Grind the peanuts, garlic, kencur and chilies coarsely in a mortar or blender.
Combine the ground ingredients with all the other ingredients (except the lime or lemon juice and Crispy Fried Shallots) in a saucepan, mix well and simmer over medium heat for 20 to 15 minutes, stirring constantly to prevent the sauce from burning. Add more water as needed to