Cyprus said it had ended talks with a consortium including Russia's Novatek and France's Total that had been bidding for potential development of a natural gas field off the island.
Stefanos Stefanou, a Cypriot government spokesman, said on Wednesday that negotiations for the block would shift to another consortium comprising South Korea's Kogas and Italy's ENI, which is already in talks with authorities for two other fields.
The decision effectively excludes for the present any Russian involvement in developing Cypriot offshore gas in one of the most promising resource regions discovered in the past decade.
Stefanou said there had been insufficient progress in talks with the consortium.
"The Council of Ministers decided to rescind its approval for direct negotiations and declare the negotiations over," Stefanou told reporters after a cabinet meeting.