Cosco said the 35-year concession is valued at around $738 million in total.
China's Cosco Shipping Ports will invest $400 million in building a container terminal in Abu Dhabi as the emirate aims to expand trade with the world's second largest economy, a senior company official has said.
The bulk of China's trade with the UAE currently goes through Dubai, the regional hub, but Abu Dhabi is hoping to take some of that trade as it invests billions of dollars in infrastructure, real estate and tourism to diversify its economy away from oil.
Abu Dhabi Ports awarded Cosco Shipping a 35-year concession to build and operate the terminal at Khalifa Port, Abu Dhabi's main port. It will be the second terminal at Khalifa.
According to a filing with the Hong Kong Stock Exchange, Cosco said the concession is valued at around $738 million in total.
"We plan to divert Chinese vessels from Dubai to Abu Dhabi once the terminal is operational," Raymond Wong, deputy general manager, Cosco Shipping Ports Ltd told Reuters.
Dubai's Jebel Ali port is much larger and only about 40 km (25 miles) north along the coast.
The Chinese company will set up a joint venture company for the project, to be called Cosco Shipping Ports Ltd - Abu Dhabi, with Cosco Shipping Ports holding the majority stake and Abu Dhabi Ports taking a minority stake, Wong said.
The new terminal will have a capacity of 2.4 million TEUs, with an option to increase that to 3.5 million TEUs. It is expected to be operational in the first quarter of 2018, Mohamed Juma al-Shamsi, chief executive of Abu Dhabi Ports said, ahead of signing the agreement with Cosco.
"The concession with Cosco will significantly expand trade between China and Abu Dhabi by bringing additional volumes to the port," he said.
Khalifa Port's existing terminal has a capacity of 2.5 million 20-foot equivalent units (TEUs).
Bilateral trade between China and the UAE totalled $20.2 billion in the first six months of 2016, according to figures from the Chinese Embassy in Abu Dhabi.
Cosco Shipping operates a global network of 46 terminals and 169 berths across mainland China, Hong Kong, Taiwan, Korea, Singapore, Greece, Turkey, Egypt, Belgium and the United States.