Italy's Eni holds an 80 percent stake in exploiting Blocks 2, 3 and 9 of Cyprus's Exclusive Economic Zone, while South Korea''s Kogas holds the balance.
Energy Minister George Lakkotrypis told reporters drilling would begin before the summer's end.
He said the signing confirms the government's commitment to building an onshore terminal if viable, but proven reserves found so far are not enough.
US firm Noble Energy made the first find off Cyprus's southeast coast in 2011 in the Aphrodite field, which is estimated to contain between 3.6 trillion and 6 trillion cubic feet of gas.
Lakkotrypis said the land terminal would be the "optimal solution for the development of potential deposits, provided of course we find more quantities of natural gas.
"Such activities involve a large element of uncertainty; there are encouraging signs for potential deposits… if we do not drill we can't be sure about the existence nor the quantities or quality of gas," he added.
Cyprus has ambitions of becoming a regional gas hub for its own as well as Israeli and even Lebanese exports.
It plans to build a liquefied natural gas factory at Vassiliko, near the southern coastal city of Limassol, that would allow exports by ship to Asia and Europe.
The government has commissioned Noble, with its Israeli partners Delek and Avner, as well as France's Total, to carry out feasibility studies for a plant.
Total, which is also looking for oil, will exploit blocks 10 and 11 from 2015.
Cyprus is hoping to export its gas, and maybe oil, by 2020.