In a food processor, combine lemongrass, garlic, shallot, and red chilis and pulse until coarsely ground.
In a pot over medium heat, add lemongrass paste and 1 ½ neutral oil and heat the oil until hot. When the lemongrass paste starts sizzling, simmer on medium-low heat for about 10 mins to release all the flavors.
In another pot, heat ½ cup neutral oil until hot (about 350F). You can also use a wooden chopstick and bubbles should form around it when submerged. Don’t heat the oil until smoking or it will burn the chili flakes. Add red chili flakes to a large heatproof bowl. When the oil is hot, turn off the heat and immediately pour oil over the chili flakes until sizzling.
Now carefully add the lemongrass oil to the bowl with the red chili flake oil. Add sugar, fish sauce, and salt and stir well to combine. Transfer to a large airtight jar and store in the fridge for up to 3 months.