, a number of Libyan officials sit onstage in dark suits and ties, addressing scores of Western executives in flawless English about the country's new business opportunities. A few feet away is a huge portrait of the most famous face in Libya, Muammar Gaddafi, in his trademark African robe and sunglasses, fist in the air, a defiant look on his face, as if to say to the roomful of businessmen: I still run things around here. But the businessmen don't seem to notice. Instead they are transfixed by a tall young man with wire-rimmed spectacles and a fashionably shaved head. When he talks about a new economic strategy for Libya, including private enterprise, job creation and international financial institutions, the audience hangs on his words. After decades of centralized state control, he says, "we have a new reality in Libya."

The hip-looking speaker should know. He is Seif al-Islam Gaddafi, the second son of Libya's leader. Seif says he spent most of 2003 coaxing his father into transforming his 35-year-old revolution, which Gaddafi has led since he waged a military coup in 1969. The aging revolutionary has ruled over a centralized socialist system, repressing dissent and supporting armed attacks against American targets. Seif, 32, is believed by many analysts and diplomats to be Gaddafi's probable political heir. He is a doctoral student at the London School of Economics, a skilled artist and a keen tennis player who frequents the courts of Tripoli's Regatta Club, a favorite beachside haunt for the city's resident expatriates and Libyan élite. With no official role in government, Seif heads the Gaddafi International Foundation, a quasi-independent organization that has negotiated hostage releases and sent relief aid around Africa. He finally persuaded his 62-year-old father to make peace with the international community — thus opening the country to foreign investment. "It took nine months — nine months!" Seif told TIME, stretching his long legs out in front of the couch under another portrait of his father.

Whether Seif is Libya's future and his father its past is still unclear. But Gaddafi agreed to curtail Libya's nuclear-weapons program as well as pay damages to the families of those killed in the 1988 Pan Am airline bombing over Lockerbie, Scotland, and the non-American survivors of the 1986 bombing of a West Berlin discothèque. As a result, President Bush announced he would begin lifting economic sanctions against Libya. The European Union recently followed. "It was the right decision," says Seif of his father's new Western-friendly stance, "the right initiative."

Since then investors and executives of all stripes have poured into Libya — especially oil executives. Oil accounts for more than 90% of Libya's revenues. At a time when world oil prices are over $40 per bbl., analysts estimate that Libya's known oil reserves hold 30 billion bbl. — more than $1 trillion worth — enough to keep the pumps turning in Libya for decades. What's more, only about 25% of the country has yet been explored. Some 120 companies have joined Libya's first open bidding process to dig for new oil in 15 areas; the bid results are expected at the end of this month.

Oil companies regard Libya's crude as some of the best on the planet. Relatively thin, it is among the easiest to refine. And tankers leaving Libya need far less time to reach U.S. and European ports than those leaving the Persian Gulf. Given the turmoil in Iraq, and the fact that Washington is on chilly terms with Iran, many U.S. oil companies see Libya as a dream prospect. "There's a huge amount of oil that hasn't been discovered," says Michael Thomas, director of the London-based Middle East Association, a trade-promotion group that organized the business conference in Tripoli where Seif spoke. "The money is all there. There is nothing like this in the world."

As one looks out on Tripoli, it is hard to grasp the potential. The city's crumbling old Italian colonial buildings are set amid billboards hailing Libya's socialist revolution. But Libya's fans insist the possibilities are real. In the Corinthia — Libya's only luxury hotel, boasting $300-a-night rooms — Western executives crowd the lobby. American executives will need to catch up with European oil businesses, which remained in Libya through decades of U.S. sanctions. Italy's Eni, Spain's Repsol-YPF and France's Total have run Libyan subsidiaries with no American competition. Virtually all of Libya's oil — about 1.5 million barrels a day — is exported to Europe, and since October, millions of cubic meters of gas have flowed directly from Libya to Sicily through Eni and Libya's National Oil Corp's new pipeline. But the Americans are certainly trying. The U.S. liaison office, the prelude to a real embassy, now operates out of bedrooms on an upper floor of the Corinthia. Two sparsely furnished suites serve as the temporary digs for Marathon Oil and ConocoPhillips, both of which suspended their large Libyan oil operations when U.S. sanctions were imposed in 1986. "Nobody really hates Americans here," says Abdullah Salim el-Badri, chairman of the country's National Oil Corp., which runs the huge oil fields abandoned by the Americans in 1986. "Oil started here with the Americans. They trained us."

Libyans' friendliness to Americans is even clearer hundreds of miles down the coast at the Essider Marine Terminal, from which oil is shipped by the government-owned Waha Oil Co. The company took over the operation from U.S. companies in 1986, when sanctions drove out the Oasis Group, a combination of Amerada Hess, Marathon Oil and Conoco. But a handful of American citizens are still at work in the facility and have been throughout the decades of sanctions, in violation of U.S. laws. "Basically, we never left," says Conrad B. Cazalas, 58, an electrician from Corpus Christi, Texas, sitting in Essider's dining hall in blue jeans and work boots. Days after U.S. officials ordered him out in 1986, Cazalas says, he called his Libyan colleagues and talked his way back into his old job. Darrell Livingston, 51, from Winter Haven, Florida, who works on Essider's metering equipment, says he was once detained by federal agents after arriving home and asked to inform for them in Libya. Livingston says he rejected their offer but kept his job, even filing yearly U.S. tax returns listing his overseas residence as Libya. "The irs didn't seem to care," Livingston says.

Libya's oil industry will need many more such experts if it is to reach its potential. "Everyone's waiting for the Americans to come back in with huge amounts of money," says Livingston. "A lot of infrastructure needs to be rebuilt." At the Waha oil field, hundreds of kilometers into the Sahara from Essider's harbor, the production lines are monitored from a computer room equipped with the defunct Data General's 1982 system. "I'd say we're at least 15 years behind in technology," explains Gordon Snowdon, 55, a Briton in charge of production at the oil field's biggest station. "Actually, we're frozen in the 1970s."

Over the past year, delegations of American oil executives have flown regularly to the Essider terminal and to Waha's desert oil fields, trying to discern how to re-enter Libya. Under a 1986 standstill agreement, the fields are still partly the property of the American oil companies, though they have been operated by the Libyan government. Diplomats in Tripoli and Waha workers say negotiations have bogged down, with the American oil companies demanding a controlling stake in the operations in return for investing billions. That prospect is met in the oil fields with a mixed response. "Before 1986 the Americans were the bosses," says Snowdon, who has worked at Waha for decades. "Now that the Libyans have run things themselves, I don't think they'll want to be pushed aside."

It is a question facing businessmen across Libya as the prospect of a full-force American return to the country builds. Back in Tripoli, Seif Gaddafi says the conundrum is "very classic," faced by countless developing countries. Then, as with most problems, he finds a reason to dismiss this one. "The story of Libya is different," he says. "We have a strong leadership — that is obvious." And thanks to $20 billion in foreign reserves from the country's existing oil business, Seif goes on, "we don't lack cash. We don't need capital." But Libya does need modern technological know-how and experienced manpower — the kinds of resources that big outside oil firms can provide. "We are strong enough to bargain," says Seif, who knows how valuable his country's crude is to the West. Who will have the upper hand in the negotiations remains to be seen. But with both sides motivated to get the oil pumping, Libya's importance to the world economy, and to America, will only grow.

• VIVIENNE WALT | Tripoli
• Seif Gaddafi is drawing investors to Libya