Combine the water and coconut milk. Give it a stir to combine.
Add half the liquid to a blender, along with the chillies, lemongrass, turmeric, shrimp paste, peppercorns, galangal, and garlic. Liquidise to a smooth consistency. Pour the blended liquid into a saucepan and bring to a vigorous, rapid simmer over medium high heat.
Add soy sauce, seasoning powder, salt, sugar, and lime leaves. Once the contents are simmering, set a timer for 5 minutes.
Meanwhile, add the remaining coconut milk and water mixture back to the blender, along with the mushrooms. Blend just enough to break the mushrooms down into small pieces. Do not blend into a smooth sauce; you want some texture.
Once the timer pings, add the blended mushroom liquid. Knock the heat down to low and give it a good stir. Cover and simmer for a further 15 minutes, stirring from time to time.
Turn the heat down and allow to cool at least slightly. The curry can be served either warm or at room temperature. Discard the lime leaves.