GLASGOW, Scotland -- Prime Minister Margaret Thatcher, saying she was 'deeply wounded' by America's pipeline policy, declared Wednesday British firms will defy President Reagan's sanctions and honor contracts for the Soviet gas pipeline.
In Washington, an administration spokesman said the United States had decided to limit the sanctions. Instead of a total ban on U.S. technology to European companies violating the pipeline embargo, the official said, only gas and oil technology would be denied the violators.
Despite the toned-down sanctions, one of two firms in France blacklisted by Reagan's embargo said it will further defy even the weaker sanctions. Creusot-Loire said 12 gas filters for the pipeline will be shipped Sept. 6 'in spite of the American embargo' which a spokesman said 'has had absolutely no effect on our factory.'
Mrs. Thatcher, Reagan's closest European ally, said John Brown Engineering, which is exporting U.S.-licensed turbines to the Soviet pipeline, had her full backing to go proceed despite the threat of U.S. retaliation.
'They got a splendid order and I feel very strongly that once you have made a deal you ought to keep to it,' Mrs. Thatcher said on arrival in Glasgow to meet businessmen and trade unionists.
Britain is the second nation to defy Reagan's sanctions by shipping U.S.-licensed equipment to the 3,600-mile pipeline, which will carry Soviet natural gas to Western Europe. France was the first nation to defy the sanctions.
In Washington, Treasury Secretary Donald Regan said the administration will limit the sanctions to oil and gas-related exports that might be useful to the Soviets in the pipeline project.
The Treasury secretary said the orders, to be issued against John Brown and to be revised for the French companies, represent a 'clarification,' not a rollback.
Reagan last week ordered sanctions covering every kind of U.S. export against the two French firms.
Mrs. Thatcher said she was in close contact with Washington on the issue and had told Reagan 'the whole reputation of the city of London was built up on 'my word is my bond' and when you've made a commercial contract -- short of there being a war or something like the Falklands - then you do not then just upset it.'
John Brown is supplying 21 turbines for the deal. The first six are being shipped from Glasgow this week.
'Naturally we feel particularly deeply wounded by a friend,' Mrs. Thatcher said in a television interview. 'But I would just like to say one thing. We've been staunch friends of the United States and must continue to be if the alliance must hold because that is in our interests.
Mrs. Thatcher said she spoke to Reagan on the issue during the summer but got the impression 'he did not quite realize how serious it was to us in Scotland ... if we had to stand off (lay off) more people.'
'We're strongly trying to get that message through,' the prime minister said. 'Especially since, after all, the United States are going to deliver wheat to the Soviet Union.'
Washington last week ordered economic reprisals against two French companies which exported pipeline equipment to Russia with the backing of the French government.
John Brown uses turbine blades and rotors made by General Electric. It was unclear whether 15 turbines still on order can be completed without the parts from General Electric.
Peter Rees, the government's trade minister, emphasized Britain backs Reagan's condemnation of Soviet policy in Poland but trade sanctions were not 'the right way to set about it.'
He said he would probably meet Thursday with William Brock, President Reagan's special trade representative who is traveling to Britain for a trade conference.